Slovak Financial Law News 2005

Specification of Some Terms

The Act also states a more detailed definition of insolvency and introduces a new definition of the term ``debt overburden'' which was missing in the currently valid legal regulation. Under the new legal regulation, a person overburdened by debt means such person that is obliged to keep its books under the Accounting Act, has more than one creditor, and the value of its obligations exceeds the value of its assets. An insolvent person means such person that has more than one creditor and is not able to fulfil more than one financial obligation after 30 days from the due date. When the debtor's insolvency is reviewed, all receivables that initially belonged only to one creditor during a 90-day period prior to the filing of a petition for declaration of bankruptcy are deemed to be one receivable. Under the new legal regulation, the debtor is insolvent if it cannot meet its financial obligations or is overburdened by debt. If the debtor files a petition for the approval of restructuring or a petition for declaration of bankruptcy, it shall mean that the debtor is insolvent. The Act also governs further definitions of significant terms such as ``conduct with professional care'' (which means conduct with care that is appropriate to the function or position of a conducting person when any available information that are related to this person or might affect the conduct of this person have been considered), ``lien'', ``affiliate'', and ``common legal acts''.