ZAGREB, Croatia (AP) — Croatia's parliament on Thursday adopted an emergency law to protect the economy from large company failures after the country's biggest private-owned firm accumulated huge debts.
Agrokor, the largest private retailer and food producer in the Balkans with some 60,000 staff, has struggled to pay suppliers and creditors after building up $6.5 billion (6 billion euros) in debt, or six times its equity.
The emergency law allows the state to appoint an executive to lead a restructuring process if debtors and creditors demand it. It could be applied to firms that have more than 5,000 employees and owe more than $1 billion (1 billion euros.)
Croatian Prime Minister Andrej Plenkovic said the law will try to help "protect our financial system, the economy, jobs, suppliers, family businesses and all the stakeholders" of Agrokor.
Agrokor has reached a deal with its lenders, including Russia's Sberbank and VTB banks, to get an unspecified cash injection and temporary freeze on debt repayments. A restructuring expert was appointed by the lenders to try to rescue the company.
Croatian officials said that the emergency law would not be implemented for Agrokor if the creditors manage to come up with a plan for its rescue.
The opposition has criticized the law, claiming it protects the interests of big capital at the cost of small businesses.
The leader of the Social Democratic Party, Davor Bernardic, said that "by approving this law the fate of Agrokor was tied to the fate of Croatia."
Bernardic also accused the conservative government of not reacting to Agrokor's financial troubles in time.
"They knew for five months and they were sitting on it, buying time for the owners and creditors," Bernardic said.
The vote in parliament was 83 for the emergency law, 46 against and two abstentions.