Bankruptcy in Croatia

Financial instability is present in European as well as in Croatian capital market.

Therefore legal persons are much more careful when entering into new business. One must always bear in mind the possibility of bankruptcy of his/her business associate. Thereat, all legal persons must be aware of certain legal consequences of bankruptcy:

1. If the bankruptcy creditor, over the last sixty days prior to the bankruptcy petition or afterwards, by courts enforcement or by forced courts insurance, obtains a separate satisfaction right or similar right on debtors property within the bankrupt’s estate, this right ceases i.e. the ongoing procedure stops when bankruptcy proceedings is opened.
2. If there is a preregistration registered in the land registry in order to insure the request for acquirement or seizure of a right on debtors real estate or on certain right registered on his behalf or to insure the request to change content or rank of that right, the creditor is entitled to settle his/her claim as bankruptcy creditor.
3. Power of attorney of the debtor regarding his/her estate within the bankrupt’s estate ceases when bankruptcy proceedings is opened.
4. Legal action carried out in the last three months prior to the bankruptcy petition by which one of the bankruptcy creditors acquires insurance or settlement according to his/her right (congruent discharge), can be contested if the debtor was insolvent at the time the action was taken and the creditor was aware of debtors insolvency.
5. Legal action by which one of the bankruptcy creditors acquires insurance or settlement that he/she was not authorized to claim in that certain manner or in that certain time, can be contested:

1. if the action was taken in the last month prior to the bankruptcy petition or afterwards, or
2. if the action was taken during third or second month prior to thebankruptcy petition and debtor was insolvent at that time, or
3. if the action was taken during third or second month prior to the bankruptcy petition and creditor was aware, at the time the action was taken, that this action harms bankruptcy creditors.

6. Legal action of the debtor that directly harms bankruptcy creditors can be contested:

1. if the action was taken during last three months prior to the bankruptcy petition, if the debtor was insolvent at that time and the other party was aware of debtors insolvency at the time the action was taken, or
2. if the action was taken after the debtors bankruptcy petition, and the
3. other party was aware or had to be aware of the debtors insolvency or of
4. debtors bankruptcy petition at the time the action was taken.

7. Legal action of the debtor taken during last 10 years prior to the bankruptcy petition or afterwards, with the intention to harm his/her creditors, can be contested if the other party was, at the time the action was taken, aware of debtors intentions. This awareness is presumed if the other party knew that debtor is close to being insolvent and if he/she knew that this action harms debtor’s creditors.
8. Debtor’s legal action want of consideration or with minor consideration can be contested, unless it is taken in the last 4 years prior to the bankruptcy petition.
9. Legal action by which the share of the secret member in the company is completely or partially returned to him/her or by which he/she is completely or partially excluded from his/her share in the accrued loss of the company is voidable if such agreement is entered into during the last year prior to the bankruptcy petition or afterwards.