Pre-Bankruptcy Proceedings - Account Unblocking and Business Continuity

Pre-bankruptcy proceedings are one of the most important legal mechanisms for entrepreneurs who have found themselves in financial difficulties but still have a realistic chance of business recovery. This is a legally regulated procedure that enables the debtor and creditors to reach an agreement on debt restructuring in order to avoid bankruptcy.
If conducted properly and in a timely manner, pre-bankruptcy proceedings (or pre-bankruptcy settlement, as it was previously called) enable a fresh start instead of business shutdown - and personal assumption of debt - in bankruptcy.
In this text, we explain in detail what pre-bankruptcy proceedings are, who can initiate them, what the entire process looks like, what the benefits and risks are, and when the right time is to make such a decision. The aim is to provide a clear, professional and practical guide for everyone seeking reliable information.

What Are Pre-Bankruptcy Proceedings?

Pre-bankruptcy proceedings are special court proceedings regulated by the Bankruptcy Act of the Republic of Croatia. The key prerequisite for initiation is an account blockade of up to 60 days or illiquidity. Unlike bankruptcy, the purpose of pre-bankruptcy proceedings is not liquidation of assets, but preservation of the business, jobs and the conditions for continued business activity. In other words, pre-bankruptcy proceedings enable:

write-off of part of the debt
grace period for payment of obligations
rescheduling of obligations
extension of payment deadlines
reduction of interest rates

The key difference compared with bankruptcy is that the entrepreneur continues to operate under a clearly defined restructuring plan that enables a moratorium, partial write-off and debt rescheduling.

Legal Conditions for Initiating Pre-Bankruptcy Proceedings

It is important to emphasise that pre-bankruptcy proceedings cannot be initiated after the 60th day of an account blockade.

When Are Pre-Bankruptcy Proceedings Initiated?

Pre-bankruptcy proceedings may be initiated when the debtor is:

unable to pay
facing imminent inability to pay, meaning it is clear that in the near future the debtor will not be able to meet obligations regularly
under an account blockade for up to 60 days

Who Can Initiate Pre-Bankruptcy Proceedings?

Pre-bankruptcy proceedings may be initiated by:

companies (d.o.o., d.d.)
craft businesses
other legal entities engaged in economic activity

The procedure cannot be initiated for natural persons.

What Pre-Bankruptcy Proceedings Look Like - Step by Step

1. Filing the Petition with the Court

The procedure begins by filing a petition to open pre-bankruptcy proceedings with the competent commercial court. The petition must include:

financial statements and their analysis
a list of assets and liabilities
a list of creditors
a restructuring plan with a projection of future operations
a detailed description of operational and financial restructuring measures

Professional preparation of documentation is critical because incomplete or unrealistic petitions often lead to rejection.

2. Opening of the Proceedings and Protection of the Debtor

The statutory deadline for opening pre-bankruptcy proceedings is 8 days from submission of the documentation to the court. Upon the court's decision opening the proceedings:

the company's transaction account is unblocked
enforcement actions and forced collection are suspended
the debtor gains "breathing space"

3. Registration of Claims and Hearing for Determination of Claims

Creditors register their claims within the prescribed deadline using the Fina form. This is followed by:

examination of claims
determination of which claims are admitted and which are disputed

This creates a realistic picture of the debtor's financial position.
The debtor (the company initiating pre-bankruptcy proceedings) may admit or dispute claims in order to determine precisely who votes and in what amount in the pre-bankruptcy settlement.
Two hearings are held in pre-bankruptcy proceedings - a hearing for determination of claims and a voting hearing.
The hearing for determination of claims is the central point of the pre-bankruptcy procedure. At this hearing, registered and disputed claims are discussed, evidence and arguments are presented, and the final table of determined and disputed claims is formed.
High-quality preparation for the hearing reduces the risk of litigation and delays, and increases the chances of timely voting and confirmation of the plan.
Maneo manages every step - from strategy planning and preparation of submissions to representation at the hearing - with a clear focus on the final result: a feasible restructuring plan, a sustainable settlement with creditors and long-term unblocking of the account.

4. Negotiations with Creditors

Negotiations with creditors are the foundation of pre-bankruptcy proceedings. These negotiations define the settlement terms that enter the restructuring plan: repayment dynamics, rescheduling, write-offs and security instruments. For the procedure to succeed, an agreement must be reached with the required majorities by creditor groups, while respecting the principle of equal treatment and realistic financial projections that enable sustainable continuation of business.
Maneo has specialised in creditor negotiations for 15 years. We have developed relationships with banks, ministries and a large number of corporate creditors, making negotiations faster and more effective. Our expertise includes effective restructuring of creditor groups, repayment simulations, preparation of the pre-bankruptcy settlement plan and coordinated communication with all participants.
The advantage of working with Maneo is that we combine the legal and financial aspects. We provide solutions that satisfy the necessary creditor groups and deliver measurable results - an agreed settlement with creditors and a successfully voted pre-bankruptcy plan.

5. Restructuring Plan and Voting Hearing

The restructuring plan is the core document of pre-bankruptcy proceedings. It defines:

the amount of debt write-off,
the length of the payment grace period,
new payment deadlines,
the method of creditor settlement,
measures for continuing business operations.

Creditors vote on the plan, and its acceptance requires the legally prescribed two-thirds majority.
Maneo prepares the voting structure, coordinates groups, ensures procedural correctness and compliance with deadlines, and steers the process toward a positive outcome. Our goal is: pre-bankruptcy proceedings that end with a confirmed plan, realistic implementation deadlines, stable operations and permanent unblocking of the account.
At the voting hearing, creditors vote within classified groups. Voting rights belong to creditors whose claims are affected by the plan and who registered their claims within the deadline. Creditors who did not register claims do not have voting rights, but the confirmed plan remains binding on them. For the plan to be accepted, two criteria must be met: a two-thirds majority by amount (votes in favour must reach at least 2/3 of the total claim amount) and a majority by number (more than 50% of creditors in each group must vote in favour). This model protects the principle of fairness and equal treatment within each group.
If the required majority is not achieved in a group, it is possible to return to negotiations and revise the plan in order to reach an acceptable settlement with creditors and secure a sustainable restructuring path.

6. Confirmation of the Plan and Completion of the Proceedings

If the plan is approved by vote:

the court confirms it
the proceedings are completed
the plan becomes binding on all creditors
the debtor continues operating under the new terms

The Role of Creditors in Pre-Bankruptcy Proceedings

Creditors play a central role in pre-bankruptcy proceedings. Without the active participation and support of the majority of creditors, the restructuring plan cannot succeed.
In accordance with the Bankruptcy Act, creditors are classified into groups based on the type and status of their claims, and within each group the principle of equal treatment applies - creditors in the same group are granted equal rights and proportional settlement.
This structure enables transparent negotiations and facilitates a solution that satisfies both secured and unsecured creditors.

Advantages of Pre-Bankruptcy Proceedings

avoiding bankruptcy and liquidation
unblocking the account
continuing business operations
preserving jobs
grace period for payment of obligations
partial debt write-off
suspension of enforcement actions

Risks and Common Mistakes

The most common mistake is believing that pre-bankruptcy is a solution in itself.
Without professional guidance and a clear strategy, the procedure can fail - even for companies with good potential.

Pre-Bankruptcy or Bankruptcy - How to Decide?

The key question entrepreneurs ask themselves is: are pre-bankruptcy proceedings the right solution, or is bankruptcy inevitable?

Pre-bankruptcy makes sense if:

the business model still has potential,
there is a market for the products or services,
the problems are primarily financial in nature.

If these conditions are not met, bankruptcy may be the fairer and healthier long-term solution.

The Role of Expert Advisory in Pre-Bankruptcy Proceedings

Pre-bankruptcy proceedings are not only a legal issue, but also a:

financial issue,
strategic issue,
operational issue.

It is therefore important to involve experts who understand:

the Bankruptcy Act,
tax implications,
negotiations with creditors,
preparation of realistic restructuring plans.

Maneo manages every step - from strategy planning and preparation of submissions to representation at the hearing - with a clear focus on the final result: a feasible restructuring plan, a sustainable settlement with creditors and long-term unblocking of the account.

Why Choose Maneo as Your Partner in Pre-Bankruptcy Proceedings?

Specialisation and experience: Maneo is a company specialised in pre-bankruptcy proceedings, which it has conducted for its clients for 15 years.
Comprehensive approach - legal and financial: Maneo offers an integrated solution, not partial advice.
Excellent negotiation skills: A major advantage of Maneo is its experience in negotiations with banks, the Tax Administration and suppliers, which is crucial for acceptance of the pre-bankruptcy plan.
Speed and operational efficiency: Pre-bankruptcy has strict deadlines, and Maneo is known for fast preparation of documentation.
Discretion and professional communication: In sensitive situations of financial difficulty, a discreet and professional approach toward the public, employees and partners is extremely important.
Availability and individual approach: For Maneo, clients are not numbers - each client is approached individually, and every client has a dedicated pre-bankruptcy adviser available for all questions.

Summary: Why Pre-Bankruptcy Proceedings Are an Important Tool

Pre-bankruptcy proceedings are not a sign of failure, but a tool for responsible crisis management. When initiated on time and with expert support, they can enable:

business stabilisation,
reduction of financial pressure,
a new, sustainable start.

If you are an entrepreneur facing financial challenges, it is important to react in a timely and informed manner. If you want to learn more about how pre-bankruptcy proceedings can help in your specific situation, contact Maneo's expert team for individual advisory support and a concrete offer.

Frequently Asked Questions about Pre-Bankruptcy Proceedings

Who pays salaries if the company is in pre-bankruptcy?

Salaries are paid by the employer as a priority obligation. Careful liquidity planning is required to ensure continuity of payments.

Who initiates pre-bankruptcy and bankruptcy?

The decision to initiate pre-bankruptcy proceedings is made exclusively by the debtor when the legal grounds arise, while bankruptcy may also be initiated by creditors.

Can creditors influence the opening of pre-bankruptcy proceedings?

The judge opens pre-bankruptcy proceedings based on correct documentation; creditors do not decide on the opening.

What happens if a creditor does not register a claim in pre-bankruptcy proceedings?

In that case, the creditor loses the right to vote on the restructuring plan, and its claims lose priority status. Registration is necessary for active participation in the proceedings.

Should a debtor enter pre-bankruptcy if it has several loans?

Pre-bankruptcy is justified if the business model still has potential and accumulated loans can be resolved through debt rescheduling.

Is it mandatory to register a claim in pre-bankruptcy proceedings?

Registration is mandatory for everyone who wants to participate and influence the final voting outcome.

What if a company in pre-bankruptcy proceedings does not fulfil its obligations toward creditors?

Such non-compliance most often results in suspension of the procedure. The objective is to prepare realistic plans to avoid this negative scenario.

How many copies are required for a claim registration in pre-bankruptcy proceedings?

The number of copies depends on the number of participants and the requirements of the competent court. Particular attention must be paid to technical correctness and delivery of documentation.

What if a debt under a pre-bankruptcy settlement is not paid on time?

The creditor may initiate enforcement because a confirmed settlement has the force of an enforceable instrument.

Does the Tax Administration need to register its claim in a pre-bankruptcy settlement?

Yes, the Tax Administration must register its claims like any other creditor within the prescribed deadline. Experience in negotiations with public authorities is crucial for aligning these obligations.

Can litigation be conducted in pre-bankruptcy proceedings?

Disputes may be conducted to determine contested claims, while standard enforcement actions for collection are prohibited.

Who is required to register claims in pre-bankruptcy proceedings?

All creditors (banks, suppliers, the state) who wish to exercise their rights and vote on the company's future. Coordinated communication with all creditor groups is required to secure the success of the plan.

Legal Framework and Relevant Sources

Pre-bankruptcy proceedings are regulated by:

the Bankruptcy Act of the Republic of Croatia,
court practice of commercial courts,
guidelines of the Ministry of Justice.

For interpretation of the law and its practical application, it is recommended to consult experienced professionals.