Slovak Restructuring Tools and Their Use in Practice
July 2025
Introduction
In recent years, Slovak businesses have faced mounting pressure from several major challenges: the COVID-19 pandemic, rising inflation, high energy costs, and global uncertainty. Additionally, the German economic slowdown has severely impacted Slovakia, as Germany remains the country's main trading partner. Any decrease in German demand quickly affects Slovak companies, particularly in the automotive industry, resulting in fewer orders, extended payment terms, and reduced profit margins. As a result, more companies are turning to restructuring tools to stay afloat and protect their future.
Data indicates minimal use of court-approved restructuring proceedings in Slovakia over the past decade. While there were isolated cases between 2016 and 2019, there were no approved restructurings from 2020 to 2023. This was likely due to the COVID-19 pandemic, during which courts operated in a restricted mode, delaying or suspending non-urgent proceedings. A notable increase only appeared recently, with eight approved cases in 2024 and six in early 2025.
This article provides a brief overview of the key features of Slovak restructuring law and examines how companies currently use restructuring tools within the jurisdiction.
Restructured Proceedings
Permitted by Court
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Introduction
In recent years, Slovak businesses have faced mounting pressure from several major challenges: the COVID-19 pandemic, rising inflation, high energy costs, and global uncertainty. Additionally, the German economic slowdown has severely impacted Slovakia, as Germany remains the country's main trading partner. Any decrease in German demand quickly affects Slovak companies, particularly in the automotive industry, resulting in fewer orders, extended payment terms, and reduced profit margins. As a result, more companies are turning to restructuring tools to stay afloat and protect their future.
Data indicates minimal use of court-approved restructuring proceedings in Slovakia over the past decade. While there were isolated cases between 2016 and 2019, there were no approved restructurings from 2020 to 2023. This was likely due to the COVID-19 pandemic, during which courts operated in a restricted mode, delaying or suspending non-urgent proceedings. A notable increase only appeared recently, with eight approved cases in 2024 and six in early 2025.
This article provides a brief overview of the key features of Slovak restructuring law and examines how companies currently use restructuring tools within the jurisdiction.
Restructured Proceedings
Permitted by Court
Click the points to find more
Implementing the Directive on Preventive Restructuring and Insolvency
Implementing the Directive on Preventive
Restructuring and Insolvency
In Slovakia, most insolvency cases (both bankruptcy and restructuring proceedings) last three to five years. Given these extended timeframes, the adoption of the Act on Resolution of Impending Insolvency (the “Preventive Restructuring Act”) by the Slovak Parliament in 2022, which, inter alia, transposes the Directive (EU) 2019/1023 of the European Parliament and of the Council of 20 June 2019 on preventive restructuring, insolvency and disqualification frameworks (the “Directive”), constitutes a very welcome step in the development of Insolvency & Restructuring practice in Slovakia. However, in practice, these tools remain underused. To date, only one Slovak company has used the new public preventive restructuring procedure, highlighting the slow uptake despite the reform’s potential.
Several factors contribute to this limited uptake, including the tax treatment of debt relief (where forgiven debts are treated as taxable income for the debtor), limited awareness among SMEs about the new options, and a generally cautious approach by Slovak courts and advisors when applying relatively new legal instruments. Broader use of the preventive tools will likely depend on future case law development and clearer guidance on their application.
In Slovakia, most insolvency cases (both bankruptcy and restructuring proceedings) last three to five years. Given these extended timeframes, the adoption of the Act on Resolution of Impending Insolvency (the “Preventive Restructuring Act”) by the Slovak Parliament in 2022, which, inter alia, transposes the Directive (EU) 2019/1023 of the European Parliament and of the Council of 20 June 2019 on preventive restructuring, insolvency and disqualification frameworks (the “Directive”), constitutes a very welcome step in the development of Insolvency & Restructuring practice in Slovakia. However, in practice, these tools remain underused. To date, only one Slovak company has used the new public preventive restructuring procedure, highlighting the slow uptake despite the reform’s potential.
Several factors contribute to this limited uptake, including the tax treatment of debt relief (where forgiven debts are treated as taxable income for the debtor), limited awareness among SMEs about the new options, and a generally cautious approach by Slovak courts and advisors when applying relatively new legal instruments. Broader use of the preventive tools will likely depend on future case law development and clearer guidance on their application.
General Remarks
General Remarks
The Slovak Insolvency & Restructuring Act recognizes two types of insolvency situations: bankruptcy, and restructuring.
The key distinction between these procedures concerns the preservation of the debtor’s business. In restructuring, the continuation of the business (or at least part thereof) is a prerequisite for the success of the restructuring. By contrast, bankruptcy will generally involve the winding up of the debtor’s business and liquidation of the remaining assets of the debtor.
Another important distinction between restructuring and bankruptcy lies in the role of the trustee. In formal restructuring, a court-appointed trustee plays a key role in assessing creditor claims, convening and managing creditor meetings, supervising the implementation of the restructuring plan, and ensuring that legal requirements are met throughout the process. The trustee acts more as a supervisor rather than a liquidator, with the aim of preserving the debtor’s business and achieving the best outcome for creditors.
By contrast, in bankruptcy proceedings, the trustee (known as the bankruptcy trustee or receiver) assumes full control over the debtor’s assets and operations. Their role is to liquidate the estate, sell assets, and distribute the proceeds to creditors in accordance with the statutory order of priority. The trustee acts as a neutral administrator focused solely on maximizing recovery for creditors through asset realization, without regard to preserving the business as a going concern.
The Slovak Insolvency & Restructuring Act recognizes two types of insolvency situations: bankruptcy, and restructuring.
The key distinction between these procedures concerns the preservation of the debtor’s business. In restructuring, the continuation of the business (or at least part thereof) is a prerequisite for the success of the restructuring. By contrast, bankruptcy will generally involve the winding up of the debtor’s business and liquidation of the remaining assets of the debtor.
Another important distinction between restructuring and bankruptcy lies in the role of the trustee. In formal restructuring, a court-appointed trustee plays a key role in assessing creditor claims, convening and managing creditor meetings, supervising the implementation of the restructuring plan, and ensuring that legal requirements are met throughout the process. The trustee acts more as a supervisor rather than a liquidator, with the aim of preserving the debtor’s business and achieving the best outcome for creditors.
By contrast, in bankruptcy proceedings, the trustee (known as the bankruptcy trustee or receiver) assumes full control over the debtor’s assets and operations. Their role is to liquidate the estate, sell assets, and distribute the proceeds to creditors in accordance with the statutory order of priority. The trustee acts as a neutral administrator focused solely on maximizing recovery for creditors through asset realization, without regard to preserving the business as a going concern.
Restructuring
Restructuring
Restructuring in Slovakia is a court-driven turnaround process designed to provide higher creditor satisfaction compared to bankruptcy. Slovak law recognises two types of restructuring proceedings:
Formal restructuring – more suitable for an insolvent company; and
Public / non-public preventive restructuring – more suitable for a company on the verge of insolvency.
Restructuring always takes priority over bankruptcy, if filed simultaneously.
An important constraint on formal restructuring requires that compensation to general unsecured creditors must not fall below 50% of the claim value.
In case the debtor is not yet bankrupt, the above-mentioned Preventive Restructuring Act provides a solution to the impending bankruptcy through preventive proceedings.
Bankruptcy
Bankruptcy
Bankruptcy aims to maximize creditor claim satisfaction, generally through selling and liquidating all the debtor’s assets. Once declared bankrupt, the bankruptcy trustee takes over the debtor’s assets and manages creditor distributions by allocating proceeds according to statutory priorities. Bankruptcy ends the debtor’s business operations, except in limited cases where part of the business might be sold as a going concern.
Bankruptcy aims to maximize creditor claim satisfaction, generally through selling and liquidating all the debtor’s assets. Once declared bankrupt, the bankruptcy trustee takes over the debtor’s assets and manages creditor distributions by allocating proceeds according to statutory priorities. Bankruptcy ends the debtor’s business operations, except in limited cases where part of the business might be sold as a going concern.
Restructuring Proceedings
Restructuring Proceedings
Slovak law offers three types of restructuring proceedings, and the most suitable option typically depends on the debtor’s specific circumstances.
Formal Restructuring
Formal restructuring proceedings consist of the following four main phases:
- Proposal – A company or its creditor can ask a trustee to prepare an opinion assessing restructuring feasibility.
- Initiation – If the court accepts the application, it initiates the process by publishing a notice. The company receives protection from existing debts (moratorium), and the court evaluates whether restructuring can proceed.
- Negotiation of plan – The company prepares a restructuring plan. Creditors and the creditors’ committee must approve of the plan.
- Approval – When creditors approve the plan, the court confirms it, concludes the restructuring, and publishes the final decision in the Slovak Commercial Bulletin.
Public Preventive Restructuring
Public preventive restructuring is available to companies at risk of insolvency within the next 12 months, based on a cash-flow test. While similar to formal restructuring, it offers some advantages, such as no minimum recovery threshold for unsecured creditors and no automatic bankruptcy if the process fails. However, due to unresolved tax issues (e.g., debt write-offs are taxed), its practical use remains limited. A key feature is the public plan, drafted with the help of an advisor (such as a law or audit firm or insolvency trustee), which the debtor may adjust throughout the process after negotiations with creditors, but the final version must remain broadly consistent with the initial draft. If the court approves the procedure, the company presents the plan to creditors for a vote.
Non-Public Preventive Restructuring
Non-public preventive restructuring is intended for cases involving creditors that are supervised by the National Bank of Slovakia. It is typically used in financial standstill situations, where a debtor negotiates directly with a bank or a syndicate of banks. Unlike public preventive restructuring, the process and the plan are not made public. The non-public plan is binding only on those creditors who have given their written consent.
Advantages of
Restructuring Proceedings
Advantages of
Restructuring Proceedings
Restructuring proceedings create valuable opportunities for parties to cooperate and develop mutually beneficial solutions, potentially accelerating the process (including extending payment terms, reducing interest rates, or accepting partial repayments). Restructuring processes typically proceed faster than bankruptcy or liquidation, allowing quicker resolution of financial issues while preserving company value and minimizing operational disruption.
A successful restructuring process can make the company more attractive to new investors. As the financial health of the business improves, it may be seen as a viable and potentially lucrative investment opportunity, leading to increased interest from external investors.
Restructuring is generally viewed as a proactive approach to addressing financial challenges. Unlike bankruptcy, which can carry a stigma and may be associated with failure, restructuring is often perceived as a strategic move to overcome difficulties and improve the company’s prospects. This approach typically results in fewer reputational consequences.
Restructuring proceedings create valuable opportunities for parties to cooperate and develop mutually beneficial solutions, potentially accelerating the process (including extending payment terms, reducing interest rates, or accepting partial repayments). Restructuring processes typically proceed faster than bankruptcy or liquidation, allowing quicker resolution of financial issues while preserving company value and minimizing operational disruption.
A successful restructuring process can make the company more attractive to new investors. As the financial health of the business improves, it may be seen as a viable and potentially lucrative investment opportunity, leading to increased interest from external investors.
Restructuring is generally viewed as a proactive approach to addressing financial challenges. Unlike bankruptcy, which can carry a stigma and may be associated with failure, restructuring is often perceived as a strategic move to overcome difficulties and improve the company’s prospects. This approach typically results in fewer reputational consequences.
Enforcement Protection
Enforcement Protection
In Slovakia, enforcement protection (i.e., a moratorium on enforcement actions) applies only in formal restructuring proceedings and begins once the court initiates the process. This protection includes the following key elements:
No new enforcement or execution proceedings may be initiated against the debtor for claims that are registered in the restructuring.
Ongoing enforcement or execution proceedings concerning such claims are automatically suspended.
Secured creditors are also restricted from initiating or continuing the enforcement of security rights (e.g., foreclosure) against the debtor’s assets, provided their claims are included in the restructuring.
This framework allows the debtor to focus on negotiations and the preparation of a restructuring plan without the immediate pressure of enforcement actions or asset loss.
Preventive restructuring does not automatically provide such protection. Courts may grant protection only under specific conditions, typically requiring creditor approval and limiting duration to six months. In formal restructuring, debtors benefit from the moratorium once proceedings begin, offering crucial relief during restructuring plan negotiation and approval.
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