The amendment to the Financial Operations, Insolvency proceedings and Compulsory Dissolution Act (ZFPPIPP-H) was adopted on 20 September 2023 and aligns Slovenian insolvency legislation with EU Directive 2019/1023 on restructuring and insolvency, addresses identified inconsistencies between the current insolvency law and the Constitution of the Republic of Slovenia, while introducing certain changes and solutions based on past practical experience. The key change introduced by the ZFPPIPP-H amendment is statutory definition of likelihood of insolvency in a separate article and the introduction of new preliminary obligations for management, upon the occurrence of so-called likelihood of insolvency. The idea behind this is, to enable debtors in financial difficulty to undergo effective restructuring at an earlier stage, at the stage when they are not yet insolvent, but are likely to become so within a year. Acting in a timely manner not only enhances the prospects for a successful restructuring and the company’s survival, but also strengthens creditors’ positions in terms of the recovery of their claims. The statutory obligations of management upon the occurrence of likelihood of insolvency are regulated in a general and conceptually open manner in ZFPPIPP. Therefore, it will be crucial in the future for legal theory and case law to provide meaningful interpretations of these new legal provisions, regarding what exactly falls under obligations in the event of likelihood of insolvency. A clear understanding of the new legal provisions regarding the event of likelihood of insolvency and obligations related, is essential also from the perspective of potential liability for damages of management and supervisory board members, due to untimely action upon occurrence of the event of likelihood of insolvency and failure of fulfilment of related obligations.
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