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Amendments to insolvency legislation to enable faster restructuring of companies

Ljubljana – “The amendments to the insolvency act which were approved today provide the legal framework for resolving one of the key problems in Slovenia, i.e. the over-indebtedness of companies, whose main creditors are banks,” said Senko Pličanič, the Minister of Justice, at the press conference following today’s government session. He added that this was a major tool for saving companies and consequently jobs and employees. The amendments also recently received a favourable review from the IMF.

The amendments provide a legal measure for out-of-court restructuring which is consistent with the existing law on insolvency and provides an incentive to both creditors and shareholders to opt for out-of-court restructuring deals.

The novelty of preventive re-structuring is particularly significant, as it will enable the conclusion of agreements on the financial re-structuring of large and medium-size companies which are directly under threat of insolvency, but which are not yet insolvent. Together with an appropriate approach, determination and bold decision-making on the part of all involved, such procedures will enable the systematic settlement of the Slovenian economy’s debts.

Amendments to insolvency legislation were also included in one of the two spring recommendation of the European Commission on the area of justice. By adopting the first stage of judicial reform and preparing major changes to insolvency legislation, Slovenia has managed to implement both of the recommendations of the Commission in six months, thereby maintaining credibility in international financial markets.

Significant positive effects on Slovenia economy expected

The new legal basis for adopting re-structuring deals will enable the prompt and effective discharge of the Slovenian economy’s debt, which is a significant measure for restarting growth. However, legal provisions do not suffice: all stakeholders, particularly companies and banks, must deal with the situation decisively and quickly, relying on these amendments. New amendments enable concluding re-structuring agreements, but such agreements require engagement of everyone involved, which demands serious approach, professionalism, personal responsibility and courage of anyone representing the parties involved.

Together with the Bank of Slovenia and the Ministry of Finance, the Ministry of Justice will monitor the effects of the amendments and consult a wide circle of relevant stakeholders. Therefore, a permanent advisory working group will be established in the future.