The Existing System
Despite its introduction to the Slovak legal system in 2006, current laws on debt relief within the framework of bankruptcy of natural persons have not been a viable solution.
Basing the legal institute of debt relief on a two-step procedure:
- starting with bankruptcy (i.e. liquidation of (all) the debtor’s assets)
- then followed by a three-year trial period at the end of which the court releases a resolution on the possibility of personal bankruptcy
has in fact hindered debtors from filing.
Summary
Background
New rules strengthen the position of individual creditors and weaken the concept of insolvency proceedings as a means of final collective satisfaction of creditors. Taylor Wessing in Bratislava, as an advisor to the Ministry of Justice, has been actively involved in the creation of this new regime.
New provisions
Key points
When deciding whether to grant an order that administrators may sell secured assets as if they are not subject to security the court will:
Key Points
- A trust can be created and enforceable in respect of assets sited in a jurisdiction that does not recognise the concept of a trust
- In circumstances where the owner of a beneficial right goes into liquidation, the transfer of legal rights held by a third party to a bonafide purchaser for value is not a disposition within the meaning of s127.
The Facts
The draft Lex Covid, which amends insolvency and enforcement laws and draft law on certain measures related to repayment of loans in relation to the COVID-19 pandemic, has been approved by the Czech Parliament and must now be counter-signed by the President.
The insolvency law-related measures include:
Debtor's delay in payments
The long-discussed amendments to the Czech Insolvency Act entered into force on 1 July 2017.
These aim primarily to strengthen the transparency of insolvency proceedings; reduce paperwork in the insolvency courts; and change the system of allocation of insolvency cases in the area of debt relief.
The following highlights the most fundamental changes introduced last month.
Allocating insolvency cases
Key Points
Reorganisation is one of the means of resolving a company’s insolvency under Czech law. In the course of reorganisation the debtor’s enterprise continues to carry out its business activity within the framework set out by the reorganisation plan. The aim of reorganisation is a recovery of the debtor’s business and settlement of the relationships between the debtor and his creditors.
Generally, the reorganisation is not available to company which is;
Background
By way of introduction it should be stated that under Czech law, certain legal acts (voidable transactions) can be opposed pursuant to the Civil Code as well as the Insolvency Act. There are therefore two kinds of opposition rights: general (i.e. outside of insolvency) and insolvency right to oppose, whereby the latter can be generally applied during insolvency proceedings, while the former cannot.
The decision