A Creditor did not register his claim against a debtor in insolvency proceedings due to missing information concerning the publication of the debtor's bankruptcy in the Insolvency Register. The creditor regularly searched for information regarding the debtor´s potential bankruptcy in the insolvency register and was always informed that a resolution on the debtor´s bankruptcy had not been made.

The Czech Supreme Court recently issued two decisions having significant impact on the position of secured creditors (i.e. generally financial institutions) within insolvency proceedings. Both decisions stem from one of the first major insolvencies conducted under the (then new) Czech Insolvency Act effective from 2008 in respect of the group of companies in a glass-making business. This article briefly reviews those decisions and points out their practical effects on the rights of secured creditors.

Security interest in rental income

KEY POINTS

On 23 February, the European Commission (“Commission”) opened an in-depth investigation, to verify whether the measures notified in the context of the restructuring of the Czech national flag carrier Czech Airlines are in line with the EU rescue and restructuring aid guidelines. The measures comprise a loan of CZK 2.5 billion (around €94 million) granted by the State-owned undertaking Osinek under allegedly preferential conditions, its later de-collateralisation and transformation into equity capital and a potential guarantee for the purchase of an airplane.

Introduction

In brief

The most recent amendment to the Act on Commercial Companies and Cooperatives, effective since 1 January 2021, has brought several changes to the liability of managing directors (MDs), which we outline below.

Salary and benefits

The time period within which an MD is obliged to return any salary and benefits received from an insolvent company has been altered.

The draft Lex Covid, which amends insolvency and enforcement laws and draft law on certain measures related to repayment of loans in relation to the COVID-19 pandemic, has been approved by the Czech Parliament and must now be counter-signed by the President.

The insolvency law-related measures include:

Debtor's delay in payments

While the Czech government has not yet enacted the June 2019 EU Directive on restructuring and insolvency, it has proposed another debt relief measure, the Milostivé léto or 'Debt Jubilee'. This will give debtors the opportunity to discharge debts owed to the Czech state.

Background

The measure will provide relief for debts where interest repayments substantially exceed the principal amount. The measure follows on from the previous 'Debt Jubilee' between 28 October 2021 and 28 January 2022 when 42,000 debt enforcement proceedings were cancelled.

Background

The bill implementing the EU Preventive Restructuring Directive – a means of financial relief for entrepreneurs (companies only) – should have originally been enacted and introduced last year. As the bill has not yet been approved by the Chamber of Deputies, the deadline has been moved to July 2022.

What's new?

The new government has amended the original proposal, drafted by its predecessor.