Digitalisation in insolvency proceedings

Due to their clear structure and organisation, insolvency proceedings are ideally suited for digitalisation processes. It is therefore more than surprising that despite Austria's pioneering role in the digitalisation of the justice system with its Justice 3.0 project, there has been no significant development in the expansion of digitalisation in insolvency proceedings since the early 2000s. The situation is different in Croatia, however, where the new Insolvency Act came into force in 2015 and was used as an opportunity to open the path towards digitisation. But what is Croatia doing differently and what can Austria learn from it?

When the new Insolvency Act came into force in Croatia, the first thing that changed was the method of publication. Instead of the previous provisions on informing parties and the general public of the insolvency proceedings via the Official Gazette of the Republic of Croatia, an e-Bulletin board was introduced into Croatian insolvency proceedings. This is the Croatian equivalent of the Ediktsdatei in Austria. In Croatia, there are also commercial service providers that provide alerts based on a Croatian PIN (Personal Identification Number), which makes it easier to follow the e-Bulletin board. This enables information sharing in near real time, which can be considered a significant support as public announcements in the e-Bulletin board and the Ediktsdatei trigger material consequences under insolvency law.

The introduction of this possibility is especially welcome because insolvency proceedings are characterised by a huge volume of information and communication. Therefore, transparency in insolvency proceedings plays an essential role. Electronically managed files not only satisfy the general requirement for transparency, but also enable other advantages to be exploited, such as standardisation, simplification of information procurement and efficiency. Croatia has not only recognised these advantages but is also largely using them. Whereas in Austrian insolvency proceedings, court files can only be inspected on site, in Croatia all information – from the filings of the parties to the proceedings and the reports of the insolvency administrator to the minutes of the assembly of creditors and the creditors' committee – is made public on the e-Bulletin board and can therefore be easily viewed by anyone at any time.

The digitalisation of insolvency proceedings in Croatia went even one step further by implementing an electronic auction system, supervised by the financial agency called FINA and the competent court, which is now used as the standard auction method. Although Austria has also implemented the option of selling movable assets via an online auction platform since 2019, this method is still far from being used as standard.

It remains to be seen whether Austria will follow Croatia in making more information in insolvency proceedings more easily accessible through further digitalisation.

authors: Cvijeta Gavric, Petra Majher Lončar