On 27.10.2016, the Albanian parliament approved the law
no. 110/2016, "On bankruptcy". The law published with
Official Gazette no. 226, dated 22 November 2016 will enter into
force six month after publication date.
The law aiming at discharging the debtor from its obligations
through the bankruptcy procedure defines the latter as natural or
legal person against whom is filed, or has filed, a request for
commencement of bankruptcy procedure.
According to the provisions of law, bankruptcy procedures cannot
be initiated against public entities, being governed by the
administrative law. On the other hand, state owned companies and
public companies do follow under the provisions of the law.
The law provides for important novelties and new entry agencies
such as the National Bankruptcy Agency defined as the competent
state authority entrusted with the supervision, training and
licensing of the administrators.
Another important novelty is the provision of article 144 of the
law stipulating the creditors' priority rank.
As per the said article, the raking of creditors is the
Secured creditors up to the value of
Preferred creditors (i.e. employees
claims for dismissal, work and health matters, alimony, tax
obligations, etc.) up to a certain amount and subject to certain
Unsecured creditors' claims;
Final creditors (i.e. penalties as
per Civil Code, Criminal Code, penalties for late payments computed
on the creditors' claims before initiation of the bankruptcy
procedure, claims that both creditor and debtor agree to classify
as final ones, etc.);
The aforementioned article 144 makes obsolete the provisions of
article 605 of the Civil Code 'Priority Ranking", which
served as the benchmark list of creditors up to the coming into
existence of this law.
Another novelty that will raise discussions is the provision
under article 73 of the law providing for the invalidity of any
contract clause stipulating that the contract will immediately
terminated should the bankruptcy procedures of any of the parties
As for the procedure, key roles, apart the debtor and creditors,
important roles are vested in the administrator (bankruptcy,
supervisory and temporary), creditors' committee, etc.
The bankruptcy procedure is administered by the bankruptcy court
(sole judge of the commercial section near each district court) and
its decisions can be appealed within 15 days at the Appeal
The bankruptcy procedure can end up with the reorganization of
the debtor or liquidations of the insolvency estate. With regard,
the re-organization the latter can be an ordinary re-organization
or fast-forward one.
Both the options will conclude with the liquidation of the
assets resulting from the re-organization process.
The Council of Ministers has the duty to approve the secondary
legislation within 6 months from the entry into force of the law.
As such, taking into account the 6 months interval from the
publishing date with the Official Gazette for the entry into force,
it is expected that the law will be operative in the beginning of
the next year.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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