Challenging the debtor’s legal acts is an important institution of the law of obligations and insolvency law, the fundamental purpose of which is to protect creditors against conduct by the debtor whereby the debtor reduces his assets or gives preference to individual creditors to the detriment of others. This strengthens the protection of creditors, while at the same time encroaching upon the principle of legal certainty and trust in legal transactions, especially where third parties acting in good faith are involved in legal relationships. Therefore, the key question is how to ensure an appropriate balance between the effective protection of creditors, on the one hand, and the protection of third parties and the stability of legal relationships, on the other. The Slovenian legal system distinguishes between two forms of challenging the debtor’s legal acts. The first form relates to the challenging of legal acts outside bankruptcy proceedings, governed by the provisions of the Obligations Code (OZ), while the second relates to the challenging of the legal acts of a bankruptcy debtor, governed by the Financial Operations, Insolvency Proceedings and Compulsory Dissolution Act (ZFPPIPP). The most common form of challenging the debtor’s legal acts is actio Pauliana, by means of which creditors may challenge legal acts performed by the debtor to the detriment of creditors, in particular where the debtor knew or ought to have known that, by doing so, he was interfering with their rights. The successful enforcement of an actio Pauliana does not result in the annulment of the legal transaction, but rather in its ineffectiveness in relation to the creditor who asserted the challenge.
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