The legislative landscape on insolvency in Kosovo has undergone substantial changes with the Law No. 08/L-256 on Bankruptcy (Law on Bankruptcy), which, beyond modernizing domestic procedures, regulates cross-border bankruptcy in line with international standards such as the EU Insolvency Regulation (2015/848). Through such changes, Kosovo moves closer toward protecting cross-border assets and creditors, providing for a better climate for further economic development.
Under the Law on Bankruptcy, bankruptcy proceedings may be initiated by a foreign representative and foreign creditors, provided the general conditions for such initiation stipulated by the law are met. In addition to initiating the proceedings, foreign representatives and foreign creditors are also entitled to participate in proceedings already initiated before the Commercial Court of Kosovo. In particular, foreign representatives may participate in bankruptcy proceedings upon recognition of a foreign proceeding. With recognition of foreign proceedings, commencement or continuation of individual actions or individual proceedings concerning the debtor’s assets, rights, obligations, or liabilities, and execution against the debtor’s assets are stayed. At the same time, the right to transfer, encumber, or otherwise dispose of any assets of the debtor is suspended. However, any action that is requested to be undertaken according to the provisions of the Law on Bankruptcy can be refused if the same is contrary to the public policy of Kosovo (subject to the Commercial Court’s discretion).
In cases of domestic and foreign proceedings taking place concurrently regarding the same debtor, the main element to consider is whether the proceeding in Kosovo is taking place at the time of application or after granting recognition of the foreign proceeding. After recognition of the foreign proceedings, domestic proceedings may only be commenced if the debtor has assets in Kosovo. In such a case, proceedings are restricted to those assets. In any case, however, a creditor who has received a partial payment in respect to their claim in a foreign proceeding may not receive a payment for the same claim under the Law on Bankruptcy regarding the same debtor, as long as the payment to other creditors of the same class is proportionally less than the payment the creditor has already received. Furthermore, the fact that foreign proceedings have been initiated against a debtor, should no other evidence prove the contrary, is sufficient to prove that the debtor is insolvent. Therefore, this framework guarantees fairness and coordination between domestic and international actors by preventing inconsistent or duplicative outcomes.
In providing seamless cross-border bankruptcy proceedings, the Law on Bankruptcy provides for cooperation and direct communication between the Commercial Court and foreign courts or foreign representatives. Through its provisions, the Commercial Court is entitled to communicate directly with, or to request information directly from, foreign courts or foreign representatives of the bankruptcy estate. Cooperation is manifested through different means, such as appointment of a responsible person or body to act under the discretion of the Court, communication of information by means considered appropriate by the Court, coordination of the administration and supervision of the debtor’s assets and affairs, as well as joint hearings between the Commercial Court and the foreign courts conducted through appropriate electronic means. These collaborative efforts seek to eliminate redundancies, expedite the administrative process, and establish uniformity for creditors in various jurisdictions.
Bankruptcy procedures pursuant to the abrogated law had feasible difficulties with legal and procedural ambiguities. These and other cross-border insolvency provisions represent a significant step toward Kosovo’s international integration. For investors and businesses, the Law on Bankruptcy increases predictability in handling assets and creditors across borders, reduces litigation risks, and strengthens Kosovo’s attractiveness as a business-friendly jurisdiction.
However, challenges remain. As this topic has been introduced only recently, the judiciary’s familiarity with such complex multinational cases is rather limited, impacting the Commercial Court’s effective enforcement of these provisions both independently and in cooperation with foreign actors. To address these challenges, Kosovo will need ongoing training for judges and insolvency administrators, as well as the development of secondary regulations clarifying procedural details. In practice, this means that sustained institutional investment and close collaboration with international partners will be essential for building capacity and ensuring effective outcomes.
To conclude, Kosovo’s Law on Bankruptcy aligns the country with international insolvency law. By incorporating mechanisms for, inter alia, recognition, cooperation, and concurrent proceedings, the law provides a structured framework for cross-border bankruptcy.
By Klit Shala, Head of Insolvency & Restructuring, and Erza Arifi, Legal Associate, RPHS Law
This article was originally published in Issue 12.8 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
