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

Besides new rules preventing fraudulent mergers of indebted companies and the introduction of the concept of de facto/shadow director, the new law increases directors’ liability for failing to file for insolvency. Creditors’ losses will be presumed to be the amount of their receivables not satisfied within insolvency or execution proceedings and, although there are narrow statutory exemptions to help directors, court rulings on damages for late insolvency filings will automatically disqualify directors for three years.

Personal liability for directors and shareholders has also been introduced, resembling the German concept of “existenzvernichtender Eingriff” though there is a “good faith” defence.

These are liabilities to creditors, not the insolvency trustee. Creditors will be entitled to claim the damages individually and directly, no later than one year after the termination of insolvency or similar proceedings.

Timings

The new law will apply from 1 January 2018, with the exception of the rules concerning mergers that will apply from the imminent publication of the new law.