CORONAVIRUS TASKFORCE UP-DATE - Temporary protection of entrepreneurs and extraordinary deferral of execution – 27 April 2020, 3 pm

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Please note that the content below is current as at today, i.e. 27 April 2020, 3 pm. In the case of any changes, this content will be amended. 

The parliament adopted the amendment of the Act no. 62/2020 Coll. on extraordinary measures due to spread of the dangerous contagious human disease COVID-19 and justice, regulating temporary protection of entrepreneurs operating a business from negative effects of coronavirus pandemic. 

The aim of this amendment is to help affected entrepreneurs by provision of temporary protection. Temporary protection should create the preconditions for the viability and healthy business operation of the company after the end of the coronavirus pandemic.

For the purposes of the temporary condition, the term entrepreneur shall mean either natural or legal person, having its registered seat or place of business in the Slovak republic, with its trading licence issued before 12th March 2020 (hereinafter referred to as the “entrepreneur”).

Submission for temporary protection

The entrepreneur can apply for temporary protection by submitting application to the respective court as of 12th May. Respective courts for temporary protection provision are as follows: 

  • Trnava District Court (for district of Trnava Regional Court and Bratislava Regional Court) 
  • Žilina District Court (for district of Žilina Regional Court and Trenčín Regional Court) 
  • Banská Bystrica District Court (for district of Banská Bystrica Regional Court and Nitra Regional Court)
  • Prešov District Court (for district of Prešov Regional Court and Košice Regional Court)

Requirements for the application

The entrepreneur submits the application through form, which is to be published on the website of the Ministry of Justice. Integral part of the application shall be an affidavit, in which entrepreneurs declares fulfillment of all the following conditions for provision of temporary protection: 

  • an increase in overdue receivables or a significant decrease in revenues compared to the same period in 2019, within the business activity of the entrepreneur, menacing the operation of entrepreneur’s company 
  • as of 12th March 2020, the entrepreneur was not in economic decline/crisis
  • at the date of submission of the application, the entrepreneur has not been declared bankrupt, restructure was not allowed and there are no reasons to wind up its operation 
  • as of 12 March 2020, no enforcement proceedings were pending against him in order to satisfy the claim arising from his business activity
  • the exercise of the lien was not commenced as of 12 March 2020 in relation to an enterprise, it’s assets or rights belonging to the property value of the entrepreneur's enterprise
  • the entrepreneur did not distribute its profit or other resources during the calendar year of 2020, or eliminated consequences of such acts 
  • during the calendar year of 2020, the entrepreneur has not performed any measures endangering its financial stability or have eliminated consequences of such actions. This does not include any measures to mitigate consequences of Covid-19 pandemic
  • keeps its account pursuant to the relevant regulation and submits financial statement to the registry 

Effects of granting temporary protection

  • protection against all filings for bankruptcy by the creditors 
  • postponement of the obligation to file for its own bankruptcy
  • suspension of executions after 12th March 2020 (only if liabilities arose from business activities)
  • pledges relating to an undertaking, its assets, rights or other funds belonging to the undertaking cannot be enforced 
  • prohibition to offset related receivables 
  • termination of contract with contractual partners due to delay between 12th March and 12th May in connection to the coronavirus pandemic is forbidden. This effect shall not apply in cases where the other contractual party would immediately endanger its operation
  • periods for voidability of legal acts and to claim right against entrepreneurs under temporary protection are extended 
  • entrepreneur can pay obligations related to the operation of the premises as a priority

Adopted measures shall be apply until 1st October 2020. The Government can extend this time period, but no later than to the end of the year 2020. 

Provisions on temporary protection shall not apply to selected financial institutions, such as banks, insurance companies, health insurance companies, etc.  

Extraordinary deferral of executions 

Adopted amendment of the Act no. 62/2020 Coll. on extraordinary measures due to spread of the dangerous contagious human disease COVID-19 and justice, introduces changes in the area of enforcement proceedings. 

Specifically, the possibility to request an executor to defer execution up to 6 months, but no later than to 1st December 2020. During deferral of the execution, the executer has a right to perform all acts to secure property of the person against whom the enforcement proceeding is led. 

The execution deferral is possible only in proceeding which began after 12th March 2020. Deferral shall not be allowed if any of following situation occurs:

  •  it is repeated deferral of execution 
  • instalments were allowed to the person against who the execution is led 
  • execution for alimony payment 
  • execution for provision of other than financial obligation 

Integral part of the request for deferral of the execution shall be affidavit stating, that due to the coronavirus pandemic, the applicant’s revenue has temporarily diminished, and enforcement proceeding would cause particularly unfavourable consequences to him or his family. The request must also contain affidavit on the property.