Overview
The Ministry of Economy of North Macedonia (“Ministry”) has introduced a Draft Law on Early Warning and Preventive Restructuring of Commercial Companies (“Draft Law”), transposing EU Directive 2019/1023. The Draft Law establishes a pre-insolvency framework enabling companies facing financial difficulties to restructure before bankruptcy becomes necessary.
Key Provisions
The Draft Law departs from the existing Bankruptcy Law in several key respects:
- Early Warning – continuous monitoring of liquidity/solvency indicators with quarterly accountant reports; management must notify creditors within 15 days of identified insolvency risk, with personal liability for failure to act.
- Debtor-in-Possession – unlike the Bankruptcy Law where a trustee assumes control, the debtor retains management during restructuring, assisted by a court-appointed restructuring practitioner.
- Restructuring Plan – requires financial projections, creditor class distribution, and proposed measures; adoption needs a two-thirds majority by value per class; unanimous plans may be confirmed by notary, otherwise court confirmation applies with cross-class cram-down available.
- Moratorium – if a company is trying to fix its financial problems through a restructuring process, the court can temporarily stop creditors (like banks or suppliers) from seizing the company’s assets or forcing it to pay. However, tax authorities are not covered by this protection, they can still collect what they are owed during this period.
- Transition to Bankruptcy – if the plan fails or insolvency occurs, bankruptcy proceedings may be opened; creditors and the debtor retain filing rights at any time.
Timeline and Outlook
The Draft Law is currently being prepared by the Ministry and is expected to be discussed in the Assembly of North Macedonia, with application anticipated from 1 January 2027. It represents an important step toward modernising North Macedonia’s insolvency framework by introducing pre-insolvency mechanisms and debtor-in-possession restructuring, promoting business continuity, employment protection, and financial stability.
FAQ
How does the Draft Law differ from the existing Bankruptcy Law?
The Draft Law operates pre-insolvency with the debtor retaining control, whereas the Bankruptcy Law applies post-insolvency with a court-appointed trustee; the Draft Law also allows notarial confirmation of unanimous plans.
What is the moratorium and how long can it last?
A court-ordered stay of individual enforcement actions lasting up to four months, extendable to 12 months maximum; tax enforcement is excluded.
What protections apply to the new financing?
New financing provided to implement a restructuring plan or keep the debtor’s business operating is protected by law. It cannot be challenged or declared invalid solely because it was provided during the restructuring process, and lenders are not liable unless they acted with fraudulent intent.
The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.
