PROBLEMS OF APPLICATION AND ENFORCEMENT OF EXTRAJUDICIAL BANKRUPTCY PROCEEDINGS

This article focuses on extrajudicial (out-of-court) bankruptcy proceedings. It discusses how the new Law on Insolvency of Enterprises has changed the legal regulation of this process. The article examines the procedure of commencement of out-of-court bankruptcy proceedings, alongside the issues of informing creditors and the gathering of the creditors’ meeting. The statutory conditions for out-of-court bankruptcy proceedings are thoroughly discussed. The article also examines the competence of the creditors’ meeting in such bankruptcy proceedings. In essence, the creditors’ meeting performs the functions assigned to the court in ordinary bankruptcy proceedings. In practice, however, there are problems with the competence of the creditors’ meeting, for instance, the application of fraudulent bankruptcy. Furthermore, the article discusses the role of the court in this process. Though the court is not active in extrajudicial bankruptcy proceedings, the practical examples raise doubts as to whether the court should be allowed to interfere in the competence of the creditors’ meeting in deciding certain issues relevant to the bankruptcy proceedings.