BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS IN SLOVAKIA] 79
controlling person shall be released from such liability if it proves that it acted in an informed manner and that they were acting in good faith for the benefit of the controlled person. Unless a different amount of damage is proved, it shall be deemed that the creditor incurred damage to the extent to which its receivable was not satisfied from the proceeds after the bankruptcy proceedings held against the controlled person is terminated due to lack of property, cancellation of the bankruptcy declared against the property of the controlled person due to lack of property, termination of execution or similar enforcement proceedings conducted against the controlled person due to lack of property, or the dissolution of the controlled person without a legal successor. (2) Preventive restructuring proceeding Since July 2022, a new Act No. 111/2022 Coll. On the Resolution of Impending Bankruptcy (the “Act”), has been adopted in Slovakia, which provides for a new type of procedure – preventive restructuring and temporary protection of the debtor. This law is a consequence of the transposition of 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 7 For the purpose of determining the coverage gap, the number of due cash liabilities shall not be taken into account: • which are linked to a subordinated obligation or would be satisfied in the bankruptcy proceedings in the order of subordinated claims if the creditor has agreed in writing to their temporary non- performance, • the debtor and the creditor are mutually negotiating to change or modify their maturity and the creditor has an interest in negotiating, which the debtor has confirmed in writing to the creditor at the time of the negotiation. 8 For the purposes of determining insolvency, cash assets are: • cash, • claims on an account, deposit or other form of deposit in a bank or branch of a foreign bank
increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt, and amending Directive (EU) 2017/1132 (Directive on restructuring and insolvency). When a debtor (legal entity only) discovers that it is at risk of insolvency in the next 12 calendar months, i.e., the debtor is more than 90 days late in meeting at least two financial liabilities with more than one creditor, it is obliged to monitor its financial situation very closely and to take appropriate measures to avert it without undue delay. To assess whether insolvency is imminent, it is important to calculate the “coverage gap”, i.e., if the difference between due cash liabilities 7 and cash assets 8 is more than 1/10 of the debtor's due cash liabilities “ coverage gap ” and it will not be able to reverse this situation within 60 days, the debtor is deemed to have become insolvent. Being registered on the list of debtors for social/health insurance or taxes signals a risk of bankruptcy. In these cases, the debtor should take appropriate precautionary measures, including a preventive restructuring proceeding. Debtor may initiate preventive restructuring proceeding provided that there is a chance of preserving and recovering its business, it is not yet bankrupt, and no execution or other enforcement proceedings have been • monetary claims, securities and financial instruments maturing within 30 days, where, in the exercise of professional diligence, their due and punctual fulfilment can reasonably be expected, • monetary claims, securities and financial instruments not more than 30 days overdue if, in the exercise of professional diligence, they can reasonably be expected to be duly settled within 30 days of their due date, • cash receivables, securities and financial instruments that are repayable on demand (sight), if it is reasonable in the exercise of professional diligence to expect that they would be duly and punctually discharged if they were called for repayment on the following day.
ILN Restructuring & Insolvency Group – Bankruptcy, Insolvency & Rehabilitation Series
Made with FlippingBook Online newsletter maker