What does the Act on intervention measures bring in the field of enforcement and insolvency proceedings?

Below, we outline some of the measures that will have the broadest impact on enforcement and insolvency proceedings.

THE FIELD OF ENFORCEMENT AND PERSONAL BANKRUPTCY 

All receipts to natural persons and sole proprietors paid by the state or the employer will, on the basis of the new mentioned Act, be exempted from enforcement under the Claim Enforcement and Security Act (ZIZ) and from tax enforcement under the Tax Procedure Act (ZDavP-2), as well as from bankruptcy in the process of personal bankruptcy under the Financial Operations, Insolvency Proceedings, and Compulsory Dissolution Act (ZFPPIPP). 

The latter means that the following receipts will be exempted from enforcement: 

i) workers’ compensation of employers who are temporarily unable to provide them work and compensation of workers who are unable to work due to force majeure; 

ii) extraordinary assistance in the form of a monthly basic income for self-employed workers and farmers;

iii) temporary cash compensation for loss of employment; 

iv) one-time solidarity allowance for seniors and other vulnerable groups of persons; 

v) financial assistance to holders and members of farms, for the purpose that in the case of getting sick with CoVID-19 and not having a temporary farmer at their disposal, they can hire assistance during illness; 

vi) compensation for berth payments at fishing ports to holders of fishing licenses for industrial fishing. 

In enforcement proceedings under ZIZ and ZDavP-2, the execution of decisions will, from the date of entry into force of the Act, be suspended in (current) enforcements. The latter will not apply to (current and future) enforcements for a claim for legal maintenance and compensation for lost maintenance due to the death of the person responsible for the maintenance.

FIELD OF COMPANY FINANCIAL OPERATIONS, INSOLVENCY PROCEDURES AND COMPULSORY WINDING-UP

The law introduces an additional presumption of insolvency, which states that notwithstanding Article 14 of the ZFPPIPP (and contrary evidence will not be allowed), a legal entity, entrepreneur or private person will become permanently illiquid if he or she delays payment of salaries and contributions to workers for more than one month, since receiving reimbursement of wages and contributions under the laws governing emergency measures. The presumption of insolvency will continue for four months after the termination of the measures (meaning that the employer must not delay payment of wages during this time as well). The latter aims to ensure that employers provide workers with wages and contributions within one month of receiving reimbursement. 

Regarding the deferral of management obligations, the new law provides that notwithstanding Article 38 and the first paragraph of Article 39 of ZFPPIPP, management is not obliged to file a proposal for the initiation of compulsory settlement or bankruptcy, if the insolvency of the company arises as a result of the declaration of the CoVID-19 epidemic. The measure is applicable for the duration of the CoVID-19 epidemic and for three months after the end of the measures. The bodies of the company will have to implement insolvency proposals within one month after the termination of the measures. 

The decision on the creditor’s motion for bankruptcy is also postponed. Notwithstanding Articles 236, 237 and 238 of the ZFPPIPP, the period for which the court may postpone ruling on the creditor’s motion for bankruptcy and the period within which the debtor justifies his request for the postponement of decision-making shall be four months, if the company’s insolvency has arisen as a result of the announcement of the CoVID-19 epidemic. The measure referred to in the preceding sentence, shall be applied in bankruptcy proceedings at the request of the creditor, who shall file it no later than two months after the termination of the measures. 

The Act also establishes that the insolvency of a company is the result of the declaration of the CoVID-19 epidemic, if the company engages in an activity for which the government, ministerial, or municipal regulation or act mandates that the activity (service or sale of goods) be prohibited or substantially restricted as a result of the CoVID-19.