Slovenská správcovská a reštrukturalizačná, k.s.

Debt discharge

Proceeding on debt discharge is a two-stage proceeding, which may follow after termination of the bankruptcy proceeding held on the property of the debtor, who is a natural person.

The result of the bankruptcy proceeding after the monetization of debtor’s property, proceeds from which are usually lower than the amount of determined receivables, is the possibility of the creditors to enforce their unsatisfied claims until the death of the natural person. Act No. 7/2005 Coll. on Bankruptcy and Restructuring and on amendments and supplements to some acts (“BRA”) introduced for the debtor the option through proceeding on debt discharge to reach unenforceability of creditors’ receivables, which were not satisfied in previous bankruptcy proceeding. Proceeding on debt discharge may commence only upon application of the debtor.

Application must be submitted at latest until the termination of the bankruptcy proceeding. From the reasoning of the application must be obvious the honest intention of the debtor to make reasonable efforts to satisfy receivables of its creditors. The court may reject the application for debt discharge in case the debtor has not duly fulfilled, during the bankruptcy proceeding, its obligations set by BRA and in case the bankruptcy was terminated due to lack of debtor’s property. The court authorizes the debt discharge by resolution, in which will be determined the trustee, the extent of legal actions, which are subject to trustee’s approval, and the amount of monetary funds, which the debtor must provide to trustee at the end of the trial period. The trial period lasts 3 years.

In determination of the amount of monetary funds, which the debtor shall pay at the end of the trial period, the decision of the competent court will be based mainly on the amount of unsatisfied claims of the creditors in previous bankruptcy proceeding and on debtor’s economic possibilities. If during the trial period will not happen the termination of the trial period, for example because of serious and repeated breach of BRA by the debtor, the court shall decide on debtor’s debt discharge. The consequence of court’s decision on debt discharge is the unenforceability of the receivables, which were not satisfied during bankruptcy proceeding.