The new Law on Bankruptcy (Zakon o stečaju, Official Gazette of the Republic of Serbia, n.104/09) was enacted on 11 December 2009. Aiming to diminish or eliminate uncertainties experienced in practice and related to the initiation of the bankruptcy procedure against the insolvent companies due to bankruptcy costs, the new Law introduced the institute of "Automatic bankruptcy". The provisions regulating the Automatic bankruptcy came into force on 24 March 2010. According to these provisions the National Bank of Serbia is obliged to provide monthly the competent courts with the list of legal entities in Serbia whose bank accounts have been blocked for over 3 years. The Automatic bankruptcy should facilitate bankruptcy of the long period insolvent company, resolve respective book keeping ambiguities and potentially decrease base for corporate income tax.
Upon receipt of the list from NBS, the insolvency judge shall render ex officio decision on initiation of the preliminary bankruptcy procedure. The insolvency judge shall note in the decision that the bankruptcy creditors and bankruptcy debtor are entitled to request conduct of the bankruptcy procedure within 60 days from the date of publication of the decision. The judge shall also determine the advance amount to be paid for the bankruptcy costs. If this advance is paid within 60 days the bankruptcy judge shall schedule the hearing on which it will determine the existence of the bankruptcy ground. If the advance is not paid, the judge shall open and immediately close the bankruptcy procedure. The decision on closing the bankruptcy procedure shall be published and delivered to the Agency for Business Registers. Upon receipt thereof, the Agency for Business Registers shall deregister the company from the companies' register. The assets of the company shall become the property of the Republic of Serbia, whereas the Republic of Serbia shall not be liable for the obligations of the bankruptcy debtor. However, the security interest on the asset shall remain. The Republic of Serbia shall proceed with the litigation procedure as the plaintiff instead of the bankruptcy debtor, for collection of receivables or hand over of the property.
Hence, if the abovementioned advance is paid and the bankruptcy judge decides to conduct the bankruptcy procedure, the bankruptcy creditor has to register the outstanding receivables against the bankruptcy debtor within the prescribed deadline (in the decision) which cannot be less than 30 days and longer than 120 days from the announcement of decision on opening of the bankruptcy procedure.
If the advance is not paid and the bankruptcy judge decides to close the bankruptcy procedure and consequently the company is deregistered from the companies' register, the creditor of such company is entitled to register the respective receivables in the company's business books as non collectable and respectively write it off. Only in that situation, such receivable shall not be part of creditor's income and thus shall not be taxable.
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