What you should know about the enforcement?

The last stop of uncollected receivables – enforcement proceeding

You have sold goods, performed a service or performed any obligation on any basis of which the other party has become obliged to pay you. But it didn’t. Nor does it intend to.

In addition to being nervous, in more drastic situations you grab your head and worry about the liquidity of your own business and ask yourself the question – could everything have been avoided?

It probably could, but it is equally likely that it couldn’t. The real question is, have you taken all the steps to be ready for such a potential scenario?

Guided by business plans and set goals, and for the purpose of making a profit, many companies do not choose (and at the very beginning of their business, they are usually not in a position to choose) other entities with which they will achieve business cooperation. However, risk management will bring you much-needed security and certainty of your business, and thus business success.

What can you do in the first place?

– Check the creditworthiness of the business entity with which you intend to establish cooperation.

– Check his entire property to the extent available to you.

– Check other available data, such as current accounts of the company through the website of the National Bank of Serbia, as well as whether they are blocked (or have been blocked) on any basis.

– Issue a complete invoice for your services.

– Conclude the contract in writing and contract the appropriate collateral.

– In general, treat your own business with a high degree of attention.

Taking the above steps cannot spare you the possibility of someone not paying you, but you will have some kind of ground under your feet in the occasion of the “earthquake” and you will not risk being thrown to your knees by one turbulence, which are so common in the business world.

What are your next steps?

Depending on the odds of collection and the amount of the claim, you can initiate the collection of your claim in court or out of court. This decision is subject to your own assessment. In the following text, we bring you an overview of the key points of the court – executive procedure, its main characteristics and your possibilities in it.

Initiation of enforcement proceedings

Enforcement procedure is initiated by a proposal for enforcement before the court of actual and local jurisdiction, and after the decision on enforcement is made, further enforcement procedure is conducted before the Public Executor.

The Law on Enforcement and Security (“Official Gazette of the RS”, No. 106/2015, 106/2016 – authentic interpretation, 113/2017 – authentic interpretation and 54/2019 “the Law“) stipulates that a proposal for enforcement may be submitted to the basis of an executive and authentic document, with the submission of an executive or authentic statement in the original or a certified transcript. In addition, the proposal for execution must, at the choice of the creditor, state the Public Executor who will carry out the execution, as well as the subject and means of execution.

Enforcement documents are:

1) executive court decision and court settlement which are based on giving, doing, not doing or suffering;

2) an executive decision rendered in a misdemeanor or administrative procedure and an administrative settlement stipulating a pecuniary obligation, unless otherwise determined by a special law;

3) excerpt from the Pledge Register and excerpt from the Financial Leasing Register;

4) mortgage agreement and pledge statement;

5) a reorganization plan in the bankruptcy procedure, the adoption of which was confirmed by a court decision;

6) notarial documents that have the force of an executive document;

7) an agreement on resolving a dispute through mediation, which meets the conditions determined by the law governing mediation in resolving disputes;

8) the decision of the Constitutional Court by which the request of the submitter of the constitutional complaint for compensation of damages was adopted;

9) a document determined by the Law or another law as an executive document.

Mortgage agreement and pledge statement are executive documents if they are concluded, ie given in the form determined by the law governing the mortgage, if they contain provisions that it provides and if they are registered in the real estate cadastre as an executive out-of-court mortgage.

Based on the enforcement documents referred to in items 3 and 4, enforcement may be carried out only on the subject of the lien, while in other cases the subject of enforcement is determined by the proposal for enforcement.

On the other hand, authentic documents are:

1) promissory note and check of a domestic or foreign person, with a protest if it is necessary for establishing a claim;

2) an excerpt from the Central Securities Depository on the account of the legal holder of bonds or money market instruments (treasury, treasury and commercial papers) and a decision on their issuance;

3) account of a domestic or foreign person, with a delivery note or other written proof that the executive debtor has been informed of his obligation;

4) excerpt from the business books on performed utility or related services;

5) calculation or excerpt from the business books for claiming the fee for the public media service;

6) public document that creates an enforceable financial obligation;

7) bank guarantee;

8) letter of credit;

9) a certified statement of the executive debtor authorizing the bank to transfer funds from his account to the account of the executive creditor;

10) calculation of interest with proof of the basis of maturity and the amount of receivables;

11) temporary or completed situation on performed construction works;

12) calculation of attorneys’ fees and reimbursements.

A credible document is eligible for a decision on enforcement if it contains data on the enforcement creditor and the enforcement debtor and the subject, type, scope and maturity of the enforcement debtor’s obligation.

If the maturity of the obligation cannot be determined from a credible document, the executive creditor is obliged to enclose with the credible document written proof that he has left the executive debtor a subsequent deadline to fulfill the obligation.

What is the difference between an executive and a credible document?

The enforcement procedure according to the Enforcement Decision issued on the basis of the enforcement document begins to be conducted before the Enforcement Decision becomes final (therefore, immediately), with the exception that real estate or movables on which the monetary claim is settled cannot be sold before the Enforcement Decision becomes final.

On the other hand, the execution of the Decision on execution made on the basis of an authentic document is carried out after its finality, except when it is made on the basis of a bill of exchange.

Subject and means of execution

Means of execution are actions by which the claim of the executive creditor is settled.

The means of execution for the purpose of settling the monetary claim are: sale of the debtor’s real estate, sale of the debtor’s movables, joint sale of real estate and movables, transfer of the debtor’s monetary claim, transfer of the executive debtor’s salary, transfer of funds from the debtor’s bank account savings deposit or current account of the enforcement debtor, sale of financial instruments of the enforcement debtor, sale of shares of the enforcement debtor in economic entities and transfer of claims of the enforcement debtor to hand over or deliver movables or transfer real estate and realization of other property rights of the enforcement debtor.

The objects of enforcement are the things and rights of the enforcement debtor on which the enforcement is carried out.

Items outside legal traffic, facilities, weapons and equipment intended for the defense and security of the Republic of Serbia may not be the subject of execution.

The subject of enforcement may not be immovable or movable property used by state bodies to perform activities within their competence.

The subject of execution may not be funds and financial instruments that have been determined as collateral in accordance with the law governing financial security, including funds and financial instruments on which a lien has been established in accordance with that law.

The subject of enforcement may not be other rights and things that are exempt from enforcement by law or other law.

Enforcement

After issuing the Decision on Enforcement, the court delivers the Decision on Enforcement to the appointed Public Executor for its implementation.

The public executor then issues an conclusion for the upfront payment for the execution, which is initially paid by the creditor, and after the advance is paid, the execution begins.

Depending on the determined means and subject of execution, the Public Executor shall issue a conclusion on the execution, and in accordance with the actual possibilities and property of the debtor, he shall execute. If enforcement cannot be carried out on certain cases, the Public Executor will order the creditor to determine the further course of the proceedings, which will usually be answered by the creditor’s proposal that the Public Executor perform additional checks on the debtor’s property (which will cause additional costs that will fall on the creditor), which is eligible for enforcement. If such property is not found, the Public Executor will make a decision to suspend the enforcement proceeding.

If there are assets suitable for enforcement, the Public Executor will carry out the enforcement with the allocated funds, and settle the creditor by transferring the amount of money to his account, which actually ends the enforcement procedure.

After settlement, the Public Executor issues a conclusion determining the Public Executors reward for successful enforcement proceeding, which is also paid by the creditor. Afterwards, the Public Executor will pass the conclusion that the last enforcement action was taken, which will conclude the enforcement proceeding.

The creditor is obliged to submit a request to the Public Executor for reimbursement of the costs of the executive procedure before the Public Executor within 8 days from the end of the procedure, namely the costs paid by the creditor to the Public Executor, attorney’s fees, considering that the costs of the procedure before the court are settled in parallel with the main claim in the procedure itself, and on which the Public Executor decides by a decision. The decision on the costs of the enforcement procedure before the Public Executor is the same as the Decision on enforcement, ie. if the debtor does not settle the costs of the procedure within 8 days, it determines the subject and means of forced collection of the determined costs. After the collection of costs, the Public Executor transfers them to the account of the creditor and thus the executive procedure is definitely over.

This represents only one segment of the enforcement procedure, which, given the above risks, is in itself sufficiently stressful, laborious and costly.

We believe that after reading this text, which is, we emphasize once again, a simplified presentation of the executive procedure, you will apply our main advice and treat your own business responsibly and carefully, and welcome risky situations willingly.