When are you declared bankrupt?

In Slovenia, bankruptcy is declared against a debtor who has become insolvent. A debtor has become insolvent if he is unable to fulfill his liabilities in longer time period that are due in that period (f. e. if he is at least 2 months late in fulfilling his obligations that represent at least 20% of all of his obligations; or if his account equity does not suffice to enforce a writ of execution and it remains unchanged for at least 60 days; or if he has no bank account in either Slovenian banks and has not fulfilled his obligations deriving from writ of execution against him) or if he is permanently unable to fulfill his liabilities as they are due (f. e. if the value of his obligations exceed the value of his assets).
A petition for the bankruptcy can be submitted by a creditor, who has to pay an advance for bankruptcy costs of aprox.EUR 3.500 (if the creditor is debtors’ employee, he is exempted from paying an advance) or by the debtor himself without any costs (no advance needs to be paid).

How long does it take to process a petition for bankruptcy in Slovenia?

The petition for bankruptcy must be processed without unnecessary delay in 8 days. Usually the duration of the process varies from some days to 2 – 3 weeks. The process is faster when the petition has been filed by debtor himself. If the petition comes from a creditor, the petition must be served to the debtor, giving him the possibility to object in 15 days.The creditor holds the burden of proof considering the debtors insolvency.

What can you do if you disagree with the bankruptcy order by the court?

The debtor has an option to object his insolvency in 15 days after the petition for bankruptcy has been served to him.
Bankruptcy decisions by court can be appealed to higher instance courts, where itis mandatory to be represented by an attorney or a person that has passed bar examination.

What happens if you are declared bankrupt?

The bankruptcy is declared by the court that appoints a trustee. The trustee takes over control of the bankruptcyestate and the company/debtor loses control of his assets. The trustee will sell the assets and distribute the proceeds in accordance with the legal rules.

What duties and powers does the trustee have?

The trustee performs his tasksin order to protect and realize the interests of joint creditors. The trustee falls under the supervision of the delegated judge appointed by the court issuing the bankruptcy order. Instructions, given to the trustee by the delegated judge are mandatory. The role of the trustee is to sell all the assets of the bankrupt at the highest possible price and to distribute the obtained amount correctly to the creditors in the manner prescribed by law. He also draws up an inventory and estimates the bankruptcy estate, draws up a liquidation plan in which he proposes ways to sell assets, an estimate of expenses and a sales plan. In matters relating to the bankruptcy estate, he always performs acts on behalf of the bankrupt. Every three months, the trustee has to present a progress report to the court. The trustee shall act with due diligence, in a manner enabling optimum utilization of the debtor’s assets in order to satisfy creditors to the greatest possible extent.

What kind of obligations do I have as a bankrupt?

The bankrupt has several statutory obligations, including a duty to provide information to the trustee and to deliver up documents relating to his activities, including books of account.
In personal bankruptcy, the debtor is obliged to cooperate with the court and the trustee, to respond to everysummon and to provide contact details where he can be reached at any time. Further he is obliged to submit a report on his property for the last 5 years prior to bankruptcy. In process for remission of liabilities, he is obliged to fulfill his obligations under the employment contract, if he is employed, or apply for a job, if he is not employed. He is forbidden to refuse any job that he is capable to perform and is obliged to monthly report to the trustee regarding the actions made in pursue of employment.

How can I monitor the progress of the bankruptcy?

Every bankruptcy order or proceeding is published by the court and is open for public. You can find the insolvency register on the website www.ajpes.si on which the trustee will publish bankruptcy reports.

How long does a bankruptcy last?

Every bankruptcy is different, there are no rules that regulate this. The duration of the procedure depends on the complexity of the case (f.e. weather there are any assets to sell). In practice, bankruptcy lasts for at least 12 months. If legal proceedings are involved, the bankruptcy may last longer.

Can I make arrangements with my creditors?

The arrangements between the debtor and the creditor are possible before the bankruptcy process, however they are not possible during the bankruptcy process.

How can an employee collect outstanding salary from his bankrupt employer?

After the bankruptcy of the employer is announced, the employee has to register his claim within 3 months. Outstanding salaries for the last six months prior to bankruptcy are regarded as privileged claims.

What important advice can be given to a company director in the event of imminent bankruptcy?

It is important that a proper administration has been kept and can be provided to the trustee. When a company becomes insolvent, it is prohibited to make payments or to undertake obligations other than the ones that are necessary for ordinary operations. Further, it is prohibited to act in such manner that would put some creditors in privileged position in comparison to others. One month after the company becomes insolvent company director has to submit a report on the financial restructuring measures to supervisory board including its opinion weather it can be executed successfully. If that opinion is negative, he has to file the petition for bankruptcy within 3 days.
If this has not been complied with, the director of the company is guilty of mismanagement and may be held liable for the damage, caused to a creditor for not receiving full payment of its debt during the bankruptcy process.

Is there a special arrangement for a private person who is in danger of going bankrupt?

A private person has a possibility to file a petition for personal bankruptcy. He has to submit a report on his property for the last 5 years prior to bankruptcy. During the personal bankruptcy the debtor has limited legal capacity. Creditors are not limited to 3 month deadline to register their claims. Unpaid debts transfer to private person when the personal bankruptcy ends, however a private person has the possibility to file a request for procedure for remission of liabilities within the procedure of personal bankruptcy. If the court allows the procedure for remission of liabilities, it also determines the length of test period (2 – 5 years), after which a private person is no longer liable for its unpaid debts. During the test period, the debtor must try to obtain as much income as possible and, if this is not possible, the debtor must apply for a job. In addition, all the debtor’s assets, with the exception of normal household goods, are sold. During the test period, the debtor must live at social assistance benefit level.

Published by: http://www.gsp.si
For further questions you can contact one of our insolvency law specialists:
iztok.starc@gsp.si or anton.grilc@gsp.si