The Armed Forces of the Independent State of Croatia were reorganized in November 1944 to combine the units of the Ustaše and Army of the Independent State of Croatia into eighteen divisions, comprising 13 infantry, two mountain, two assault and one replacement division, each with its own organic artillery and other support units. There were also several armoured units. From early 1945, the divisions were allocated to various German Corps and by March 1945 were holding the Southern Front.
In the spring of 1945, the German Army and their allies were in full retreat from the Yugoslav Partisans. In early April, the Partisan 3rd Army, under the command of Kosta Nađ, fanned out through the Drava Valley region (Podravina), reaching a point north of Zagreb, and crossed the old Austrian border with Yugoslavia in the Dravograd sector. The 3rd Army closed the ring around Axis forces when its advanced motorized detachments linked up with detachments of the 4th Army in Carinthia. As a result, the German Army Group E was prevented from escaping north-west across the Drava river. Completely surrounded, General Alexander Löhr, Commander-in-Chief of Army Group E was forced to sign the unconditional surrender of the forces under his command at Topolšica, near Velenje, Slovenia, on Wednesday May 9. Nevertheless, some of his troops, along with collaborationist units, namely the NDH forces, Slovene Home Guard, Montenegrin People's Army (former Chetniks), and elements of other factions, continued to resist and tried to fight their way west to what they hoped would be the protection of the British at Klagenfurt.
Just before 9 am on May 14, a significant force of mostly NDH units with some Montenegrin People's Army and Slovenian Home Guard troops approached Partisan positions at the Šurnik farm near Poljana demanding free passage west. This was refused, and firing commenced on both sides. NDH attacks, including artillery fire support, intensified in the afternoon, evening and overnight, finally ceasing on the morning of 15 May with the arrival of around 20 British tanks. Tense negotiations followed, during which British officers made it abundantly clear that they would not offer protection to the collaborators and that unconditional surrender to the Partisans was the only option. White flags of surrender were finally raised around 4 pm on 15 May.
Casualty estimates by the Partisans were at least 310 NDH and Axis dead in the two main locations of fighting, and 250 wounded. On the Partisan side, losses were considerably lower, numbering fewer than 100 dead and wounded.