The Supreme Court of the Slovak Republic Strengthened the Protection of Buyers in Bankruptcy Auctions

Acquiring real estate through a bankruptcy auction may involve legal uncertainty, particularly where an alleged owner subsequently challenges the buyer’s ownership rights. However, in our case, Supreme Court of the Slovak Republic confirmed that buyer protection under Slovak bankruptcy law also applies to voluntary auctions conducted within bankruptcy proceedings.

In a dispute concerning the determination of ownership of real estate auctioned in bankruptcy proceedings, we successfully represented our client against claims raised by alleged owners who argued that they had acquired ownership of the property through adverse possession prior to its sale in bankruptcy.

Both the first-instance and appellate courts held the view that the buyer protection provided under Section 93(3) of the Bankruptcy and Restructuring Act applies only to transfers of ownership rights, but not to transfers occurring through voluntary auction proceedings. Before the Supreme Court of the Slovak Republic, we successfully challenged this legal interpretation.

The Supreme Court agreed with our arguments and confirmed that:

• buyer protection also applies where bankruptcy assets are monetized through a voluntary auction,
• the buyer acquires ownership of the auctioned asset even if the bankrupt entity was not its owner,
• any liability towards the original owner is borne by the bankruptcy trustee, not the buyer.

The decision significantly strengthens legal certainty for purchasers acquiring assets from bankruptcy proceedings and extends the exception to the nemo plus iuris principle (“no one can transfer more rights than they possess”) to asset disposals carried out through auctions.

The judgment also follows the case law established by the Grand Chamber of the Supreme Court of the Slovak Republic in 2024, which unified the interpretation of the nemo plus iuris principle, and further reinforces the protection of bona fide acquirers.

We are proud to have successfully represented our client in a dispute whose significance extends beyond the individual case and provides important guidance for bankruptcy and auction practice.

Need advice on bankruptcy law, auctions, or ownership disputes?
Contact LEGATE — we will be happy to assist you with complex disputes and strategic transactions.