Excluding the NPLs held by special purpose vehicles that are established and owned by the parents of some foreign-owned banks in Montenegro.
The decline came largely as a result of “bulk sales” of bad loans.
Decision on Minimum Standards of the Credit Risk Management.
Decision on Minimum Standards for Bank Investment in Immovable Property and Fixed Assets.
Fiduciary transfer of ownership rights over immovable assets (a form of security based on title) was popular in the past as a way of securing loans. Nowadays banks prefer mortgages, in particular due to the improved enforcement procedures that were introduced by law some years ago.
LOR, article 308.
LOR, article 315.
LOR, article 347.
LOR, article 325.
LOR, article 318.
LOR, article 319.
LOR, article 324.
Such mortgage can be registered only when the property comes into existence (LOR, article 309).
LOR, article 310.
A claim is specific enough if the creditor and debtor, the legal ground and the maximum secured amount, are determined in the mortgage contract (LOR, article 315).
LOR, article 322.
LOR, article 326.
Information received at a meeting with the READ authorities.
LOR, article 335.
Although a number of creditors complain about the READ staff inconsistent interpretation of some law provisions governing the extra-judicial procedure, the same creditors also recognize that the MoF (which is the authority in charge of resolving the appeals against the READ acts) has issued appropriate decisions to eliminate such inconsistencies. These have now diminished significantly.
LOR, article 336, and LESC, articles 17 and 18, 3).
At least 15 days before the date of sale, the notice of sale shall also be posted in a visible place on the property to be sold (LOR, article 338).
LOR, article 339.
LOR, article 343.
LOR, article 342.
LESC, article 173.
LOR, article 342.
LOR, article 345.
LESC, articles 183 and 184.
LOR, article 347; LoB, article 53.
Some lenders have mentioned a cultural issue that should be considered where realizing residential properties in small towns: nobody would bid for purchasing a financially distressed neighbor’s home.
LOR, article 269.
LOR, article 295.
LOR, article 270.
LOR, article 271.
LOR, article 274.
LOR, article 284.
LOR, article 288.
LOR, article 289. Market price means the price at which the same or similar things are regularly sold under the usual circumstances at the place and at the time of the sale of collateral.
LOR, article 291.
LST, article 3.
LST, article 4.
LST, article 6.
LST, article 15.
The pledgor must have consented to the registration of the pledge – the law provides that the pledgor is deemed to have authorized the pledgee to register the statement by signing a pledge agreement.
The effective time and date of the registration shall be the time and date the notification statement was presented to the Registration Office (LST, article 15).
(1) EUR 20 for a transaction of up to EUR 10,000; (2) EUR 50 if the transaction amount is EUR 10,000 – 200,000; and, (3) EUR 100 for transactions above EUR 200,000.
Information provided by the Director of the STR.
A pledge agreement under which a pledge has been perfected shall have effect of an executive title (LST, article 20).
Upon such a showing by the pledgee, the burden shall be upon the pledgor to prove otherwise (LST, article 20).
The method, manner, time, place, and terms of the disposition must be “commercially reasonable” (LST, article 20).
LESC, articles 17 and 18, 5) and LST, article 20.
LESC, Title II.
LESC, article 18.
LESC, article 25.
LESC, article 40.
LESC, article 41.
LESC, article 26.
LESC, article 27.
LESC, article 47.
For example, a complaint against a writ of enforcement adopted on the basis of authentic document may be filed if: (1) the document on the basis of which the enforcement is ordered is not an authentic one under law; (2) the claim referred to in authentic document has not occurred; (3) untrue content is included in the authentic document; (4) the obligation referred to in the authentic document has not matured; and (5) the obligation has been fulfilled or has ceased in another manner (LESC, article 58). LESC, article 50 specifies the reasons for complaint against enforceable documents.
LESC, articles 50 and 58.
LESC, articles 49 and 60.
LESC, article 48.
According to recent amendments to the LESC.
An exhaustive evaluation of the bankruptcy system against international standards would require conducting an Insolvency and Creditor-debtor Rights Report on the Observance of Standards and Codes (ICR ROSC).
LoB, article 11.
LoB, article 14.
LoB, article 53, 2) establishes that secured creditors shall be entitled to satisfaction from the proceeds of the sale of the property that they acquired security on. After that, unsecured creditors will collect in the order of satisfaction contemplated in article 54 and according to the seniority of classes established by article 55. The exercise of security rights, however, may be temporarily postponed in the cases referred to in Articles 64 and 65 of the LoB.
Bankruptcy creditor is a person who on the day of initiation of bankruptcy proceedings has an unsecured claim against the bankrupt debtor (LoB, article 50).
LoB, article 53, 2).
LoB, article 54.
LoB, article 55.
LoB, article 64.
LoB, article 65.
LoB, article 44.
LoB, article 53, 6).
LoB, articles 159 – 177.
Anecdotal evidence gathered during the field mission.
LoB, articles 142 and 143.
LCB contemplates special rules applicable in bankruptcy liquidation, specifying in article 51, 4) that, at the request of the consumer, a real estate he needs for housing purposes may not be sold: 1) if he does not own another real estate; 2) if he does not have another form of accommodation available, nor is he able to get one; or, 3) if the real estate in question is commensurate with his needs and with the needs of his immediate family. LCB does not contemplate appropriate safeguards to protect security rights created over a bankrupt consumer’s house.
A creditor that has entered into the financial restructuring agreement with the debtor, purchasing the debtor’s claims or purchasing the debtor’s debts to other creditors, shall be exempt from the payment of value-added tax for that purchase of claims and/or debts. Also, when establishing the taxable income of a creditor that has entered into a financial restructuring agreement, the debt reduction granted under such agreement shall be recognized as a deductible loss (LVR, article 35). From the debtor’s perspective, article 36 of the LVR establishes that upon request of the debtor that has entered into the financial restructuring agreement, the competent authority responsible for tax collection shall grant to such a debtor repayment of the matured tax debt in instalments, as follows: (i) tax debt of up to EUR 100,000 in 6 monthly instalments; (ii) tax debt exceeding EUR 100,000 in 12 monthly instalments. If the payment of the matured tax debt has been subject to enforced collection, the enforcement procedure shall be discontinued.
According to LVR, article 37, a bank may keep the debtor’s loan that is the subject of the concluded standstill agreement in the same classification category it was classified before the entry into force of the standstill agreement, but no longer than for two months. Otherwise, during the asset classification and the calculation of potential loss provisions, banks may treat the debtor’s loan restructured under LVR system as a new loan.
LVR, article 38 specifies that the debtor-creditor relations that are the subject of a financial restructuring agreement may not be challenged in bankruptcy proceedings initiated against the debtor. LoB establishes a comprehensive regime for avoiding numerous transactions performed by the bankrupt debtor (LoB, articles 122 to 132). Legal transactions and other legal actions entered into or taken before initiating the bankruptcy proceedings, that are interfering with equal satisfaction of bankruptcy creditors or damaging the creditors, as well as legal transactions and other legal actions putting some creditors in a more favorable position over the others, may be voided by the bankruptcy administrator, on behalf of the bankruptcy debtor, and by the creditors, in accordance with provisions of the LoB (LoB, article 122, 1). In the context of voidance, the failure to enter into a legal transaction or failure to take an action shall be equal to the legal transaction or legal action (LoB, article 122, 2). However, no legal transactions entered into or actions taken may be voided if undertaken to: (i) execute an approved reorganization plan of the bankruptcy debtor undertaken after initiating the bankruptcy proceedings; and (ii) continue business operations, undertaken after initiating the bankruptcy proceedings (LoB, article 129, 1).
Information provided at a mission meeting with the MoF authorities.
LPEO regulates in detail the PEOs license requirements (including exams), as well as the control and supervision of these professionals. It also contemplates a Chamber of PEOs and a Disciplinary Commission, but the MoJ adequately keeps significant supervisory functions with respect to the behavior and performance of PEOs.
As regards enforcement, now the Courts keep competence only in cases aimed at: (i) restoring an employee’s employment; (ii) implement a child’s custody; and, (iii) forcing a debtor to perform an action that can only be personally performed by him/her.
Information provided by Podgorica Basic Court and MoJ authorities.
Information provided at the meeting with the Commercial Court authorities.
Anecdotal evidence gathered over the mission meetings with several stakeholders.