A Zagreb Commercial Court judge has decided to suspend the ongoing pre-bankruptcy settlement proceedings for Dalekovod, a Croatian provider of services in power system, road, railway and telecommunications infrastructure, in order to ask the Constitutional Court to assess the constitutionality of some segments of the legislation on financial operations and pre-bankurptcy settlements, which is why a hearing in the proceedings for Dalekovod, scheduled for Tuesday, 23 July, has been cancelled.
The court reported on Monday that the judge Mislav Kolakusic had decided to suspend the ongoing proceedings in the case of Dalekovod as he believes that some articles of the said legislation, passed in January 2011, and subsequent amendments, passed earlier this year, are not in compliance with the constitution.
The first hearing in the case of Dalekovod, that has around 900 creditors, was held on 5 February. Dalekovod was the first large company to begin with pre-bankruptcy proceedings according to new legislation. Dalekovod CEO, Goran Brajdic explained that the company had fallen into difficulties due to a fall in revenue from the energy and building sectors, high debts and poor management. According to Assistant Finance Minister Branko Segon, Dalekovod has registered debts amounting to HRK 1.56 billion while off-balance records and guarantees that may be activated could raise that debt to HRK 2.34 billion.
The judge's decision to stay proceedings, which is likely to have large implications not only on Dalekovod but also on other similar cases, angered Finance Minister Slavko Linic who accused the judge of indolence.
"I am personally outraged, much money has been spent so far. The Finance Ministry has engaged over 500 people, we have lawyers, consultants, analysts and so much hard work invested over the seven last months, and now a judge is discarding all that as he finds it boring for him to study the case," Linic said.
The minister also claims that such a decision from the commercial court also reflected legal insecurity in the country.
"We have judges that have accepted proposed pre-bankruptcy settlements, and now we have a judge who finds the law to be contrary to the constitution," Linic told the press in his ministry on Monday.
Linic believes that the judge could have asked the Constitutional Court to assess the relevant law earlier rather than waiting for months to pass since the adoption of the legislation.
He called on the judge to explain "why he does not bother about a pre-bankruptcy settlement in this case".
Later on Monday, the Dalekovod management said in a press release that it was surprised by the court's decision.
The company is going to take all legal steps at its disposal to respond to the latest developments.
The management describes the judge's latest decision as incomprehensible having in mind the court has been dealing with the case since 26 April 2013.
We have hoped that we will bring to a conclusion the efforts made for months, regarding the proceedings, the management said adding that finalisation of the proceedings is important for the recovery of this ailing company.
