Slovensko: Konkurz nebo reorganizace po fúzích

3. 7. 2021

Publikované články

JUDr. Martin Provazník

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Slovakia saw a huge increase in the number of merged companies between 2012 and 2017. Thousands of companies were merged into fewer than 200 successor companies, which subsequently ended up in bankruptcy. Abuse of the merger process A merger is a procedure that is quite common in M&A transactions and is often the desired way to dissolve companies. However, when a merger is carried out in order to avoid liquidation, bankruptcy or reorganisation, the insolvent company is often merged with a successor company and liabilities of the insolvent company are transferred to the legal successor. Thus, the creditors’ claims cannot be satisfied in the liquidation, bankruptcy or reorganisation of the dissolved company and the liabilities of the dissolved company remain with the legal successor. Moreover, the merger is often planned so that the legal successor is also insolvent or becomes insolvent by the merger itself. As a consequence, the legal successor files for bankruptcy after the merger. In the subsequent insolvency proceedings of the legal successor the insolvency administrator has difficulty obtaining information about the dissolved company. If the bankrupt successor company is the legal successor of a large number of dissolved companies (10 or more), it is almost impossible for the insolvency administrator to get the essential information about the dissolved companies. In addition, under this merger “model”, the sole shareholder of the successor company is often a person who has no funds and/or is difficult to find, often a foreign national from an Asian or African country, making it extremely difficult to communicate and hold them accountable. Creditors thus have nothing to satisfy the claim, leaving them with only one option: to ask the police for help. In the context of criminal proceedings, the investigation focuses on whether the debtor has reduced its assets with the intention of harming the creditor or whether there has been an attempt to prevent the winding-up of the business. Emergence of the merger problem in 2012 The sharp rise in these “special purpose” mergers occurred due to a legislative change in 2012. Previously, when someone needed to get rid of a company, they transferred its shares to a penniless and often uncontactable person. The abandonment of this “model” and the focus on company mergers indirectly resulted from an amendment to the Slovak Commercial Code. As of 1 October 2012, the law changed and the registration of a majority shareholder now also requires the consent of the tax authority. This consent applies to both the transferor and the transferee, with a few exceptions (e.g. foreign entities). The amendment spurred a massive increase in corporate mergers aimed at getting rid of company debts. The law allowing this type of merger remained in force until 2017. During this time period (especially 2014 and 2015), there was a significant increase in company mergers in Slovakia. The Slovak Ministry of Justice was aware of this development and initiated a change of laws in 2017. Correcting the problems with abuse of merger process in 2017 Effective as of 8 November 2017, the amendment to the Commercial Code incorporated new conditions for mergers to reflect the frequent occurrence of mergers deliberately aimed at preventing debt recovery or getting rid of insolvent companies and avoiding bankruptcy proceedings. From this date, companies should not merge if doing so would create a situation where the value of the legal successor’s liabilities would exceed that of its assets. An addition, an auditor’s certification is required. Furthermore, none of the merged companies can be in liquidation, bankruptcy, reorganisation or dissolution proceedings. If such a merger were to take place, all members of the bodies that carried out the merger could be held liable. This new law also introduced the obligation to inform the tax authority of the merger in advance. Today, it is possible to merge with a company that has financial difficulties but is not bankrupt. However, the legal successor must have enough assets to cover the debts of both companies.

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