By Alba Legal – Your Trusted Partner in Albanian Business Law.
Bankruptcy and corporate restructuring are critical legal processes for businesses facing financial distress in Albania. Whether a company seeks to reorganize its debts or must undergo liquidation, understanding the legal framework is essential. At Alba Legal Albanian Law Firm, we guide clients through Albania’s bankruptcy and restructuring procedures, ensuring compliance and protecting stakeholders’ rights.
This article outlines the key laws, procedures, and real-world cases related to bankruptcy and restructuring in Albania.
1. Legal Framework for Bankruptcy and Restructuring in Albania
Albania’s bankruptcy and restructuring laws are primarily governed by:
– Law No. 8901 “On Bankruptcy” (2002, amended in 2016) – Regulates insolvency proceedings, including liquidation and reorganization.
– Law No. 110/2018 “On Insolvency of Banks and Financial Institutions” – Specific rules for financial sector insolvencies.
– Civil Procedure Code – Governs court procedures in bankruptcy cases.
Key Features of Albanian Bankruptcy Law
– Two Main Procedures:
1. Bankruptcy Liquidation – The company’s assets are sold to repay creditors.
2. Restructuring (Reorganization) – The debtor negotiates with creditors to modify debt terms and continue operations.
– Automatic Stay – Once proceedings begin, creditors cannot enforce claims individually.
– Priority of Claims – Secured creditors (e.g., banks) are paid first, followed by unsecured creditors (e.g., suppliers).
– Role of Bankruptcy Administrators – Court-appointed experts oversee the process.
2. Bankruptcy Procedure in Albania
Step 1: Filing for Bankruptcy
– The debtor or creditors can file a bankruptcy petition at the Albanian Commercial Court.
– The petition must include financial statements, a list of creditors, and proof of insolvency (inability to pay debts).
Step 2: Court Review & Declaration of Bankruptcy
– The court examines the petition and, if insolvency is confirmed, declares bankruptcy.
– An administrator (trustee) is appointed to manage the process.
Step 3: Creditors’ Meeting & Claims Verification
– Creditors submit claims within 30 days of the bankruptcy declaration.
– The administrator verifies claims and prepares a repayment plan.
Step 4: Liquidation or Restructuring
– Liquidation: Assets are sold, and proceeds are distributed to creditors.
– Restructuring: If creditors agree, the debtor may continue operations under a court-approved repayment plan.
Step 5: Conclusion of Proceedings
– After asset distribution or restructuring completion, the court closes the case.
– The debtor is either dissolved (liquidation) or exits bankruptcy (restructuring).
3. Corporate Restructuring in Albania
Restructuring allows financially troubled companies to avoid liquidation by renegotiating debts. The process includes:
Debt rescheduling (extended payment terms).
Debt-for-equity swaps (creditors become shareholders).
Partial debt forgiveness.
Key Requirements for Restructuring
– Approval by majority of creditors (by value).
– Court confirmation of the restructuring plan.
– Supervision by a bankruptcy administrator.
4. Notable Bankruptcy and Restructuring Cases in Albania
Case 1: Bankruptcy of a Construction Company (2022)
– A major construction firm filed for bankruptcy after failing to repay bank loans.
– The court ordered liquidation, with secured creditors recovering 60% of claims.
– Unsecured creditors (suppliers, employees) received partial payments.
Case 2: Successful Restructuring of a Retail Chain (2021)
– A retail company negotiated a 5-year debt restructuring plan with creditors.
– The court approved reduced monthly payments, allowing the business to survive.
Case 3: Bank Insolvency under Law No. 110/2018
– A small bank was declared insolvent and placed under special administration.
– Depositors were protected, and the bank’s assets were sold to another financial institution.
5. How Alba Legal Can Assist
Our expertise includes
Bankruptcy filings & creditor negotiations.
Restructuring plan preparation & court representation.
Defending creditors’ rights in insolvency proceedings.
Contact us, for legal assistance with bankruptcy or restructuring in Albania. Disclaimer: This article is for informational purposes only and does not constitute legal advice.
