The Czech Republic Report: Creditors with secured contingent and future claims have gained more certainty

On 1 July 2017, an extensive amendment to the Insolvency Act shall take effect.

The amendment brings several substantial changes to a number of aspects pertaining to insolvency proceedings, including security of future or contingent claims (including bank guarantees), the assessment of a company’s insolvency and the discharge from debts. This report focuses on the position of creditors with secured contingent and future claims.

Security on contingent claims and future claims

Insolvency proceedings are commenced upon the entitled person filing the insolvency petition to the relevant insolvency court, which is then published by the court in the publicly available insolvency register. One of the most substantial effects of the commencement of insolvency proceedings is that a security interest relating the assets owned by the debtor or other assets belonging to the insolvency estate may be created or executed only pursuant to the statutory conditions of the Insolvency Act. Indeed, only the so-called debtor-in-possession financing (in Czech: úvěrové financování) enables the creation of “new security interest”.

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