Slovak Republic
held the office of the debtor’s statutory body or as one of its members, the liquidator or the statutory agent for the four years before commencement of bankruptcy proceedings, who violate their duty to timely file a petition in bankruptcy in the event of over-indebtedness, must pay into the general bank- ruptcy estate an amount equal to the debtor’s share capital as registered in the commercial registry at the time when the violation of that duty occurred; this amount is capped in the case of a limited liability company to €10,000 ($13,600) and in the case of joint-stock companies to €50,000. If there is more than one such person, they are jointly and severally liable. Persons are relieved of this liability if they prove they did not violate the duty to timely file the petition in bankruptcy or that they acted with pro- fessional diligence. Pursuant to a temporary rule, if the debtor’s liabilities had already exceeded its assets before January 1 2013, and this financial situation persists after that date, the debtor’s statutory body is obliged to file a petition in bankruptcy by March 31 2013; otherwise they are liable to pay the bankrupt- cy estate a sum equal to the debtor’s actual registered share capital recorded in the Commercial Registry and in this case the statutory cap will not apply. Bankruptcy procedure In terms of procedure, bankruptcy proceedings
are organised in a way allowing the petition to declare bankruptcy to be lodged by a creditor, the affected insolvent entrepreneur or the liquidator. If the petition to declare bankruptcy over the assets of the insolvent entrepreneur is lodged by a creditor, it must demonstrate the claim by submitting a docu- ment bearing the notarised signature of the entrepre- neur (debtor) or a valid and enforceable court order. As of January 1 2012, all a creditor needs is to attach a confirmation to their claim from an auditor, bank- ruptcy administrator or court expert indicating its claim is entered on the books. Once the petition to declare bankruptcy has been
lodged, the proceedings are separated into two phas- es: the preliminary bankruptcy proceedings and the
ordinary and preliminary bankruptcy administrator are randomly selected by the court
“ ” Both the
declaration of bankruptcy, both of which have differ- ing, limiting effects on the business and assets of the debtor. Once the petition to declare bankruptcy has been lodged, if the court verifies the petition meets the formal requirements it will decide on commenc- ing bankruptcy proceedings within 15 days, and that decision will be automatically published in the national Commercial Bulletin (which can be accessed by the public electronically) without the court having to ascertain at that point the debtor’s true financial situation. The court’s decision to com- mence bankruptcy proceedings is therefore purely formal and limited to verifying whether the petition to declare bankruptcy is complete with all mandato- ry annexes, and in this phase the entrepreneur has no way to prevent its trade name from appearing in the Commercial Bulletin in the negative context of com- menced bankruptcy proceedings, even though on the books the entrepreneur objectively need not be insolvent. This is more frequently used by business partners against an entrepreneur to informally pres- sure the entrepreneur to pay up its outstanding debt, or else a hostile petition to declare bankruptcy will be lodged against them. Only after bankruptcy proceed- ings have commenced will the court serve the credi- tor’s petition to declare bankruptcy on the entrepre- neur, along with the annexes, giving the entrepreneur opportunity to respond along with the invitation for the entrepreneur to prove to the court its ability to pay in a standard judicial hearing, to which the entre- preneur will be subpoenaed. Among other things, this is important to differentiate in relation to loan documentation, as frequently banks insist that a vio- lation of the loan agreement has occurred as soon as bankruptcy proceedings are commenced. The debtor’s consent to such a condition can be relative- ly risky because the debtor has no control over, and is not even aware of, whether a third party has peti- tioned to have bankruptcy proceedings commenced. In practice, these situations are oftentimes abused and the bank may threaten to call in the debtor’s loan. Therefore, the debtor should insist that loan
About the author Daniel Futej JUDr Phd, LLM is the managing partner of Slovak law firm Futej & Partners. Throughout his practice he has been responsible for the negotiation of a wide variety of transactions including: acquisition of pension companies; acquisitions of health insurance and industry companies; debt and equity financing; and venture capital investments. He has published various articles and is a co-author of books on EU law. He is a member of the Slovak bar Association and also the Czech Bar Association.
Contact information
Daniel Futej Futej & Partners
Radlinského 2, 811 07 Bratislava, Slovakia T: +421/2/5263 3161 F: +421/2/5263 3163 E:
futej@futej.sk W:
www.futej.sk
www.iflr.com
IFLR|RESTRUCTURING & INSOLVENCY 039
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