Written by: Vjosa Shkodra
Kosovo has taken an important step towards reforming its insolvency procedure with the adoption of the new Insolvency Law, which aims to improve the legal framework and procedures for handling insolvency cases. According to the Organisation for Economic Co-operation and Development (OECD), efficient insolvency procedures are an important condition for facilitating the exit and re-entry of businesses into the market. Consequently, a consolidated legal and institutional insolvency framework enables businesses to make an orderly exit from the market or to undergo eventual restructuring.
The new bankruptcy law in Kosovo aims to increase transparency, efficiency and security for all parties involved in legal processes, focusing on several key changes that transform the way these cases are handled in Kosovo.
One of the biggest changes is the change in the requirement for the number of creditors who can initiate bankruptcy proceedings. Unlike the previous rules, where it was necessary for two or more creditors to initiate the bankruptcy of a company, the new law now allows even a single creditor to initiate this process, as long as the unpaid debt is at least 30,000 euros. This change aims to remove obstacles that limited the number of bankruptcy cases, making the process easier and more effective.
Another important aspect of this law is the improvement of the rules for the sale of assets in cases of liquidation. According to the new law, sales will be carried out through public auctions, maximizing the value of assets and ensuring greater transparency. This measure improves creditor protection and accountability in the management of bankrupt assets.
Judicial jurisdictions have been harmonized in accordance with the Law on the Commercial Court, creating a clearer division of powers for handling bankruptcy cases, in particular with regard to secured creditors. These new provisions ensure a more efficient process for the use of collateral and the compensation of creditors in case of delays in the realization of assets by bankruptcy administrators. For the first time, the law provides for the establishment of the Chamber of Bankruptcy Administrators, a new institution that will govern the activity of bankruptcy administrators, and is supervised by the Ministry of Justice. The Chamber will be responsible for the organization and licensing of administrators, while the law clearly defines the rules for their supervision, including disciplinary procedures and fees for the services provided. These measures aim to increase transparency, accountability and professionalism in the management of bankruptcy proceedings.
For the first time, the law includes a clear provision for cases where the debtor dies during the bankruptcy process. Heirs now inherit the obligations and rights under the Inheritance Law, bringing clarity to the treatment of these cases and avoiding previous ambiguities.
Finally, the law specifies the documentation required for the opening of bankruptcy cases by debtors and provides for the possibility that, if the bankrupt estate does not cover administrative costs, the debtor may deposit a certain amount to ensure the continuity of the proceedings. This regulation aims to eliminate unnecessary delays and improve efficiency in practice.
In order to effectively implement this law, the adoption of several bylaws is expected, including administrative instructions for disciplinary procedures, as well as the reporting methods of administrators and administrators' fees.
With these changes, Kosovo aims to strengthen trust and the functioning of justice in bankruptcy matters, benefiting from a clearer and more effective legal framework for all participants.
The author is a lawyer, managing partner of Lex Business.
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