Consideration of the effectiveness of flat-rate compensation for damage in insolvency proceedings

Abstract

Damage to property is a socially undesirable phenomenon that also occurs in insolvency proceedings. The parties involved in such proceedings do not comply with their obligations under the applicable law due to different motives. Such misconduct not only undermines the proper performance of insolvency proceedings, but also threatens or violates the property integrity of another party, especially creditors. This article analyses the importance of flat-rate compensation for damage and the extent of its preventive effect on parties who consider and weigh the effects of their possibly unlawful conduct when they are aware of the amount of monetary compensation for immaterial damage that will have to be provided to the injured party in the event of their breach of an obligation imposed or stipulated by law. Although the Act on Bankruptcy and Restructuring does not regulate flat-rate compensations for damage; we analyse the purpose pursued by legislators, considering the fact that such compensation is laid down in several laws valid and effective on the territory of the Slovak Republic, and we provide supporting arguments favouring the idea to introduce flat-rate compensations for damage also in insolvency proceedings, as this can reduce the rate of offences related to the insolvency of the bankrupt.