Slovak Financial Law News 2005

Purpose and Subject of the Act

As stated in the explanatory report, the purpose of the new Act on Bankruptcy and Restructuring is mainly (i) to avoid any loss on the value of the bankrupt's property in the period just prior to the commencement of bankruptcy proceedings and in the course of the proceedings, (ii) to ensure an acceleration in the proceedings and to take measures stimulating the parties involved to act fast and have a pro-active approach in the proceedings, (iii) to increase the responsibility of all parties involved in the proceedings, mainly the bankruptcy trustees (the ``trustee''), as well as (iv) to avoid the existing absence of the conflicting provisions of international private and procedural law in the area of bankruptcy.

The new Act stipulates that the bankrupt's insolvency can be solved by encashment of the debtor's assets and collective satisfaction of its creditors, or by gradual satisfaction of the debtor's creditors in a manner agreed upon in the restructuring plan. The Act also governs how to solve imminent insolvency of the bankrupt and the discharge of an individual's debts.