SLOVENIA Law and Practice Contributed by: Vid Kobe and Peter Gorše, Schoenherr Slovenia
Tax Liens As a general rule (and subject to certain exceptions that are of limited importance in the context of financ- ing transactions), a tax authority’s claims for unpaid taxes enjoy absolute priority over the claims of other creditors of a debtor. Consequently, a lien obtained by the tax authority in the tax enforcement procedure will prime any lender’s security over the relevant asset that is subject to enforcement, unless the lender’s secu- rity interest is registered with the appropriate register. In practical terms, this priming lien is particularly rel- evant for security over bank accounts, as there are no relevant registers where such security could be registered. Apart from arrangements regarding the obligor’s obligation to preserve the value of security (eg, by way of an account top-up), there are limited ways to structure around this priming lien. Bank Liens While not arising by operation of law, the banks may have a (prior ranking) security interest over the bank account that is subject to transaction security. Banks’ general terms and conditions or agreements underly- ing bank accounts typically provide for a bank’s right to directly debit a bank account for any of its unpaid claims, its retention right and/or security (eg, pledge) over the (assets credited to the benefit of the) bank account. Whether or not the obligor will be required to ensure that the bank waives such rights to the benefit of the lender in the context of a financing transaction depends on the commercial agreement. In practical terms, such requirement may prolong the perfection procedure or even lead to reluctance of the bank to acknowledge the lender’s security, which could have practical implications in the case of enforcement. Retention of Title Certain assets may be – while in the possession of an obligor – subject to the retention of title by a third person, either by operation of an agreement or (under certain specified circumstances) by operation of law. A typical example would be a retention of title by the seller over certain movable assets (eg, business equip- ment or inventory) of the obligor, which may exist until full repayment of the purchase price and associated claims. Any workarounds will necessarily be driven by facts and commercial agreement and may include an undertaking by the obligor not to agree on any reten-
tion of title going forward, and an obligation to duly discharge all obligations underlying the retention of title in a timely manner. The lender may also wish to regulate its right to repay the relevant third-party cred- itor and the inclusion of any debt against the obligor arising as a result of repayment into the obligations secured by the transactions security. Statutory Liens Similarly to the retention of title, there are also certain instances where a lien arises over certain assets by operation of law. An example of such a statutory lien (potentially relevant in the financing context) is a lien of a warehouse operator over the movables stored in the warehouse and a lien of a repairman over repaired movables, which exist until full repayment of the underlying obligations. As regards the workarounds, the same considerations that apply to the retention of title (see the preceding point subsection) also apply here. 6. Enforcement 6.1 Enforcement of Collateral by Secured Lenders Enforcement of contractual security varies depending on the type of security and assets in question. While it is generally possible to enforce a collateral via court – which generally requires an enforcement title (eg, a final binding judgment or directly enforceable notarial deed), the parties may also agree on an out-of-court sale for certain asset classes, where such agreement must adhere to specific (mandatory) statutory rules (in particular as regards the manner of enforcement and mandatory notice periods). Such agreement is pre- sumed in the case of commercial contracts – mean- ing, in simplified terms, contracts between legal enti- ties engaged in economic activities. As a general rule, the following applies. Shares It is market standard to include an agreement on the possibility of an out-of-court sale in the share pledge agreement, and shares (either in publicly traded com- panies or in private LLCs) have historically been sub- ject to the most out-of-court enforcement proceedings in Slovenia. The sale may be effectuated, following a
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