LAW ON EMERGENCY MEASURES IN ENFORCEMENT AND BANKRUPTCY PROCEEDINGS FOR THE DURATION OF SPECIAL CIRCUMSTANCES
Neven Marić | 18.05.2020
The Emergency Measures Act
[DOWNLOAD PDF BELOW]
On 30 April
2020, the Law on Emergency Measures in Enforcement and Bankruptcy Proceedings
for the duration of special circumstances (hereinafter referred to as "the
Emergency Measures Act" or "the Act") was adopted.
The Act shall enter into force on the first day of its publication in the
Official Gazette, i.e. on 1 May 2020.
The
purpose of the Emergency Measures Act is to enact measures aimed at
facilitating the position of:
Ø natural persons to whom part of their remuneration is withheld for the purpose of enforcing foreclosure on a salary, pension or other permanent financial remuneration;
Ø economic operators threatened with bankruptcy;
Ø beneficiaries of grants for the implementation of projects financed by national funds and/or the budget of the European Union;
Ø beneficiaries of aid measures paid due to the special circumstances.
It
is important to emphasise that the Emergency Measures Act only applies for the
duration of the "special circumstances" that exist as a result of the
COVID-19 disease pandemic caused by the SARS-CoV-2 virus and are defined as:
"...
an event or a certain condition which could not have been predicted and could
not be affected, which threatens the life and health of citizens, property of
greater value, significantly damages the environment, disrupts economic
activity or causes significant economic damage."
Consequently,
we conclude that the intention of the lawmaker was to regulate only those
measures during the duration of special circumstances caused solely by the coronavirus
COVID-19 disease, and which derives from Article 1 of the Act, as well as from
the explanation of the draft of the Act. Therefore, it is questionable whether also
other (in the future uncertain, but possible) special circumstances caused by
some other causative agents also fall under the application of this Act.
The
duration of special circumstances is foreseen from the date of entry into force
of the Emergency Measures Act until the expiration of 3 (three) months after it
enters into force, or until July 31, 2020. The Act contains a provision
authorising the Government of the Republic of Croatia to extend that decision
for an additional 3 (three) months, respectively to extend the application of
the Emergency Measures Act until 31 October 2020.
With regards to exemptions
from the application, the Emergency Measures Act does not apply to the
enforcement carried out in accordance with the provisions of the Law on
Enforcement of Foreclosure on Monetary Funds (Official Gazette 68/18, 02/20,
46/20 and 47/20).
In the continuation of this article we give a brief overview of the intervention measures in the enforcement and bankruptcy proceedings covered by the aforementioned Act, and what situations fall outside the application of these measures.
|
|
Description
of the measure |
Exception /
Notes |
|
1. |
Stopping
enforcement proceedings while special circumstances persist |
·
enforcement proceedings to settle a claim for legal
child support, ·
other claims when enforcement is carried out to
settle future instalments when due, ·
claims that are due, and on unpaid salaries, salary
compensation or severance pay, ·
in the case of insurance measures from
criminal proceedings. REMARK: Enforcement
proceedings may also be conducted during the special circumstances beyond the
aforementioned cases, if the judge considers that, given the circumstances of
each individual case, it is necessary to carry out the said procedures
urgently, despite special circumstances. Such a decision shall be reasoned
specifically by the judge. |
|
2. |
The
employer or other payer of permanent remuneration is obliged to stop the
execution of the foreclosure on the salary or permanent remuneration, and
will pay the entire salary to the employer or recipient of permanent remuneration |
·
if the enforcement is carried out to settle the
claim for legal child support, ·
other claims when enforcement is carried out to
settle future instalments when due, ·
claims on due but unpaid salaries, salary
compensation or severance pay, ·
in the case of insurance measures from criminal
proceedings. REMARKS: The
employer or other payer of permanent remuneration is obliged to receive new
enforcement documents for the purpose of acquiring the priority right at
settlement, but will not confiscate or transfer the remuneration to the enforcement
creditor, except in the case of the above exceptions. If
during the special circumstances the condition for transferring the funds
confiscated before the occurrence of the special circumstances occurs, the
employer or other payer of permanent remuneration will transfer the
confiscated amount to the enforcement creditor. |
|
3. |
Exempted
from enforcement shall be funds paid for a specific purpose, intended for the
implementation of projects through grants or support or financial instruments
financed from national funds and/or the budget of the European Union |
|
|
4. |
Exempted
from enforcement are funds paid as a measure of assistance to legal and
natural persons due to special circumstances |
|
|
5. |
For
the duration of special circumstances and within the meaning of the Act, no
default interest is due |
|
|
6. |
Bankruptcy
reasons arising during special circumstances are not a prerequisite for
filing bankruptcy proceedings |
Exceptionally,
the debtor may file a petition for bankruptcy, but the Financial Agency and
the creditor can only file for the protection of the interests and security
of the Republic of Croatia, nature, the human environment and human health. |
about author
Neven Marić
Neven Marić is a Croatian Attorney at Law known for his work in the field of Corporate Law, Mergers & Acquisitions Law, and in Real estate projects.