The amendment to Bankruptcy and Restructuring Act

Effective from: 1 April 2017

The amendment changes the regulation of the discharge of debts (in Slovak: oddlženie) for individuals. The aim of the amendment is to make individual bankrupt more available and to motivate the debtors to earn a living for themselves.

The regulation of the discharge of debts for individuals comes from foreign legal systems. It particularly concerns the so-called Fresh Start concept, which means that all of the debtor’s assets are liquidated and his debts are discharged. This concept corresponds to discharge of debts in a bankruptcy. In practice the amendment makes the existing regulation more precise.

No Fresh Start is the other concept. It works with a restructuring of debts according to a repayment schedule ordered by a court. It is an alternative for debtors with sufficient funds to satisfy creditors. This concept corresponds to discharge of debts by a repayment schedule.

Both of the procedures can be initiated only by an individual debtor (no matter if the individual is an entrepreneur). The debtor has to be insolvent and the debt collection or similar procedure has to be conducted against them.

The amendment modifies the selection of the restructuring administrator. Newly the selection of the administrator is secured randomly by technical means (such as the selection of a judge). The restructuring of a debtor will not be conducted by an administrator chosen by a debtor, but by a restructuring administrator randomly selected by a court.        

Debtor has a right to appoint an administrator at their discretion to compile a restructuring plan.