An insolvency administrator may lose their right to restitution arising from an insolvency avoidance if they are prevented from exercising the right in good faith by their conduct in the context of the conclusion of a redemption agreement, by which the creditor (and opposing party) waives rights to separate satisfaction.

Decision

According to a ruling by the German Federal Court of Justice (BGH) on 5 May 2022, a passenger's claim for reimbursement due to a flight cancellation in insolvency needs to be established in the schedule of creditors, otherwise it remains a claim for air transport that cannot be enforced in insolvency proceedings if the flight was booked and paid for before the insolvency proceedings.

The new Slovakian preventive restructuring framework aims to provide companies with a viable toolkit to deal with financial distress at an early stage and to counter the fact that the majority of Slovak companies enter an insolvency process having been insolvent for more than a year.

Main characteristics

The Slovak parliament recently passed a new law – The Temporary Protection of Distressed Undertakings Before Creditors – which came into effect on 1 January 2021. It replaces the current temporary protection (moratorium) adopted at the outset of the COVID-19 crisis.

The new regulation will only be granted where a majority of the unrelated creditors involved agree with the stay. This marks a departure from the COVID-19 moratorium, which could be easily accessed by all debtors impacted by the coronavirus pandemic.

On 22 April 2020, the Slovak parliament passed a new law to help reduce the impact of COVID-19.

It is now possible for businesses to request temporary protection that will have the following effects:

Since the outbreak of COVID-19 in Europe, the Slovak Parliament has adopted a series of new laws aiming predominantly to support employment, to provide financial aid and tax relief (particularly to SMEs) and to preserve and regulate legal enforcement.

The insolvency law related measures include mainly:

Debtor's filing

The statutory time limit for debtors to file for bankruptcy due to over-indebtedness (balance sheet test) that occurred between 12 March and 30 April 2020 has been prolonged from 30 to 60 days (and is expected to be prolonged further).

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

Summary

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.