Government Drafting Law to Provide Aid to Systemically Important Companies

Agrokor might be the first company to use the new law.

Deputy Prime Minister and Economy Minister Martina Dalić announced on Friday afternoon that the government was preparing legislative and institutional framework in order to help systemically important companies which cannot repay their debts, with the aim of preserving the stability of Croatian economy, reports Index.hr on March 24, 2017.

Dalić reiterated that the responsibility for finding ways, models and methods to solve the current business problems of Agrokor, Croatia’s largest privately-owned company, rested primarily on company’s management and owners, due to 40,000 employees in Croatia and about 5,000 companies which do business with Agrokor.

“Prompted by the events and news that we follow with regards to Agrokor, but not limited only to Agrokor, and bearing in mind that in Croatia there are a number of other companies that may potentially represent a risk to the entire economic system, the government is intensively working on drafting the legislative and institutional framework designed to protect the stability of the entire Croatian economy, precisely in situations when systemically important companies face difficulties”, she said, adding that experiences of other countries are being used as a guidance.

The law being drafted could be potentially applied to any company in Croatia with more than 8,000 employees, either individually or as a group, and with more than a billion euros in debts which can no longer be repaid. According to Dalić, the legislative proposal would create a procedure for swift transformation of such companies, with just and fair treatment of all existing creditors.

She noted that the law was not being prepared specifically for Agrokor, or for its majority owner Ivica Todorić, but, if the situation in Agrokor required it, the law could be applied to the company. “The draft law is already in a very advanced stage. I expect that it will be submitted to the legislative procedure very quickly”, said Dalić, adding that this could happen as early as next week.

The goal is to strengthen the institutional framework and create conditions for strengthening the systemically important companies which find themselves in business problems that they cannot solve on the own. Dalić said that her personal wish was that the law is never implemented. “However, it is the duty of the government to take care of the risks that can have consequences for the overall economy”, she noted.

Dalić emphasized that the draft does not envision the possibility that the state could become owner of any companies covered by the law. Asked if the announcement was actually an attempt to calm down Agrokor’s suppliers, which can no longer wait for a solution, Dalić said that the government had to work to ensure stability.

Dalić was also asked whether government representatives would attend a meeting of suppliers and Agrokor early next week. She said that the suppliers had informed her about the meeting. “Business relationship between Agrokor and its suppliers is primarily their business relationship and therefore government representatives will not participate in the meeting”, concluded Dalić.

 

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