engleski

On Models of Overcoming Business Crisis: Bankruptcy Proceedings or Change in Status

Many studies have applied econometric methods in research of business entities’ development within business environment, and tried to predict the occurrence of bankruptcy reasons, that consequently lead to the opening of bankruptcy proceedings. But, the bankruptcy proceeding is just one of the possibilities that a business has if it faces insolvency. Alternative can be different changes in debtor’s status, which are, together with restructuring proceedings, i.e. pre-bankruptcy proceedings, methods to engage the remaining assets in a more productive way, in new entrepreneurial endeavors. There are many factors that cause the difference between the bankruptcy plan and change in debtor’s status, but it can be said that the goal of both is the same: continuation of business activities. The analysis from Croatian perspective reveals that the bankruptcy plan model, i.e. pre-bankruptcy settlement has not been successful in European environment. When it comes to practical application, the choice between legal implications of either the opening of bankruptcy proceedings or execution of changes in debtor’s status is not a simple one. It is beyond dispute that the Companies Act and the Bankruptcy Act (both with their accompanying regulations) are characterized by modern solutions. Still, in a legal sense, system cannot nearly be considered as finished. The ongoing public debate on some aspects of legal regulation of market, and vagueness or inconsistencies that emerged in application of existing regulation of bankruptcy, clearly point to the areas and issues that should be regulated or reformed in a speedy manner. The goal of this paper is to analyze the detected problems and to offer answers to the dilemmas that can emerge in present or future business crises of firms. It is important to stress that scope of this paper does not allow an exhaustive and detailed analysis, but will provide an insight to some, by authors’ opinion important aspects of the regulation of bankruptcy and changes in debtor’s status.

change in status ; bankruptcy plan ; pre-bankruptcy settlement

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