24 March, 2020
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Insolvency, enforcement and notarizing – the COVID-19 implications

Since the escalation of the COVID-19 pandemic and the declaration of the state of emergency in Serbia, many people have been left wondering what this situation means for their everyday life. Should they expect enforcement proceedings to be initiated for that unpaid utility bill? Will parties be able to conclude and solemnize the sale and purchase agreement of real estate? And what about bankruptcy proceedings initiated over a company – will they be able to go on unhindered?

These and similar questions are very important for citizens as well as businesses. Luckily, the Ministry of Justice (“MoJ”) anticipated these questions and issued several recommendations to competent bodies on how these issues should be addressed during the state of emergency.

 

Insolvency proceedings – effectively stayed until further notice 

On March 17, 2020 the MoJ issued recommendations to courts and public prosecutors basically advising that judges and prosecutors do as much work as possible remotely and that only essential personnel should be present on court premises. In fact, the MoJ was adamant – only hearings in urgent cases should take place as scheduled, while all other procedural activities should be postponed.

The High Court Council (“HCC”) followed the MoJ’s recommendations on March 18, 2020 by ordering that all hearings and procedural activities be postponed and prescribing only a handful of exceptions (e.g. cases where interim measures were sought, proceedings concerning domestic violence, family support and dissemination of press).

Therefore, all non-urgent court proceedings – insolvency proceedings included – are effectively stayed until further notice and no measures will likely be taken by the courts until the state of emergency is lifted. In practice, this means that all potential bankruptcy debtors are safe for now since the courts will not perform any procedural activities, with exception to the abovementioned matters, regardless of possible submission of Motions for Initiation of Bankruptcy Proceedings by the creditors.

 

“To enforce or not to enforce?”

The MoJ also recommended that all enforcement proceedings which are not urgent be postponed. On March 18, 2020 the Chamber of Public Enforcement Agents (“CPEA”) obliged and issued instructions to its members.

Essentially, public enforcement agents are prohibited from considering enforcement requests submitted during the state of emergency, and they are effectively banned from taking actions in ongoing proceedings that would enforce a creditor’s claim (e.g. sale of debtor’s real estate or movable property, transfer of salary or remunerations from the debtor’s bank accounts to creditor’s, handover of property).

However, some exceptions were prescribed: for instance, claims relating to statutory family support obligations, compensation of damages suffered due to health impairment, work incapacity, disability or debtor’s death, as well as collection of money on a company’s account, may be enforced.

The CPEA’s instructions also provide that, where enforcement proceedings had already been commenced on a debtor’s salary, employers will be notified to temporarily suspend forced collection until the state of emergency is lifted. The consent of the creditor is not required in these cases.

It should also be noted that some public utility companies, such as “Infostan”, decided to temporarily suspend ongoing enforcement of their claims for 90 days. In this way, debtors are effectively granted a grace period for the duration of the state of emergency.

 

How are public notaries affected?

On March 17, 2020 the MoJ also issued appropriate recommendations to public notaries. These were adopted by the Serbian Chamber of Public Notaries (“SCPN”) and were published on its website on the same day.

In a nutshell, the SCPN confirmed that public notaries will generally continue solemnizing contracts and agreements, as well as issuing notarial instruments and records, but will do so only in their offices. Clients who wish to make an appointment with a public notary should submit all necessary documents in advance via email.

On the other hand, except in very urgent and justified cases, public notaries will no longer certify signatures and copies of documents, nor will they schedule hearings in probate proceedings or in other proceedings delegated to them by courts. Hearings already scheduled will be postponed, unless urgent legal action is required.

 

For more information, please contact us via covid19@geciclaw.com