Myšák Gallery Vodičkova 710/31 Praha


New measures to help the business environment - temporary protection of viable enterprises

Written by Andrea Obuchová

The Ministry of Justice of the Slovak Republic has submitted a bill proposing the introduction of a regulation of the institute of temporary protection of viable enterprises. The intention of the Ministry of Justice is to help entrepreneurs who got into trouble as a result of the COVID-19  pandemic, even subsequently, after January 1, 2021.

The proposed regulation is based on the legal regulation adopted by act no. 62/2020 Coll. on certain emergency measures in connection with the spread of the dangerous contagious human disease COVID-19 and in the judiciary and on amendments and supplements to certain acts. However, this legislation is of a temporary nature. The provision of this temporary protection is currently set until 1 October 2020, with the government being able to extend it, but no longer than 31 December 2020. The aim and purpose of the proposal are to provide an opportunity to apply for temporary protection under specified conditions even after the possibility to apply for temporary protection under act no. 62/2020 Coll. extinguished.

This legal institute is intended for viable enterprises that have run into financial difficulties, as a result of which the current, as well as the future possibility of running an enterprise, is endangered, and which can be bridged by limiting the scope of insolvency obligations if it can be reasonably assumed that the provision of such temporary protection will enable the entrepreneur to continue in business and thus prevent the loss of jobs, know-how and at the same time, such protection will contribute to a higher degree of satisfaction of creditors' claims.

An entrepreneur running an enterprise with its registered seat or place of business in the territory of the Slovak Republic and meeting the specified conditions will be entitled to apply for the provision of such temporary protection. According to the bill, the temporary protection will be provided for two months, while an entrepreneur under temporary protection is allowed to apply for the extension of temporary protection for another four months. In connection with the introduction of this institute, electronic forms are also being created, the structure of which is based on the already existing forms for temporary protection under act no. 62/2020 Coll.

In addition to the introduction of the institute of temporary protection, the draft law also proposes a change in the legal regulation of small bankruptcy in act no. 7/2005 Coll. on bankruptcy and restructuring and amendments and supplements to certain acts, as amended, which aims to streamline the legal regulation of the so-called "small bankruptcy" and to enable a quick and efficient liquidation procedure to take place. The submitted proposal simplifies the rules for conducting bankruptcy and, if the conditions are met, the court will declare a small bankruptcy on the debtor's property within 15 days of receiving the proposal.

In particular, the bill aims to simplify, streamline and speed up small business bankruptcy and restructuring processes in connection with the expected consequences of the spread of the dangerous contagious human disease COVID-19 in the business environment, so that they can leave the market relatively quickly and without undue delay.

The bill is proposed to take effect on January 1, 2021.




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