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Changes to the responsibility of statutory bodies in the Slovak Republic

Daniel Futej Daniel Grigel
An amendment to the Slovak Insolvency Code came into effect on January 1 2012 though important provisions newly regulating the responsibility of statutory bodies and other persons will not become effective until January 1 2013. The key legislative changes concern the test of over-indebtedness and the liability of the directors of insolvent companies

There are two insolvency tests: financial liquidity test (the ability of the company to comply with its due debts) and test of over-indebtedness (the ratio of the company's total assets to its total debts – until the amendment it related to overdue debts). The over-indebtedness test will be assessed taking into consideration the debtor's future (expected) economic results. Subordinated and similar debts will be excluded from calculation of a debtor's financial situation. In both instances, for a company to become insolvent it is required to prove that it has more than one creditor – in the case of the financial liquidity test, with more than 30 days overdue debts.

According to the amendment, a statutory body (or liquidator, as applicable) of the debtor that is over-indebted (not meeting the test of over-indebtedness) must file a declaration of bankruptcy within 30 days. The period of 30 days is calculated from the moment when the statutory body learned of its over-indebtedness or with professional diligence could have learned of the over-indebtedness. Effective as of January 1 2013 according to the amendment, persons who held the office of the debtor's statutory body or as one of its members, liquidator or statutory agent for the four years before commencement of bankruptcy proceedings, who violate their duty to timely file a petition for bankruptcy in case of over-indebtedness, must pay into the general bankruptcy estate an amount equal to the debtor's share capital in the amount registered in the commercial registry at the time when the violation of that duty occurred; this amount will be capped in case of limited liability companies to an amount of €10,000 ($12,900) and in the case of joint-stock companies to an amount of €50,000. If there is more than one such person, they are jointly and severally liable.

Persons will be relieved of this liability if they prove that they did not violate the duty to timely file the petition for bankruptcy or that they acted with professional diligence. Likewise, a person who is not authorised to act independently on behalf of the debtor will be relieved of liability if he or she proves that due to a lack of co-operation on the part of those with whom they act jointly that duty could not have been fulfilled and that immediately upon learning (or when it could have been learned) of the violation of that duty he or she deposited a notice to the collection of documents indicating that the debtor was over-indebted.

The amendment also lays down an important transitional provision pursuant to which if the debtor's debts exceeded its assets before January 1 2013 and this financial situation persists also after that date, the debtor's statutory body is obliged to file a petition for bankruptcy by March 31 2013. Should the members of the debtor's statutory body fail to do so by this date and they were already members of the debtor's statutory body before January 1 2013, they are liable for paying to the bankruptcy estate the sum equal to the debtor's actually registered share capital in the commercial registry. This means that, in this case, the statutory cap of EUR €10,000 for limited liability companies and €50,000 for joint stock companies will not apply.

Daniel Futej and Daniel Grigel

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