Who ones fails, cannot privatize again - What will new laws on privatization and bankruptcy bring?

The restructuring of all companies will end June 30, 2014 while the overall situation will end by the end of next year and will be carried out in a cleaner and more rightful manner, the Minister of Economy, of Serbia, Sasa Radulovic, said.

- Up till now, there has been corruption during the implementation of the privatization processes and the Agency for Privatization was like the “Swiss cheese: through which political and other interest were passing – Radulovic said at the discussion upon presentation of the Draft of the Law on privatization and the Draft of the changes to the Law on bankruptcy.

At the moment, there are 153 companies in Serbia undergoing restructuring proves, with more than 50.000 employees and 419 more have been in “different privatization stages”.

- Investors are already announcing and we will try to find an adequate solution for every company - Radulovic stressed out and pointed out that buyers cannot come from off shore zones or other regions with preferential tax treatment.

Neither those which participated in unsuccessful or terminated privatizations nor their liable entities, will be allowed to appear as buyers.

Companies which do not succeed in finding an investor and cannot live on their own, will end either in liquidation or bankruptcy, depending on their property and debts and those which can continue their operations without the support of the state will operate as companies, Radulovic said.

He mentioned that during the insight into preliminary id cards, it was concluded that majority of companies value of debts exceeds value of property so there is no longer state-owned capital but only trustees.

He explained the state will tru to sell 100% capital and if that is not possible, “more flexible” models are available: capital increase as well as an option to acquire 5% capital and obtain a managerial contract with a profit share.

- As of the day the Law becomes effective, all units of this company halt their work and a privatization receiver is appointed who shall manage the company and discusses with investors – Radulovic said.

According to him, logical and the first choice for the trustee in bankruptcy will be the current manager of any entity apart from those estimated as unable to manage privatization. They will be replaced.

Radulovic said he openly invites all parties interested in that job, mentioning that privatization trustees will be responsible and guarantee with their personal property for the damage caused during the privatization process.

The Ministry of Economy will make a decision on privatization and upon the proposal of the Agency for Privatization, while the Government will decide on what to do with companies of special interest for the state.

A buyer of capital cannot be either local legal entity operating in state-owned ownership structure nor a physical entity prove to be irresponsible when it comes to previously privatized companies, has benn convicted or at court for criminal actions.

Upon the proposal of the Ministry of Economy, changes of the Law on bankruptcy will enable automatic bankruptcy and trustees in bankruptcy will have wider responsibilities.

The Agency for licensing trustees in bankruptcy will be cancelled.

Changes for the first time regulate bankruptcy of connected companies so that in them one trustee in bankruptcy is appointed, bankruptcy mass and a reorganization plan is set up, rules of equal settling of trustees is applied on all trustees of connected companies and mutual debts of connected companies are cancelled.

Provision of terms for payment of minimal wages with an interest rate and pension and the disables insurance for the staff and former staff of bankrupt companies was planned.

Minimal wages have been listed as the first payment item while the difference between minimal and full salary is listed as the second.

The new method of property sales was planned to be carried out through collection of written proposals followed by public competition or direct deal in line with the national standard for bankruptcy mass management.

KNEZEVIC: Everything that is not implied, implies

(Milan Knezevic)

Vice President of the Association of small and medium-sized enterprises, Milan Knezevic, was among the first who criticized proposed legal solutions. He estimated that, as the things are going on, July 1, the state will become an owner of 90% of the companies which have not been privatized and almost of all the companies undergoing restructuring.

- This does not solve the problem but it becomes more complex because the end of July should see salaries and all commitments to those companies- Knezevic said.

According to him, these companies will not find buyers and they will still be a burden to the budget unless liquidated through bankruptcy procedure.

As Knezevic says, these drafts of the the law “implies everything which is not implied”.

He cannot understand the clause that a purchase of 5% of capital runs into a hundred percent management because, as he added, “the only postulate" of management is that it is proportional to the capital stake.

When it comes to privatization receiver, Knezevic pointed out it is useless that he guarantees with his or her property.

- Somebody may appear to be a genius but is a subtenant and cannot be a candidate for a privatization receiver and somebody who has a property, for instance, a used “jugo” car, can – Knezevic said, concluding that no law can permit these kinds of improvisations.

Knezevic asked whether that means that somebody should guarantee with his or her used car for a damage in, for example, Resavica which would be measured in hundreds million euros.

(Sasa Radulovic)

The Minister of Economy said that newly- appointed director for the Agency for Privatization, Vida Uzelac, is a top state officer who has been fighting against corruption for years and that he himself suggested her for the position.

Answering the question on the headlines of some media on connection of Vida Uzelac and some tycoons, Radulovic says it is not true and that he knows her personally.

According to him, the same as the Ministry of Economy “touched a beehive” during reforms, Vida Uzelac has been doing it for years so they who are directly hit with her good work “make a fuss about it”.

- A number of things are set up, connecting her with different people… She is my proposal for the Agency for Privatization, I know her personally and I think we do not have many officers of that quality who can perform this difficult task entrusted to her – the Minister said.

J.DJ.