Montenegro’s draft amendments to its bankruptcy law would let companies pursue preventive reorganisation before insolvency and give entrepreneurs a route to discharge eligible debts within three years of approval of a repayment plan. The draft, dated 27 October 2026, proposes changes to the rules on restructuring, insolvency and debt relief, but says its most significant new provisions would apply only after Montenegro joins the European Union.
The proposal aims to identify companies’ financial difficulties before they meet the conditions for bankruptcy proceedings and to help viable businesses that are struggling to meet their obligations recover. It introduces a court process in which a debtor could agree a financial recovery plan with creditors and avoid bankruptcy. The draft says the reforms would further align Montenegro’s legislation with European rules on restructuring, insolvency and discharge of debt.
Early restructuring for companies
A debtor could seek preventive reorganisation if, without appropriate measures, it is likely to become unable to pay its debts or over-indebted in the next 12 months. The assessment would take account of the debtor’s financial position, the structure and maturity of its liabilities and its prospects for continuing operations. The debtor would file a request with the court, supported by financial statements, information on assets and liabilities, and a list of creditors.
The court would decide on a properly filed application within 30 days, except in cases specified by law. If the debtor did not submit a preventive reorganisation plan with its initial application, it would have up to 60 days from the opening of proceedings to file one. Starting the process would not automatically strip the debtor of control: it would retain management of its assets and ordinary business operations.
That control would have limits. The debtor would need prior approval from a trustee or the court for certain significant transactions, including selling real estate, taking out a loan or giving guarantees. On a reasoned request from the debtor, the court could also temporarily suspend individual enforcement and recovery proceedings to give the parties room to negotiate a recovery plan.
The suspension could initially last up to four months and could be extended if negotiations were progressing, but the total period, including extensions, could not exceed 12 months. It could apply to all creditors or only specified creditors and categories. Creditors covered by the court’s order could not start or continue compulsory recovery proceedings for the claims covered by the suspension.
The court could lift the suspension if it no longer helped negotiations, unfairly threatened creditors’ rights or the debtor acted against their interests. Claims by current and former employees arising from employment would be excluded. A plan could include financial and operational recovery measures, including new financing, changes to repayment dates and other restructuring steps.
The plan’s standard implementation period could be no longer than five years, with specified exceptions for repayment of credit, loans and other financial obligations. Creditors would vote in classes, and a plan would pass in a class if it received support from creditors holding a simple majority of the total value of claims in that class. Under strictly defined conditions, the court could confirm a plan despite rejection by some classes, provided their legitimate interests were protected.
The full court process would generally be limited to 12 months, although a specified period for appeals would not count towards that limit. The proposal therefore sets time limits for filing a plan, negotiating a stay and completing proceedings, while leaving the debtor in charge of ordinary operations subject to safeguards for major transactions.
Debt relief and other proposed changes
For entrepreneurs whose businesses enter bankruptcy, the draft provides for possible discharge of eligible remaining business and personal debts after they complete the prescribed process and perform a repayment plan. Under that plan, an entrepreneur would commit the portion of future income that can be subject to enforcement to paying creditors. The plan could run for no more than three years from the date the court confirms it.
If the entrepreneur meets the plan’s obligations, debts eligible for discharge could be written off no later than the end of those three years. The court would decide on discharge on its own initiative, without a separate application from the entrepreneur, except in cases specified by law. The proposal also says discharge could be refused, limited or revoked if an entrepreneur acted dishonestly towards creditors, concealed assets or income, or materially breached the repayment plan.
Some obligations would remain outside the discharge. These include statutory maintenance obligations, certain claims for damage arising from death or harm to health, claims resulting from criminal offences, fines and obligations incurred after bankruptcy proceedings opened. Discharge would not affect secured creditors’ rights to the portion of their claims covered by the value of the collateral.
The draft would generally cap a ban on an entrepreneur conducting business, imposed in connection with the opening of bankruptcy proceedings, at three years. A ban could be extended if the cause of bankruptcy involved fraud, gross negligence or a breach of the entrepreneur’s legal obligations. The proposed limits are intended to allow entrepreneurs to recover economically and return to business after failure while protecting creditors’ rights.
Other changes cover creditor representation and bankruptcy practitioners. A creditors’ committee would have to be formed when at least three creditors met the legal membership requirements, subject to specified exceptions. If creditors did not form one, the bankruptcy judge could, under prescribed conditions, appoint three creditors with the largest established unsecured claims without seeking their consent.
The draft also proposes changes to licensing bankruptcy administrators, including requiring a knowledge test to be organised at least once a year. It would raise the advance payment for bankruptcy proceeding costs under Article 60 of the law from 5,000 to 7,000 euros.
The Commercial Court would maintain a free public electronic register of bankruptcy proceedings on its website. The register would include basic debtor information, opening and closing dates, proceeding types, bankruptcy administrators and deadlines for filing claims. After Montenegro joins the European Union, it would be linked to corresponding registers in member states through the European e-Justice Portal.
Electronic filing would be available for applications, claims, reorganisation plans, appeals and other submissions, and creditors could vote electronically. The draft says the law would enter into force on the eighth day after publication in the Official Gazette of Montenegro, while its most significant new measures would begin to apply only from the date of Montenegro’s accession to the European Union.
