The situation with the Insolvency Law, which has been „stuck“ for several years, is a typical example of the gap between the evolution of business reality and the slowness of the legislative framework in Macedonia. The fact that the existing Bankruptcy Law, which was originally adopted in 2006 and has been amended in more than 50% of its original content, is a clear signal of a „legal patchwork“ that creates uncertainty instead of protection.

Below is a brief commentary and comparative analysis of the key points brought by the new proposed concept compared to the old system, a concept that can be named From „Liquidation“ to „Rehabilitation“. The main problem with the current system (the 2006 Law) is that in our country the word “bankruptcy” is synonym for the termination of the company, i.e. the closure of the business enterprise and the monetization of what little property is left, if any. Both economically and legally, the process begins too late, when the property has already been alienated/depreciated/ under pledge or mortgage, and the accounts have been blocked for years.

The new law, supported by the World Bank, attempts to change the paradigm: insolvency should not be the end, but a chance to reset. The most important element here is prevention — mechanisms that allow companies to react before a complete collapse occur.
 

Feature	Old Bankruptcy Law (2006)	New Insolvency Law (EU Directive)
Approach	Reactive (when damage has already been done).	Proactive (preventive restructuring frameworks)
Focus	Sale of assets and settlement of creditors.	Survival of the business and preservation of jobs.
Role of the courts	Long, cumbersome and expensive procedures..	Efficiency through shortened deadlines and digitalization.
Creditors	Often in conflict; difficult to reach consensus.	Facilitated bargaining power and mechanisms to “force” minority creditors if the plan is viable.
Entrepreneurial “second spirit”	Strong stigma and difficulties in starting a business again.	Provides a “fresh start” for honest entrepreneurs.

 

Why is the EU Restructuring and Insolvency Directive important?

The European rules, which the new law incorporates, insist on:

1) Early warning:
Digital tools that alert managers when a company is entering a risk zone.

2) Suspension of Enforcement procedures:
A temporary “moratorium” on debts while rescue negotiations are underway, which is crucial for liquidity.

3) Specialization:
Greater professionalization of bankruptcy trustees who should be more “rescue managers” and less “bankruptcy liquidators”.

The stalling of the new proposed Insolvency Law in the government or parliamentary labyrinths is a direct damage to the economy. While the EU uses hybrid models of financial restructuring, Macedonian judges and administrators are forced to work with a law that is a “legal Frankenstein” (due to the many amendments), to the extent that its content contains provisions that contradict each other, but are part of the same law and regulate the same procedure. Without the new law, any crisis (energy, market or inflationary) will result in the mass closure of companies, instead of their recovery through negotiations.

In addition, we will also list several specific proposals for reforms that experts and international organizations recommend to improve the bankruptcy (insolvency) system in Macedonia, in order to increase the efficiency, legal certainty and economic benefit of bankruptcy proceedings. In order to transform the bankruptcy system from a liquidator of companies into an efficient mechanism for economic restart, experts from the World Bank, the IMF and the European Commission (through Directive 2019/1023) recommend several pillars of reforms.

These proposals have already been incorporated into the new, yet-to-be-adopted Insolvency Law, and here are the key points:

1. Introduction of an “Early Warning” tool
International organizations insist on digital tools that will alert companies when their financial indicators (e.g., late taxes or similar debts) indicate future insolvency.
Objective: To encourage management to seek help while the company still has value, instead of waiting for a blocked account of 45 or, most often, many more days.

2. Preventive Restructuring (Pre-Bankruptcy)
This is the most important recommendation. Instead of immediately going into liquidation, a legal framework is proposed for negotiations with creditors under court supervision, but without completely stopping the business.
“Cram-down” mechanism: Enabling the court to confirm the restructuring plan even if some classes of creditors are against it, if the plan is fair and offers a better outcome than liquidation.

3. Shortening and digitalization of procedures
The World Bank regularly notes in its reports that bankruptcy procedures in Macedonia take too long (on average over 2 years, often longer and we have more that are already "historical") and are expensive.
Proposal: Full e-communication between the court, the trustee and the creditors. Electronic sale of property: Reducing the space for corruption and subjective influences through transparent e-auctions.

4. Fresh Start for entrepreneurs (Fresh Start)
Experts recommend destigmatizing bankruptcy. For honest entrepreneurs (individuals) whose businesses have failed, full debt write-off should be possible after a certain period (usually 3-5 years), so that they can re-engage in the economy.

 

Reform Area	Expected Effect	Economic Benefit
Length of the Procedure	Reduction of the period from 2+ years to under 12 months.	Faster return of capital to the economy.
Costs	Reduction of administrative and court fees.	More money to settle creditors.
Collection Rate	Increase in the percentage of debt recovered (from the current ~15-30% to a higher level).	Greater liquidity with banks and suppliers.
Jobs	Through restructuring instead of liquidation.	Reduction of social pressure and unemployment.

According to legal experts, the key obstacles to implementing the new Insolvency Law as proposed, as well as the biggest challenges (which are not only in the law but also in those who are supposed to implement it), are:

1) Court capacity: 
Greater specialization of judges and more staff exclusively for insolvency matters are needed.

2) Professionalization of Insolvency Officers:
Shifting from the role of “bankruptcy liquidator” to the role of “crisis manager”.

3) Resistance from banks:
Larger creditors often prefer direct enforcement collection to collective restructuring where they have to make concessions.


Conclusion: EU models show that the integration of preventive restructuring mechanisms, early intervention tools, legal protection for creditors and debtors, and flexible reorganization plans can significantly improve the efficiency of the insolvency system. These elements can serve as practical models for reforms in Macedonia.

 

This is one of the most significant reforms in Europe in recent years — the EU adopted Directive 2019/1023 in order to encourage member states to introduce mechanisms that allow companies to restructure before bankruptcy proceedings begin. The aim is to preserve the value of business entities and avoid their unnecessary liquidation. The implementation of EU Directive 2019/1023 is the pillar of the new Macedonian Insolvency Law that is awaiting adoption. This directive is not just a technical amendment as it sounds at first glance, but a radical change in the “philosophy” of debtor-creditor relations.

Instead of the system waiting for the company to become clinically dead, the Directive imposes mechanisms for action while there is still hope. Key pillars of the Directive in the Macedonian context are:

1. Preventive Restructuring Framework
This is the “purgatory” between normal operations and bankruptcy. A debtor facing probable insolvency gains access to a procedure where: Management retains control: Management remains in charge of managing the company (unlike a classic bankruptcy where a Bankruptcy Officer manages it). Protection from Enforcement Officers: A suspension of individual enforcement proceedings is introduced (usually for 3 months) to give breathing space and negotiations.

2. Cross-class Cram-down mechanism
This is a revolutionary concept for our law. If creditors are divided into classes/ranks (secured, unsecured, employees, etc.), the rescue/reorganization plan could be adopted even if one class or rank is against it. Condition: The court must confirm that the plan is in the best interest of all and that no creditor will be worse off than they would be in the event of liquidation (the so-called Best Interest of Creditors Test).

3. Protection of “New Financing”
The most important condition for the success of any plan in our constellation of relations: The directive requires the state to guarantee that if someone (a bank or investor) invests fresh capital in the company during the restructuring, that money will be protected. It must not be subject to rebuttal in a subsequent bankruptcy and should have priority in collection.

What does this mean in practice for Macedonian companies?

 

Element	Before the Directive (Old Model)	After the Directive (New Model)
Duties of the Managers	No clear rules for how long they can operate at a loss.	Obligation to take into account the interests of creditors at the first signs of crisis.
Second start	Long-term stigma and inability to start a new business.	Full write-off of debts for honest entrepreneurs after a maximum of 3 years.
Role of the court	Administrator who only confirms the liquidation.	Active supervisor of the economic rescue of the company.

Why is rapid implementation critical?

The Macedonian economy is predominantly made up of SMEs (Small and Medium Enterprises). They are the most vulnerable to blockages. Applying the Directive through the new law to these companies would also mean:

1) Fewer “phantom” companies:
Companies that do not produce anything, but only block the money of others.

2) Cheaper loans:
When banks have a predictable framework for collection or restructuring, the risk is reduced, which theoretically leads to lower interest rates.

3) Preservation of human capital:
Instead of workers going to the Employment Agency or, more often and alarmingly, abroad, they stay in a company that is being rehabilitated.

Key challenge: The Directive requires “specialized training” for judges. There is a fear in Macedonia that without serious education and commitment, judges will continue to use the line of least resistance – quick liquidation and deletion of the company.

 

These three countries are an excellent example of the evolution of insolvency systems, as they all went through a transition and had to harmonize their laws with strict EU directives. Each of them offers a specific lesson that would be useful for the Macedonian context.

1. Slovenia: Champion in preventive restructuring

Slovenia is considered one of the most successful in the region due to the introduction of mechanisms that allow for the rescue of large debtors before they enter formal bankruptcy. Significant elements of their system that would be maximally useful to implement in our country:

1) Compulsory settlement procedure:
Slovenian law allows for a very early phase of negotiations. The debtor can propose a financial restructuring plan while is still liquid, but foresees a problem.

2) The role of the SUT (Slovenian Auditing Institute):
They introduced standards for assessing the value of bankrupt companies, which increased the confidence of banks in the process.

3) Specialization:
The courts in Ljubljana and Maribor have highly specialized departments that work only on complex restructurings.


2. Croatia: Digitalization and “Pre-Bankruptcy Settlement”

Croatia made a revolution with the introduction of the Pre-Bankruptcy Settlement Institute, which was later fully integrated into their Bankruptcy Law. The most significant elements of their system that would be most useful to implement here are:

1) FINA (Financial Agency):
The key difference in Croatia is the role of FINA. This agency automatically initiates bankruptcy after 120 days of account blockage. This eliminates the appearance of "phantom companies" that have been in debt for years without legal closure.

2) E-auctions (E-dražbe):
The sale of property is carried out exclusively through a centralized online system of FINA. This has increased transparency and the price of the property sold, since anyone can bid from their computer.

3) Speed:
As a result of automation, Croatia has managed to drastically shorten the duration of procedures for small companies.


3. Romania: Efficiency and strong bankruptcy trustees

Romania is often cited as an example of a country that has managed to build an exceptionally aggressive and efficient collection and reorganization system. The most significant elements of their system that would be most useful to implement in our country are:

1) The profession of "Insolvency Practitioner":
In Romania, trustees are high-profile professionals (UNPIR - National Union) with extensive powers. They function as crisis managers who can replace the entire board of directors within 24 hours.

2) Prioritizing business continuity:
Romanian law (Law 85/2014) is designed to maximize the “going concern” of the business. Courts there are very willing to approve reorganization plans if there is even the slightest chance of the company surviving.

3) Specialized courts and shortened deadlines:
Romania has some of the fastest insolvency courts in Eastern Europe, where deadlines are often measured in days, not months.


Comparative review: What can Macedonia learn?
 

Country	Key lesson for us	Result
Slovenia	Early diagnosis of problems.	Rescue of large employers.
Croatia	Automation of bankruptcy through FINA.	Cleansing the economy of illiquid companies.
Romania	Powerful and professional managers.	High percentage of successfully reorganized companies.

Conclusion on the Macedonian Model

If the new law truly implements the above practices, the biggest challenge for Macedonia will be the resistance to automation/digitalization (as in Croatia) and the need for a courageous and dedicated court that will allow restructuring under the newly envisaged conditions and mechanisms, rather than the “safe” and easy liquidation.