May 8, 2018 / 3:47 PM / 16 days ago

Croatian court upholds law to shield economy from Agrokor-like crisis

SARAJEVO (Reuters) - Croatia’s Constitutional Court ruled on Tuesday that a law to protect the economy if a major company runs into trouble — used to place indebted Croatian food group Agrokor [AGROK.UL] under administration a year ago — complies with the constitution.

FILE PHOTO: Agrokor logo is seen at the company's headquarters in Zagreb, Croatia, March 22, 2017. REUTERS/Antonio Bronic//File Photo

Agrokor, the biggest employer in the Balkans, was put under state-run administration after an ambitious expansion drive left it weighed down by debt.

The court’s president, Miroslav Separovic, said the adoption of the law was necessary as an emergency measure aimed at shielding the economy from failures of big businesses, such as Agrokor, Croatia’s largest private company.

A number of individuals and companies, including Agrokor founder Ivica Todoric, had asked the court to examine the legality of the law commonly known as Lex Agrokor.

The fallout from the Agrokor crisis extends beyond Croatia’s borders. Its single biggest creditor is Russia’s Sberbank, which has a claim of more than 1 billion euros ($1.18 billion). Overall debt claims against Agrokor amount to 58 billion kuna ($9.3 billion).

Last month Agrokor said its creditors had reached agreement on a settlement deal including a debt-for-equity swap, a certain level of write-offs and sustainable debt levels.

Reporting by Maja Zuvela; Editing by David Goodman

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