Parliament on Monday approved amendments that aim to make bankruptcy protection, instead of liquidation, more attractive to companies close to failure.
The amendments give the court the power to introduce a moratorium on claims by creditors within one working day of the time a company files for bankruptcy protection. The moratorium may be extended after the company that made the application reaches an agreement with creditors. During the moratorium, a court-appointed bailiff oversees the assets of the company.
Under the current law, the court has no power to declare a moratorium. Just a handful of companies file for bankruptcy protection each quarter. Almost all insolvent companies are liquidated.
The amendments also allow the company’s management to request bankruptcy protection without requiring consultations with unions or the submission of a balance sheet no more than three months old.
The amendments will come into force on September 1.