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Restructuring Laws and Regulations in Slovenia

Restructuring Laws and Regulations in Slovenia

Restructuring Comparative Guide: 2022
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Contributed by Senica & Partners.

1. Overview

1.1. What domestic pieces of legislation and international instruments apply to restructuring and insolvency matters in your jurisdiction?

The following legislation and international instruments apply to restructuring and insolvency matters in Slovenia: 

  •  The Act on Financial Operations, Insolvency Procedures and Compulsory Winding Up (ZFPPIPP, Insolvency Act);
  •  The Act on Aid for Rescue and Restructuring of Companies and Cooperatives in Trouble (ZPRPGDZT);
  •  The Act on the use of funds obtained from the purchase price on the basis of the Act on the Ownership Transformation of Companies (ZUKLPP);
  •  The Regulation on the content of the restructuring program, insurance, control and record-keeping in the allocation of aid for the rescue and restructuring of companies and cooperatives in difficulty;
  •  Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty;
  •  Regulation (EU) 2015/848.

1.2. Do you have a well-established legal regime governing restructuring and insolvency, or do you have rather frequent legislative changes in the area?

In 2007, the Insolvency Act was adopted and has been amended seven times between 2007 and 2016. The latest amendment ZFPPIPP-G entered into force on April 26, 2016. Since 2016, only individual provisions have been partially corrected by decisions of the Constitutional Court of the Republic of Slovenia and adapted to deal with the COVID-19 epidemic.

1.3. Are there any special regimes applying to specific sectors?

Special regimes apply to banks, insurance, brokerage, and fund management companies, regulated primarily by industry specifics legislation. In general, the Insolvency Act in large parts applies also for these legal entities, however specific deviations, like, for example, the process of appointment of a bankruptcy receiver, apply.

1.4. Were any changes to restructuring or insolvency laws adopted in response to the COVID-19 pandemic? If so, what were they?

Yes, Slovenia adopted two acts: The Act on Intervention Measures to Contain the COVID-19 Epidemic and Mitigate Its Consequences for Citizens and the Economy (ZIUZEOP) and the Act on Intervention Measures to Help Mitigate the Consequences of the Second Wave of the COVID-19 Epidemic (ZIUPOPDVE).

The ZIUPOPDVE stipulates that management is not obliged to file a proposal for the initiation of bankruptcy proceedings or compulsory settlement proceedings if the long-term insolvency of the company is the result of the declaration of an epidemic. This measure was valid until March 31, 2021.

Further, the act stipulates that the period for which the court can postpone the decision on the creditor’s proposal for the initiation of bankruptcy, and the period during which the debtor justifies their request for the postponement of the decision, is four months if insolvency of the debtor as a result of the declaration of an epidemic. This measure is used in bankruptcy proceedings, which are initiated at the proposal of a creditor until March 31, 2021, at the latest.

The same provisions are is also provided in the ZIUZEOP. 

The ZIUZEOP establishes an irrebuttable presumption that a legal entity, entrepreneur, or private individual has become permanently insolvent even if they are more than one month late with the payment of wages and contributions to workers, from the time they received reimbursements of paid wage compensations and contributions. 

1.5. Are there any proposed or upcoming changes to the restructuring insolvency regime in your country?

Currently, no changes related to restructuring and insolvency legislation are envisaged.

1.6. Has your country adopted or is your country considering the adoption of the UNCITRAL Model Law on Enterprise Group Insolvency?

Slovenia has incorporated the UNCITRAL Legislative Guide on Insolvency Law into the Insolvency Act, so we act in accordance with the UNCITRAL Model Law on Enterprise Group Insolvency. 

2. Insolvency

2.1. Is there an insolvency test that triggers certain obligations for directors or officers of the debtor company? If so, what is the test and what are the consequences for failure to meet these obligations?

The Slovenian Insolvency Act does not have a specific insolvency test, however under the Insolvency Act, once a debtor becomes insolvent, management must limit its operations, treat all creditors equally, and either financially restructure the company or file for insolvency.

Insolvency shall be the situation where the debtor (i) within an extended period of time is not able to settle all their liabilities falling due within such period of time (continuous insolvency) or (ii) becomes insolvent.

The decision on whether a company is insolvent (i, ii) is left to management, which is considered to include corporate finance professionals. For this purpose, the Insolvency Act sets out certain rebuttable and irrebuttable presumptions to assist management in assessing the occurrence of insolvency as follows:

I. Unless it is proven otherwise, a debtor shall be considered continuously insolvent:

a) for a debtor who is a legal person, businessperson, or a private person: 

  •  if they are more than two months in arrears in meeting one or more obligations in a total amount exceeding 20% of the amount of their liabilities shown in the last published annual report or
  •  if the funds in their accounts are insufficient for executing the enforcement order or realizing the enforcement draft, and such a situation continues without interruption for a period of 60 days or with interruptions for more than 60 days of the most recent 90-day period, and such a situation continues on the date prior to filing the petition for the initiation of insolvency proceedings, or
  •  if they do not have at least one bank account open with payment services provision in the Republic of Slovenia and if they have not settled their liabilities under the enforcement order within 60 days of the date when the enforcement order becomes final,

b) for a debtor for whom compulsory settlement or simplified compulsory settlement proceedings have been initiated and ended by a final confirmation of compulsory settlement or simplified compulsory settlement if they are more than two months in arrears with:

  •  payment of their liabilities under the confirmed compulsory settlement or simplified compulsory settlement or
  •  payment of their liabilities arising prior to the commencement of compulsory settlement or simplified compulsory settlement proceedings to creditors with the right to separate satisfaction, or
  •  the scheduled implementation of other financial restructuring measures defined by the financial restructuring plan,

c) for a debtor who is a consumer:

  •  if they are delayed for more than two months in meeting one or more obligations in the total amount exceeding the amount of three times the amount of their salary, compensation, or other remunerations received in a regular manner in periods not longer than two months, or
  •  if they are unemployed and do not receive any other regular remunerations and are delayed in meeting their obligations for more than two months, in an amount exceeding EUR 1,000.

II. Unless it is proven otherwise, a debtor shall be considered insolvent:

  •  if the value of their assets is lesser than the sum of their liabilities (overindebtedness),
  •  for a debtor who is a company: also if the loss for the current year together with the losses brought forward amounts to one-half of the share capital, and such loss cannot be deducted from profit brought forward or from reserves.

It shall apply and evidence to the contrary shall not be allowed, that a legal person, entrepreneur, or private person becomes illiquid for an extended period of time if it is delayed for more than two months: 

  •  in paying wages to its employees up to the level of the minimum wage or
  •  in paying taxes and contributions which the payer must calculate and pay together with the wages to its employees, 
  •  and such a situation continues on the day prior to filing a petition for bankruptcy.

If a debtor underwent compulsory settlement proceedings or simplified compulsory settlement which was finalized by a final confirmation of the compulsory settlement or simplified compulsory settlement, it shall apply, if not proven otherwise, that the final decision on the confirmation of compulsory settlement or simplified compulsory settlement terminated the status of the debtor’s insolvency.

If the company becomes insolvent, management must submit a report on the financial restructuring measures to the supervisory board (or to the shareholders) within one month of the insolvency. Such a report must include a description of the company’s financial position, an analysis of the causes of the insolvency, and management’s opinion as to whether there is at least a 50% probability that the financial restructuring of the company can be successfully implemented so as to restore the company’s solvency in the short and long term. On the basis of these conclusions, management determines the next steps (taking action, calling a general meeting, initiating insolvency proceedings, etc.). 

If management or (if appointed) the supervisory board of a company have not discharged their respective duties, their members will be jointly and severally liable for any damages incurred by the creditors due to the members’ failure to achieve complete payment in bankruptcy proceedings. The Insolvency act specifies rules on damage liability, exemptions, limitations of liability, and other specifics. In case the company cannot pay creditors’ claims, a claim for damages against the management board and supervisory board members can be exercised by creditors, and by a bankruptcy administrator for the benefit of creditors in a bankruptcy proceeding.

2.2. What types of insolvency procedures are established by law in your jurisdiction?

Insolvency proceedings established by law in our law system are:

  •  the compulsory settlement procedure;
  •  the simplified forced settlement procedure; and
  •  bankruptcy proceedings. 

Bankruptcy proceedings are divided into bankruptcy proceedings against a legal entity, personal bankruptcy proceedings and estate bankruptcy proceedings. 

2.3. Who has the right to initiate insolvency proceedings?

A proposal to initiate bankruptcy proceedings is eligible to be filed by:

  •  a debtor,
  •  a personally liable partner of the debtor,
  •  a creditor who is likely to demonstrate:
  •      their claim against the debtor against whom they propose to initiate proceedings, and
  •      the circumstance that the debtor is late in paying this claim for more than two months,
  •  the Public Guarantee, Alimony and Disability Fund of the Republic of Slovenia, which probably shows:
  •      workers’ claims against the debtor, against whom they propose to initiate proceedings, and
  •      the fact that the debtor is late in paying these claims for more than two months.

2.4. What are the consequences of commencing insolvency proceedings, in particular:

2.4.1. Does management continue to operate the business and/or is the debtor subject to supervision? 

In a bankruptcy proceeding, management does not continue to operate the business, for the compulsory settlement proceeding please see Section 3.4.1.

They are replaced by an administrator who, in the bankruptcy proceedings, manages the affairs of the insolvent debtor in accordance with the needs of the proceedings and represents the debtor:

a. in procedural and other legal actions related to the examination of claims and separation and exclusion rights,

b. in procedural and other actions related to contesting the legal actions of an insolvent debtor,

c. in legal transactions and other actions necessary for the liquidation of the bankruptcy estate,

d. in exercising resignation and other rights acquired by the insolvent debtor as a legal consequence of the initiation of bankruptcy proceedings, and

e. in other legal transactions that the insolvent debtor can carry out in accordance with the Insolvency Act.

2.4.2. Does a moratorium or stay apply and if so, can it have an extraterritorial effect? 

The initiation of bankruptcy proceedings has the following legal consequences for enforcement or security proceedings that were initiated against the insolvent debtor before the commencement of the proceedings:

a. if in the enforcement procedure or in the security procedure with a lien on immovable property or with a lien on movable property, the creditor has not yet obtained the right to separate by the commencement of the bankruptcy procedure, the enforcement or security procedure is stopped when the bankruptcy procedure is started,

b. if the creditor in the enforcement procedure or in the security procedure with a lien on real estate or with a lien on movable property obtained the right to separate before the start of bankruptcy proceedings and if the sale of the property that is the subject of the separation has not yet been completed before the commencement of the bankruptcy proceedings in the enforcement procedure rights, the enforcement or security procedure is interrupted by the initiation of bankruptcy proceedings,

c. if the creditor in the enforcement procedure obtained the right to separate before the commencement of the bankruptcy procedure and if the property subject to the right of divorce was sold in the enforcement procedure before the start of the bankruptcy procedure, the commencement of the bankruptcy procedure does not affect the course of this enforcement procedure.

d. the security procedure with a temporary injunction or a preliminary injunction is stopped with the commencement of the bankruptcy procedure and all actions taken in this procedure are annulled.

The legal consequences of insolvency proceedings are governed by the law of the country where the insolvency proceedings are opened unless otherwise provided by law in the particular case. Certain legal consequences of insolvency proceedings have the same effect in an EU Member State as in the Republic of Slovenia and arise at the moment determined by Slovenian law for the occurrence of those legal consequences. 

2.4.3. How does it impact the existing contracts (e.g., is the counter-party free to terminate them, can the debtor’s pre-insolvency transactions be challenged)? 

Upon the initiation of bankruptcy proceedings, the debtor in bankruptcy shall acquire the right to withdraw from a mutually unfulfilled bilateral contract and may exercise their right to withdraw from the contract within three months subject to the court’s approval.

If the other party to the contract is the first to fulfill the mutually unfulfilled bilateral contract, a right shall arise to such a party upon the initiation of bankruptcy proceedings to decline such fulfillment as long as the debtor in bankruptcy does not carry out fulfillment or provide it with adequate security.

If the time limit for fulfillment of the liabilities of a debtor in bankruptcy on the basis of a mutually unfulfilled bilateral contract, which is determined as an essential element of such contract, expires after the initiation of bankruptcy proceedings, and the debtor in bankruptcy does not fulfill their liability within such a time limit, the contract shall be rescinded and the other party to the contract shall have no right to persist in fulfilling of the liability. 

In order for an act of a debtor to be voidable, the cumulative prerequisites set out in Insolvency Act must be met, namely: 1. the act was performed during the period of voidability (depending on circumstances 12 or 36 months before the initiation of the insolvency procedure), 2. the act results in unequal treatment of creditors (objective condition of avoidability); and 3. the person in whose favor the act was performed knew or ought to have known at the time the act was performed that the debtor was insolvent (subjective condition of avoidability). A rebut action shall be filed within 12 months following the final notice of initiation of bankruptcy proceedings.

2.5. Which steps do insolvency proceedings normally include and what are the roles of the courts and other key stakeholders (such as debtor, directors of the debtor, shareholders of the debtor, secured creditors, unsecured creditors, etc.)?

  •  Bankruptcy proceedings are initiated by an application for the initiation of bankruptcy proceedings by an eligible claimant. Within 15 days after receiving the creditor’s proposal for the initiation of bankruptcy proceedings, the debtor may object that they are not insolvent or that the creditor’s claim does not exist.
  •  The court decides on the application and issues a resolution initiating the bankruptcy proceedings.
  •  The court notifies the creditors of the initiation of bankruptcy proceedings by means of a summons published on the homepage of the AJPES – the Agency of the Republic of Slovenia for Public Legal Records and Related Services in Slovenian language. Foreign creditors are not notified separately. With the publication, all deadlines start to run.
  •  The creditor (also applicable to foreign creditors) must declare their claim against the insolvent debtor within three months of the announcement of the initiation of the bankruptcy proceedings. If the creditor misses the time limit for filing the claim, their claim in relation to the debtor in bankruptcy shall terminate and the court shall reject the late filing of the claim if the debtor is a legal entity. 
  •  The insolvency administrator takes over all the business, as they conduct the bankruptcy proceedings. 
  •  A creditors’ committee may be formed at the request of creditors. It is a body of creditors that in insolvency proceedings performs procedural actions.
  •  Within one month after the expiry of the deadline for reporting a claim, the administrator must make a definite statement about each timely reported claim, whether they acknowledge or deny it. The administrator must rule on the timely reported claims by submitting a list to the court.
  •  The creditor may file an objection against the basic list of verified claims or may dispute a timely reported claim of another creditor.
  •  If an objection has been filed against the basic list of verified claims, the administrator must submit to the court a supplemented list of tested claims, with which they complete the basic list of tested claims. 
  •  The administrator then submits to the court a final list of the claims tested.
  •  Follows the realization of the general and special assets of the bankruptcy estate.
  •  A final distribution of the bankruptcy estate is made, out of which creditors are repaid.
  •  The administrator must submit their final report to the court within one month after the final distribution. The court issues an order terminating the insolvency proceedings on the basis of the insolvency administrator’s final report.

The bankrupt debtor is ex officio deleted from the register on the basis of a final decision on the termination of the bankruptcy proceedings.

2.6. In insolvency proceedings, do specific stakeholders’ claims enjoy priority (e.g., employees, pension liabilities)? Can the claims of any class of creditor be subordinated (e.g., equitable subordination)?

Priority claims are the following unsecured claims:

1. wages and salary compensation for the last six months before the initiation of insolvency proceedings,

2. compensation for injuries related to work for the debtor and occupational diseases,

3. unpaid severance pay for termination of employment before the start of bankruptcy proceedings, which are due to employees according to the law governing employment relationships, but no more than the amount of severance pay determined for an employee whose employment contract is terminated by the employer for business reasons,

4. wages and salary compensation to employees whose work becomes unnecessary due to the initiation of bankruptcy proceedings, for the period from the initiation of bankruptcy proceedings until the expiration of the notice period,

5. severance payments to workers whose employment contracts were terminated by the manager because their work became unnecessary due to the initiation of bankruptcy proceedings or during the proceedings,

6. taxes and contributions that the payer must calculate or pay at the same time as the payments from points 1, 3, 4, and 5 of this section,

7. compensation for unused annual leave for the current calendar year,

8. claims from credits given on the basis of the law regulating aid for rescue and restructuring of companies and cooperatives in difficulty, and guarantees given for these credits.

9. unsecured claims for the payment of contributions that arose before the initiation of insolvency proceedings.

Subordinated claims are unsecured claims that, based on the legal relationship between the debtor and creditor, if the debtor becomes insolvent, are paid only after payment of other unsecured claims against the debtor.

Secured creditors receive a separate payment from the proceeds of the sale of encumbered assets which are subject to the right to separate settlement (special distribution estate). Where there is more than one secured creditor on the same encumbered assets, the creditors will receive payment according to the priority of rights to separate settlements.

2.7. What is a timeline for insolvency proceedings and how are they finalized? 

In bankruptcy proceedings, the creditor must register their claim against the insolvent debtor within three months after the announcement of the initiation of the proceedings, unless otherwise specified.

The court must issue a decision deciding on the initiation of bankruptcy proceedings within three working days.

The bankruptcy proceedings are finalized by the court issuing an order terminating the insolvency proceedings on the basis of the insolvency administrator’s final report.

The bankrupt debtor is ex officio deleted from the register on the basis of a final decision on the termination of the bankruptcy proceedings.

Please also see Section 2.5.

2.8. Are there any liabilities that survive the insolvency proceedings?

Upon deletion from the register, the debtor ceases to exist as a legal person, so there are no liabilities that survive the bankruptcy proceedings. 

3. Restructuring

3.1. What formal and informal restructuring proceedings are available in your country?

Formal and informal restructuring proceedings available in Slovenia are

  •  the extrajudicial restructuring procedure;
  •  the preventive restructuring procedure;
  •  the compulsory settlement procedure; and 
  •  the simplified forced settlement procedure.

3.2. What are the entry requirements to restructuring and how are restructuring plans approved and implemented?

The entry requirements are the same as described in Section 2.1.

If a company becomes insolvent, its management must submit a report on financial restructuring measures to the supervisory board within one month of the insolvency.

The shareholders and, if appointed, the supervisory board must give an opinion on the report on the financial restructuring measures received within five working days, including an assessment of whether the company is insolvent and whether the proposed measures are necessary and appropriate.

Financial restructuring measures are then implemented and must contain:

  •  a description of the facts and circumstances from which it follows that the debtor is insolvent,
  •  a proposal for forced settlement, 
  •  an assessment of the share of payment of unsecured creditors’ claims and the deadlines for their payment, if bankruptcy proceedings were initiated against the debtor,
  •  a description of other financial restructuring measures that the debtor will implement, and for each of these measures an implementation schedule, an estimate of implementation costs, and an assessment of the effects of the implementation of the measure on the elimination of the causes of insolvency, and the short-term and long-term solvency of the debtor,
  •  a description of the facts and circumstances from which it follows that the debtor will be able to fulfill all his obligations in accordance with the proposed forced settlement.

Where compulsory administration of the company also relates to secured claims, the financial restructuring plan must also contain a more detailed description of the measures and the manner in which the compulsory administration will be implemented in order to restructure the secured claims.

3.3. Who has the right to initiate formal restructuring proceedings?

A proposal to start the compulsory settlement procedure and simplified forced settlement procedure is entitled to be submitted by:

  •  the debtor;
  •  the personally liable partner of the debtor; and
  •  creditors who are joint holders of financial claims against the debtor, the sum of which exceeds 20% of the debtor’s financial obligations, as shown in the last publicly published annual report of the debtor. 

3.4. What are the consequences of commencing restructuring proceedings, in particular:

3.4.1. Does management continue to operate the business and/or whether the debtor is subject to supervision? 

Even though the authors of the Insolvency Act claimed that they have basically copied the German insolvency Act (Insolvenzordnung), this is not true, as, in Slovenia, in the compulsory settlement procedure, the company’s management continues to operate the business.

In insolvency proceedings, the administrator supervises the insolvent debtor’s business and the fulfillment of its obligations. For this purpose, the insolvent debtor must provide him with all the information necessary for supervision and enable him to inspect his business books and documentation.

If during the supervision the administrator finds that there is a reason for objection to conducting the forced settlement procedure, they must file an objection against conducting the forced settlement procedure.

The administrator must prepare a report on the progress of the procedure (a regular report) for each calendar quarter.

Within one month after the expiry of the deadline for reporting a claim the administrator must make a definite statement about each timely reported claim, whether they acknowledge or deny it. The administrator must rule on the timely reported claims by submitting the basic list of tested claims.

If an objection has been filed against the basic list of tested claims, the administrator must submit to the court a supplemented list of tested claims.

The administrator must also submit to the court a final list of verified claims.

3.4.2. Does a moratorium or stay apply, and, if so, what is its scope?

Enforcement or security proceedings that were initiated against an insolvent debtor before the commencement of the compulsory settlement procedure shall be terminated upon the commencement of the compulsory settlement procedure.

The enforcement or security procedure may be continued only on the basis of the decision of the court conducting the forced settlement procedure.

3.4.3. How do restructuring proceedings affect existing contracts? 

The creditor’s non-monetary claim against the insolvent debtor shall be converted into a monetary claim at the market value upon initiation of the compulsory settlement procedure.

Monetary and non-monetary claims of creditors against the insolvent debtor, the subject of which are periodic duties, are converted into one-time monetary claims upon the initiation of the forced settlement procedure.

Monetary claims of creditors against the insolvent debtor, which are expressed in a foreign currency, are converted into claims expressed in euros at the start of the forced settlement procedure, at the exchange rate published or set and published by the Bank of Slovenia and valid on the day of the start of the forced settlement procedure.

If at the start of the forced settlement procedure there is a claim of an individual creditor against the insolvent debtor and a counterclaim of the insolvent debtor against this creditor, the claims are considered to be set off with the commencement of the forced settlement procedure.

Neither the initiation of the forced settlement process nor the confirmed forced settlement has an effect on qualified financial contracts and offset arrangements (for example closed-out netting agreements) and other qualified contracts, as defined by the Insolvency Act.

3.4.4. How are existing contracts treated in restructuring and insolvency processes? 

3.5. Can third-party liabilities be released through restructuring proceedings?

A confirmed compulsory settlement shall not affect claims by creditors against third-parties (e.g., guarantors, joint and several fellow debtors of an insolvent debtor, and persons liable to recourse).

3.6. Which steps do restructuring proceedings normally include and what are the roles of the courts and other key stakeholders (such as debtor, directors of the debtor, shareholders of the debtor, secured creditors, unsecured creditors, etc.)?

  •  Restructuring proceedings are initiated by an application for the initiate of restructuring proceedings by an eligible claimant.
  •  The court shall notify the creditors of the initiation of the forced settlement procedure by means of a summons.
  •  Possible objections follow.
  •  Preparation of a financial restructuring plan.
  •  Preparation of the business valuation report.
  •  The creditor must register his claim against the insolvent debtor within one month after the announcement of the initiation of this procedure.
  •  Formation of the creditors’ committee.
  •  The court appoints an administrator to supervise the restructuring proceedings.
  •  Within one month after the expiry of the deadline for reporting a claim, the administrator must make a definite statement about each timely reported claim, whether they acknowledge or deny it. The administrator must rule on the timely reported claims by submitting a list to the court.
  •  Creditors vote on the compulsory settlement, followed by a confirmation of the compulsory settlement by the court.
  •  For each calendar quarter, management must compile a report on the implementation of financial restructuring measures.
  •  End of compulsory settlement once all obligations under the restructuring plan have been met.

The court with its decision on the confirmation of the agreement on financial restructuring determines that the approved agreement on financial restructuring has an effect: 

  •  for the claims of all creditors who agreed to the conclusion of the agreement, 
  •  for ordinary financial claims, listed in the basic list of financial claims, of those creditors who did not agree to the conclusion of the agreement, and 
  •  for secured financial claims, listed in the basic list of financial claims, of those creditors who did not agree to the conclusion of the agreement. 

3.7. How are restructuring proceedings normally finalized? 

As described above, forced settlement finalizes once all obligations under the forced settlement plan have been met.

According to the Slovenian Statistical Report on Insolvency Cases (S-INS) in 2021, nine compulsory settlement proceedings were pending before the court, four of which have been confirmed (the financial restructuring plan has been approved) and four of them have been rejected (initiation of the bankruptcy procedure).

4. Cross-border restructuring and insolvency

4.1. Do domestic courts in your country recognize foreign insolvency or restructuring proceedings over a local debtor?

Yes, the domestic courts are competent to decide on the recognition of foreign insolvency proceedings and to cooperate with foreign courts, which have actual jurisdiction over domestic insolvency proceedings.

4.2. What are the preconditions for recognizing foreign decisions?

1. A request for recognition of a foreign court proceeding due to insolvency may be filed by a person who was appointed as administrator in this procedure.

2. The request for recognition must be accompanied by:

  •  a certified copy of the decision of a foreign court on the initiation of insolvency proceedings or
  •  a statement from a foreign court confirming that foreign insolvency proceedings have been initiated and a foreign administrator has been appointed, and
  •  a translation of the documents into the language in official use at the court.

3. The foreign administrator must attach their statement to the request for recognition, in which they list all foreign insolvency proceedings pending against the debtor of which they are aware.

For the recognition of foreign proceedings due to insolvency, the general rules on the recognition and enforcement of foreign court decisions, specified in the law governing private international law and procedure, apply.

If the insolvency proceeding is held in another Member State, they have direct legal effect in the Republic of Slovenia. The rules of Regulation (EU) 2015/848 and the specific rules of law are laid down in the Insolvency Act. 

The court may determine only those legal consequences of a foreign insolvency proceeding that enable the interests of creditors and other persons, including the debtor, for whom these legal consequences are to be adequately protected and do not contravene Slovenian ordre public.

4.3. Do domestic courts cooperate with their counterparts in other jurisdictions and if so, what does such recognition depend on (such as the COMI of the debtor, the governing law of the debt to be compromised, etc.)?

The Insolvency Act provides the possibility of coordination between domestic and foreign insolvency courts and appointed administrators, where such coordination may be executed in any form which provides for the realization of the purpose of cooperation.

The Insolvency Act also expressly states that a Slovenian court may refuse to recognize foreign insolvency proceedings or a request on the part of a foreign court or receiver for assistance or cooperation if this would contravene Slovenian ordre public.

4.4. How are foreign creditors treated in restructuring and insolvency proceedings in your jurisdiction?

Foreign creditors are treated in all respects equally to domestic creditors with the exception of the publication of the initiation of the insolvency proceeding by the court on the AJPES. 

Even though the Insolvency Act provides that the appointed administrator must, as soon as possible and not later than within one month following the initiation of domestic bankruptcy proceedings, provide all known foreign creditors of the debtor in bankruptcy with a notification of the initiation of bankruptcy proceedings, foreign creditors have less time for filing their claims and risk the debtor not recording their claims in their books. 

5. Summary

5.1. Overall, do you have a more creditor-friendly or debtor-friendly restructuring and insolvency regime in your jurisdiction?

Initially, the Slovenian insolvency law was more debtor-friendly but in recent years, creditors have come to the fore, gaining more opportunities to participate actively in insolvency proceedings. Creditors are, for example in a forced settlement proceeding, able to restructure the debtor independently of the debtor (decisions of the general meeting) and have the option of a debt-to-equity swap. In this way, they can squeeze out the existing shareholders and take over the debtor. Since the last overhaul of the Insolvency Act, the scales are thus tipped in favor of creditors.

Guide Contributors For Slovenia

Ales Lunder 

Partner 

Ales.Lunder@senica.si

+386 125 28000 

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