LOWER HOUSE DISCUSSES CHANGES TO DISTRESS LAW

ZAGREB, March 11 (Hina) - The main purpose of changes to the Distress Law is to speed up the bankruptcy procedure, which would eliminate from economic and legal transactions those legal entities who are not able to operate, meet their financial obligations and are insolvent. These goals of the proposed changes to the Distress Law were endorsed at a session of the Croatian National Sabor's House of Representatives on Thursday. Most objections by the MPs were, however, related to the state, ministries and the Government being the greatest debtors. The state, ministries and the Government cannot file for bankruptcy and that problem should be solved, said Petar Zitnik of the Croatian Peasants' Party (HSS) bench. He also welcomed the acceleration of the bankruptcy procedure. At the end of last year, about 26,500 firms, with some 180,000 employees, were blocked and their unpaid financial obligations amounted to about US $2.27 billion. However, the proposed changes are not a solution to the problem of illiquidity, said Anto Tukic of the Liberal Party (LS). The main cause of insolvency is the lack of money and the state as the greatest debtor, he said. Hrvoje Kraljevic of the Croatian Social Liberal Party (HSLS) bench supported Tukic's claim by mentioning the example of faculties, which were not paying any utilities but only salaries, which was the only thing they did get money for from the Science Ministry. The state finances are collapsing, said Damir Kajin of the Istrian Democratic Assembly (IDS). Kajin said he believed that the whole system, including the distress bill, was aimed at "making it through to the elections, and what happens later does not matter". He supported the part of the bill enabling employees to initiate the bankruptcy procedure against their employer for not paying salaries and other obligations. Kajin added that 150,000 workers have not been receiving salaries for months. One has to take care of employees when applying the Distress Law, because workers cannot be guilty of bankruptcy, said Djuro Njavro of the Croatian Democratic Union (HDZ). Supporting the changes to the law, Njavro believed the establishment of a normal economic environment was a top priority. Mato Arlovic of the Social Democratic Party (SDP) warned of a regulation enabling State Attorney's offices to submit proposals, on behalf of the Republic of Croatia, counties and the City of Zagreb, for initiating bankruptcy procedures against debtors who are not fulfilling their financial obligations. If bankruptcy procedures are to be initiated in such a manner, there is no way to avoid discretion, which is very dangerous for equality in the market, he added. The MPs were often referring to the problem of bills of exchange and their payment with a discount of merely 20 per cent. The state has issued one billion worth of bills of exchange, Damir Kajin said wondering whether the state would be able to fulfil its obligation. Suggestions for solving the problem of insolvency, such as multilateral compensation, could be heard throughout today's discussion. The MPs also spoke about the need to impose stricter criteria for trustees, who, along with high professional training, would have to pass a specialist exam. The Lower House also suggested that someone can be a trustee in one, possibly two, but not several firms. (hina) rml