In May 2011 the Law on Consensual Financial Restructuring of the Companies (the Law) was enacted, bringing what appeared to be a new way out for the companies facing financial difficulties.

Bankruptcy and reorganization are the two primary procedures available for solving a collective action problem in dealing with financially troubled debtors, and both are regulated by the Montenegrin Insolvency Act. Bankruptcy envisages settlement with creditors by sale of the debtor’s assets or sale of the debtor as a legal entity, while reorganization involves settlement with creditors in accordance with an adopted reorganization plan which redefines mutual debtor-creditor relations.