Slovakia

A look at corporate, personal and, where relevant, partnership insolvency proceedings in Slovakia, with a brief description to explain key features, as part of our Dictionary of Insolvency Terms in EU Member States. In particular, we highlight who controls the procedure and whether it is likely to be accompanied by a moratorium to prevent enforcement.


Konkurz, konkurzné konanie

Bankruptcy, bankruptcy proceeding

  • A company, partnership or natural person is insolvent (úpadok) if it is: (i) unable to pay at least two monetary liabilities due to more than one creditor within 30 days of the due date (platobne neschopný); or (ii) over-indebted (predĺžený), which means that the value of liabilities exceeds the value of assets. 
  • Bankruptcy provides for a sale of the debtor’s assets and satisfaction of creditors from the proceeds of sale. For corporate entities or partnerships, it leads to the winding up of the debtor.
  • Once the court declares the bankruptcy of the debtor, the debtor is obliged to limit the performance of its activities to usual legal acts. 
  • During the bankruptcy, the trustee appointed by the court shall administer and monetise the property subject to bankruptcy and use the proceeds from the monetisation to satisfy creditors. However, creditors can give binding instructions and recommendations to the trustee in connection with the administration of the property subject to bankruptcy, the operation of the debtor’s enterprise and the monetisation of the property subject to bankruptcy.
  • Any debt still outstanding following the debt discharge will be rendered unenforceable, along with: 
    • Any interest or default charges exceeding 5% of the principal per calendar year accrued before a “decisive date” (the calendar month in which the bankruptcy was declared or the protection from creditors was provided). 
    • Any interest or default charges accrued on and after the decisive date.
    • Receivable under a promissory note if signed by the debtor before the decisive date. 
    • Contractual penalties and penalties imposed by the state authorities (if the obligation triggering the penalty was breached prior to the decisive date).
    • Claims of the affiliated parties accrued before the decisive date. 
    • Costs of participants in the proceedings incurred in connection with their participation in the bankruptcy proceedings. 
  • The following claims receive protection from the debt discharge: 
    • The unregistered debt of an individual creditor on the grounds that they have not been notified in writing of the bankruptcy proceedings. 
    • Secured claims up to the value of the pledged assets. 
    • Non-monetary claims. 
    • Monetary penalty pursuant to the Criminal Code. 
    • Employment claims against the debtor. 
    • Alimony claims. 
  • There is also a “homestead exemption.” This means that if such a homestead is determined by the debtor in the list of property, this homestead is not subject to the bankruptcy up to the value of EUR10,000. The debtor’s homestead cannot be monetised if the proceeds after deduction of EUR10,000 could not satisfy the costs of monetisation and at least part of the creditors’ claims. The value of the debtor’s homestead shall be estimated by the trustee. 
  • An application to declare bankruptcy may be filed at court by a debtor, a creditor (only where the debtor is a corporate entity or natural person entrepreneur) or a liquidator of the debtor. A debtor is obliged to submit an application to declare bankruptcy within 30 days of the date when it knew or, exercising professional care, should have known of its insolvency. 
  •  As part of the decision declaring bankruptcy, the court will appoint a trustee, at random, from the register of trustees. 
  • The trustee manages the debtor’s property, sells its/his assets and distributes the proceeds to creditors.

Malý konkurz

Small bankruptcy

  • A form of bankruptcy (intended to be faster than regular bankruptcy) that can apply to insolvent companies and all forms of partnership. 
  • It can be declared by the court where the debtor’s assets do not exceed EUR165,000, its turnover does not exceed EUR333,000 and it has fewer than 50 creditors.
  • Like bankruptcy, small bankruptcy provides for a sale of the debtor’s assets and satisfaction of creditors from the proceeds of sale.

Reštrukturalizácia

Restructuring

  • Proceedings to provide a flexible approach under a plan to restructure the debtor’s liabilities or to effect other restructuring measures (including a sale of assets). 
  • An application to authorise a restructuring may be submitted to the court by a debtor, or a creditor with the debtor’s consent, but only if a trustee registered in the register of trustees provides an expert opinion and recommends restructuring. 
  • During a restructuring, a debtor is obliged to restrict its actions to those in the ordinary course of business; any other actions must be approved by the trustee. The trustee supervises the debtor and reviews registered claims. After a successful restructuring, the debtor may continue to operate its business.

Oddlženie

Debt discharge

  • Insolvent natural persons may apply for debt discharge via bankruptcy or a payment calendar regardless of whether they have obligations from business activity.
  • As regards the debt discharge by means of a payment calendar, the court shall provide the debtor with protection from creditors and appoint a trustee within 15 days of the receipt of the draft of the payment calendar.
  • The payment calendar must enable at least 10% higher satisfaction of unsecured creditors’ claims than they would have obtained in bankruptcy.
  • If the debtor’s situation does not allow the payment calendar to be drawn up, the trustee shall advise the debtor to apply for declaration of bankruptcy. 
  • In debt discharge proceedings, any debts due to creditors that were not satisfied in the previous bankruptcy proceedings will become unenforceable.  

Záložné právo

Pledge right

A pledgee is entitled to enforce a pledge in any way permitted by the legal regulations applicable at the time of the enforcement and as agreed in the pledge agreement.


Záložné právo k nehnuteľnosti

Mortgage

A mortgagee is entitled to enforce a mortgage in any way permitted by the legal regulations applicable at the time of the enforcement and as agreed in the mortgage agreement. In bankruptcy proceedings, a mortgagee shall claim its receivable properly via application. However, it is a trustee who is entitled to exercise the mortgage right, i.e. to sell the property and subsequently to satisfy the mortgagee.


Anticipated changes in the next two years

The EU Directive on Restructuring and Insolvency1 requires Member States to incorporate minimum common standards into their national restructuring and insolvency laws by 17 July 2021. The intention of the Directive is to reduce barriers to the free flow of capital stemming from differences in Member States’ restructuring and insolvency frameworks, and to enhance the rescue culture in the EU.

Notable features required to be included in Member States’ national laws include: 

  • An effective preventive restructuring framework to enable debtors experiencing financial difficulties to restructure at an early stage, with a view to preventing insolvency and ensuring their viability. 
  • A stay of up to four months extendable to up to 12 months to support negotiations of a restructuring proposal, which should prevent individual enforcement action and include rules preventing the withholding of performance, termination, acceleration or modification of essential contracts.
  • An ability to cram down dissenting classes of creditors.
  • Adequate protection for financing needed to allow the business to survive or to preserve the value of the business pending a restructuring, and for new financing necessary to implement a restructuring plan.
  • Provision for honest, insolvent entrepreneurs to have access to a procedure that can lead to a full discharge of their debts (subject to limited exceptions) within three years.

Contact: Michaela Stessl


1 Directive (EU) 2019/1023 of the European Parliament and of the Council of 20 June 2019 on preventive restructuring frameworks, on discharge of debt and disqualifications, and on measures to increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt, and amending Directive (EU) 2017/1132.