Important changes in enforcement and bankruptcy proceedings in Croatia

There has been an important legislation development in Croatia as part of the COVID-19 measures. New Act on Intervention Measures in Enforcement and Insolvency Proceedings for Duration of Special Circumstances (the “Act”) was passed in Croatian Parliament and it brings important changes in enforcement and bankruptcy proceedings.

The Act sets out rules for period of “special circumstances” which are defined as events which could not have been foreseen and affected, and which endanger lives, asset of larger value, significantly undermine environment, economic activity or cause significant economic damage. Duration of special circumstances starts on the date of entering of the Act into force (i.e. 1 May 2020) and will last for three months. Croatian Government can prolong the period for another three months.

Enforcement

During period of “special circumstances” all enforcement proceedings will be suspended (save for certain family matter related enforcements).

There is an exception to the rule. It will be possible to carry out the enforcement proceeding if a judge in the light of the circumstances of each individual case finds that it is necessary to urgently carry out such proceedings in spite of the special circumstances.

Certain type of funds have been excluded as funds over which enforcement can be done (e.g. funds paid as support in special circumstances).

Bankruptcy

If any of the bankruptcy reasons defined by the Bankruptcy Act occurs during period of special circumstances, that will not be considered as condition for opening of bankruptcy proceedings.

This will not be the case if the debtor itself files for bankruptcy.

In certain exceptional cases creditors and/or Croatian Financial Agency can request initiation of bankruptcy proceedings during period of special circumstances.

Default Interest

During period of special circumstances default interests will not run.