New d.o.o. law started 1/9/2015

[Ribaric]

A new action was started by the finance ministry on 1st September. It mostly relates to "unused" d.o.o.s and, in particular, those with a bank account blocked by FINA. I make mention of it here as I know many foreign owners use a d.o.o. as a vehicle to own land identified as one of the many agricultural designations, most of our customers do.

The action appears to be an attempt to clear up many "disused" companies and the first tranche appears to be any d.o.o. with a blocked bank account. A copy of the finance ministry's overview document is on our website, you can copy-paste it if you require a Google translation.

You can find it HERE.

Your comments and thoughts would be much appreciated.

[crojoe]

Sept 25, 2015 18:15:21 GMT 1 Ribaric said:

A new action was started by the finance ministry on 1st September. It mostly relates to "unused" d.o.o.s and, in particular, those with a bank account blocked by FINA. I make mention of it here as I know many foreign owners use a d.o.o. as a vehicle to own land identified as one of the many agricultural designations, most of our customers do.

The action appears to be an attempt to clear up many "disused" companies and the first tranche appears to be any d.o.o. with a blocked bank account. A copy of the finance ministry's overview document is on our website, you can copy-paste it if you require a Google translation.

You can find it HERE.

Your comments and thoughts would be much appreciated.

A very rough google translation:

The new bankruptcy law in force since 01.09.2015.

Posted in Bookkeeping & Accounting

In the Official Gazette No. 71/2015 of 29 June 2015 published a new bankruptcy law that comes into force on 01.09.2015.

Predstečaj and bankrupt companies will take place in court, and FINA will in the pre-procedure have only the role of technical assistance to the courts. Under the new law, FINA is obliged to initiate bankruptcy of any company whose accounts have been blocked for more than 120 days within a period of eight days. Companies that have at least one employed person, 120 days of blockade by the bankruptcy proceedings starts counting from the entry of the new bankruptcy law on snagu.Za bankruptcy with blockage of the 120 days, it will be sufficient and the fact that the company for three months in a row did not pay wages to workers .

Pre-bankruptcy proceedings can be initiated and creditors if the debtor agrees, and predstečaj is possible for companies which do not have conditions for bankruptcy, and the settlement with the creditors want to avoid. The new law regulates the sale of assets in bankruptcy to a maximum of five rounds that must unwind within one year. The law provides that the price of the first round of three-quarters of the crashes in the second half of the third, the one-quarter in the fourth round and fifth which can be one dollar or more.

A bankruptcy petition is responsible, except the director, are considered members of the Supervisory Board or the owners, which Fina, when driven bankrupt ex officio, can charge up to 20,000 kuna advance for the costs of bankruptcy if they can not start.

Pay special attention to work with your partners, because if FINA over them initiate bankruptcy of duty, you probably will not be able to collect their claims, no matter if you have the means of payment security. The state should ex officio run nearly 15,000 bankruptcies of companies that do not have any employees in the long term as the blocking of accounts, and by the spring of 2016 in such a bankruptcy should have sent a total of 19,000 companies with 8838 employees, which are required 19.8 billion.

The first wave of bankrupt companies be blocked with no employees, whose total debts of 14.8 billion and after they clean up, and all the new ones that 120 days fail to unblock your account. ... The fine will have eight days to initiate the liquidation of the company, which has been blocked for more than 120 days. Down payment of 20 thousand and another thousand for bankruptcy fund will be charged of directors, supervisory board members or founders of the company, if necessary, from their private property.

The names of blocked companies will be published on the website of the court, along with basic information about their owners and all proceedings shall be conducted in the framework of bankruptcy, including the amount of compensation for the bankruptcy trustee.

[Ribaric]

The list appears to be 25,000 strong, all in non-searchable pdf format. How does a small bar/guest house get debts of 35M kuna??

[crojoe]

Sept 28, 2015 9:24:39 GMT 1 Ribaric said:

The list appears to be 25,000 strong, all in non-searchable pdf format. How does a small bar/guest house get debts of 35M kuna??

Pretty easily until recently. I know a few people (not buddies of mine) who just use relatives to borrow money. A nice little scam that went on for quite some time was to take a loan out on your business, buy a load of assets, write of everything and anything (even personal cars), holidays (even siphon off goods for home building as business expense) then transfer all assets to another company or private at token price. Then, dormant or bankrupt the first company. Then you do that a few times with close family relatives and Bobs your uncle (for a while one could bankrupt their first company and just open another ... although I understand this "loop-hole" has been closed). Up till joining the EU and stricter regulations on HR banks (forign or domestic) all you needed was to know someone (we all know the saying). Like I said, I know quite a few people driving around in fancy cars, dress in the latest gear, going on fancy holidays, buying stuff and they claim to be bankrupt, owe people money and more. I doubt these shame lists do anything really .... almost a badge of honor to some .... "I beat the system"! Some company bosses even get their employees to take out loans for them, but it's the relatives that get called on the most. Problem with FINA closing these companies is these debts will never get repaid (the scammers win again).

[Carol]

Is the list available on line?

[Ribaric]

This gets more confusing by the hour. In the Official Gazette No. 71/2015 is talks about companies with blocked bank accounts but FINA are talking about blocking companies and preventing them from trading. The two may go hand in hand most of the time but the latter prevents any company from selling off assets in an attempt to pay debts (or trading in any way). It appears to be already too late and owners of "blocked companies" can do nothing except wait for an expensive liquidator to be appointed and watch their assets get auctioned off. I'm guessing that such companies probably have asset holdings of far less value than their debts, but not all of them surely?

Carol, our lawyers have access to it but you need a password for their pages. The list is probably on-line publicly, it bloody should be! but I don't know where.

[crojoe]

Sept 28, 2015 18:04:42 GMT 1 Ribaric said:

This gets more confusing by the hour. In the Official Gazette No. 71/2015 is talks about companies with blocked bank accounts but FINA are talking about blocking companies and preventing them from trading. The two may go hand in hand most of the time but the latter prevents any company from selling off assets in an attempt to pay debts (or trading in any way). It appears to be already too late and owners of "blocked companies" can do nothing except wait for an expensive liquidator to be appointed and watch their assets get auctioned off. I'm guessing that such companies probably have asset holdings of far less value than their debts, but not all of them surely?

Carol, our lawyers have access to it but you need a password for their pages. The list is probably on-line publicly, it bloody should be! but I don't know where.

Will we start seeing Auction taking place? If anyone hears of such events to take place please pass info as I wouldn't mind getting a bargain! The USA embassy does a few each year but their stuff is sold for top dollar (kind of stuff I would see on freeads in the UK). That is one thing I find so puzzling in HR, second hand stuff is often sold at 3/4th of the price of the item when sold brand new. Must be why I see stuff sit around a long time... wishful thinking (not just property).

Anyone know if storage facilities exist in HR?

[Carol]

So, just to check I am not misunderstanding this:-

- many people set up companies and used them to buy their properties
- running companies proved expensive, even ones that did nothing except passively own a property
- some owners stopped paying an accountant to manage the companies and submit reports etc. The company still owns the property but the owner just pays the electricity and water bills privately.
- there are small fixed taxes that every company has to pay each year. Failure to pay means the company has unpaid debts.
- the government has instituted a process to close companies that are in debt and appear to have been abandoned because the regular paperwork filings have stopped
- as soon as the government decides that a company is to be closed, it freezes the company so that the owner gets no chance to catch up on the missing taxes and paperwork backlog,
- then it appoints an expensive liquidator and adds the cost of the liquidator to the companies existing debts
- then the liquidator auctions off the property (because its the only thing that the company owns that has any value) and uses the money from the auction to pay off the company's debts.

The end result being that people who paid a lot of money for a property but were lax with keeping up with the company paperwork, suddenly find that someone else is the owner of their house as its been sold off cheaply without their knowledge.

Please tell me that I am wrong!

[Ribaric]

Carol, I think you've come to the same conclusion as I have. I don't have too much sympathy for people letting their company get into long term debt and I can't work out if there's a way out even at this late stage. If there isn't, then that's unfair but it's far from clear.

I'm trying to decide if, in the not-too-distant future, there will be hundreds (thousands?) of properties being auctioned off, this in addition to the countless properties already owned by the banks after foreclosures. The value of property looks like it's about to bomb. I have a portfolio of land plots.... timing eh?

[Carol]

Would but every one was rational like you, January. Some people are studiously laid back. Others are at sea. Some cannot afford it (they could at first but not after several years). A few think they've done all they need but their accountant has let them down.

We've seen it all in the agency.


Rib, you are right. The last thing the market needs is a massive flood of new property, each one with a sad story attached.

[Carol]

We knew an accountant who was offering €200 per year. (That was in 2005/6/7). She got so much work, her practice expanded and she did very well. Then she put her prices up, moving to a monthly fee. She kept her old clients but she didn't seem to care about getting new ones.

Some people will simply not do bureaucratic, boring stuff though, no matter how little it costs. Somehow they think they can style it out. Maybe they usually get by with a little charm and accept some of the other stuff.

I've seen this recently in the UK. Primary school places in the south east are becoming very difficult to get. There simply are not as many places as there are children, so even the bad schools are oversubscribed. You have to apply in the January when your child is 4 to get a place. If you don't, then you'll struggle to get a place at all, never mind in the school you want. Filling out the form and submitting it is very easy. its all online. You just write your child's name, date of birth, address and the schools you'd like on a form an submit it online. It takes about 20 mins tops. However, there is a deadline - 15 Jan each year. There is no point getting round to it on the 16th or even waiting until August. I know a couple who prize their laid back lifestyle. They are lovely, chilled out people. But they will not be hurried for anyone or anything. They have a child and they are just refusing to accept that they need to make sure they do this before January. Everything else in their lives has always worked out, so they won't stress about it, and they are certain this will be fine too. (It won't.)

When people with this sort of personality decide to buy a property in Croatia, they are very focused on the chilled-out side of their personalities. Persuading them that they really, really should work with, not ignore, Croatian bureaucracy is an uphill battle.

[Ribaric]

Sept 25, 2015 18:15:21 GMT 1 Ribaric said:

A new action was started by the finance ministry on 1st September. It mostly relates to "unused" d.o.o.s and, in particular, those with a bank account blocked by FINA. I make mention of it here as I know many foreign owners use a d.o.o. as a vehicle to own land identified as one of the many agricultural designations, most of our customers do.

The action appears to be an attempt to clear up many "disused" companies and the first tranche appears to be any d.o.o. with a blocked bank account. A copy of the finance ministry's overview document is on our website, you can copy-paste it if you require a Google translation.

You can find it HERE.

Has anyone had the dreaded letter yet?