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Cross-border insolvency proceedings in the EU can be tricky

Regulation of cross-border insolvency proceedings in Slovak law leaves several questions unanswered.

The Supreme Court of the SR provided a partial solution when defining the relationship between main and secondary insolvency proceedings.

The decision concerned a dispute regarding main insolvency proceedings in France and secondary proceedings in Slovakia. The trustee in the main proceedings included in the insolvency estate the same movable items as the trustee in the secondary proceedings. These items were located in Slovakia. The French trustee sold the items after the secondary proceedings were opened in Slovakia.

The court stated that once secondary proceedings are opened with regard to domestic assets, these items are excluded from the insolvency estate in the main proceedings and fall exclusively within the competence of the trustee in the secondary proceedings.

This means that after the secondary proceedings were opened, the Slovak trustee was the only person authorized to dispose of the assets. Transfer of ownership in the main proceedings in France is ineffective without the Slovak trustee’s consent.

We advise creditors to discuss assets and secondary proceedings in other EU member states with the trustee as soon as possible. After identifying such assets, the trustee in the main proceedings should take the necessary steps and inform creditors about their rights in order to prevent loss.