A frozen account is a consequence rather than a cause. Someone has started enforced collection, and from that moment the company no longer controls its own money. Owners usually turn straight to the question of how to lift the freeze, when it is more useful first to understand how the mechanism works, because that determines what can be done at all and how much time genuinely remains.
What a freeze means in practice
Everything that arrives in the account goes to settle claims, in a prescribed order rather than one you choose. You cannot pay the supplier you depend on, cannot settle the obligation that matters most commercially, and cannot decide what goes first. Incoming money is consumed by whatever sits in the queue. The company still trades, invoices and collects, but that money passes through the account and disappears.
The freeze is public. The National Bank of Serbia keeps a register of enforced collection and anyone can check whether a company is frozen, for how much and for how many days. Your customers, suppliers and banks therefore see it the moment you do. In practice the information travels faster than owners expect, and that is where the real damage starts.
What to establish first
Before any action, you need to know who initiated the enforcement, on what basis, and the exact amount. The difference matters. A freeze over a single disputed invoice for twenty thousand euros is handled differently from one based on a tax assessment or a secured loan that has fallen due. It is equally important to check whether several claims sit in the queue, because clearing the first means nothing if three more stand behind it.
Where the basis is disputed there are legal routes to challenge the enforcement, but they take time, and the freeze runs alongside them. The decision to litigate rather than settle is taken with counsel and against a clear calculation of how long the business can hold out.
Wages, taxes and people
Wages and the related taxes and contributions have their own position in the prescribed order of settlement, so salaries can generally still be paid during a freeze, though not always in the way or at the pace the company is used to. The exact order and conditions are prescribed and are a question for counsel or the accountant on the specific case, because an error here creates a new liability instead of resolving an existing one.
Regardless of the rules, people leave. Employees learn about a freeze immediately, because it shows up in their pay, and the best of them have somewhere to go. Losing key people is a loss that money does not later repair and it usually outlasts the debt itself.
How much time you really have
There is a statutory period after which a continuous freeze leads to compulsory liquidation, and that period should be checked for the specific situation. For most companies it is theoretical, because the commercial clock runs much faster than the legal one.
Within the first few weeks suppliers move to payment in advance or stop delivering. In the second month customers start looking for alternatives, because uncertainty of supply costs them more than changing supplier does. Somewhere in that window the first people leave. A company that could legally survive for years loses its trade in one or two quarters. The calculation is therefore made against how long your customers and suppliers stay with you, not against the statutory deadline.
What can be done while the freeze runs
- Settlement with the creditor who started the enforcement, usually a payment plan against suspension of enforcement. This is the fastest route and worth trying before anything else.
- Selling assets not needed for the operation, to settle in one payment. It needs consent and careful structuring, but is often the only source of cash that exists.
- Set-off and assignment of receivables where mutual debt exists, reducing obligations without money passing through the frozen account.
- A partner coming in, or a recapitalisation, where someone believes in the business and is prepared to enter the situation as it stands.
What generally does not work is new borrowing. Banks do not lend to companies under a freeze, and the offers that appear under the heading of finance to clear a freeze come on terms that postpone and enlarge the problem. Routing trade through a related company does not work either over any length of time, because it carries its own legal consequences and usually makes every later solution harder.
When the conversation should change
If the freeze has run for more than two months, if new claims have joined the queue behind the first, or if the amount exceeds what the business can generate in a year, the question is no longer how to lift the freeze but what to do with the company while there is still something to sell. We have written separately about those options, from refinancing and a partial sale to reorganisation.
Where to go next
- Restructuring or selling under pressure
- Working capital as a source of cash
- Buying out of bankruptcy
- Our services
This describes how matters run in practice and is not legal advice. The basis of enforcement, the order of settlement and the deadlines are checked with counsel on the specific file. Where a company is frozen, the most useful thing to do in the first week is establish every creditor in the queue and how much time you have, because everything else is decided on those two facts.