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Slovenia amends insolvency law

Slovenia has amended the Financial Operations, Insolvency Proceedings and Compulsory Dissolution Act, which follow on amendments in 2013, amending preventive restructuring, simplified compulsory settlement and personal bankruptcy proceedings. Amendments to Slovenia’s Insolvency Act, which were adopted by the National Assembly on 31 March 2016, will come into force on 26 April 2016.

The main modifications introduced by the amendments are as follows:

  • small companies may now rely on proceedings on preventive restructuring, in addition to medium-sized and large companies as was previously permitted;
  • a decision approving financial restructuring must now be published during preventive proceedings, eliminating delays in delivering a decision to individual creditors and shortening the period between conclusion of the agreement and its entry into force;
  • simplified compulsory settlement can only be conducted in case of micro companies and entrepreneurs; and
  • extensive amendments to personal bankruptcy proceedings, all which aim to prevent bankruptcy debtors from defrauding creditors and misusing bankruptcy proceedings. Most importantly, the amendments introduce an extension of the period for challenging legal acts concluded by the bankruptcy debtor in favour of a closely related person from three to five years. Rights of creditors to challenge several other legal acts have been introduced, as have new rules limiting the dismissal of a bankrupt person’s liabilities.

In less than eight years from its introduction, Slovenia’s Insolvency Act has undergone its seventh extensive amendment in order to achieve greater efficiency in manners of dealing with over-indebtedness of natural and legal persons, while introducing measures to prevent the misuse of personal bankruptcy proceedings and the dismissal of a bankrupt individual’s liabilities, both of which are common in Slovenia.