The Government Ordinance no. 10/2004 on the bankruptcy of credit institutions has been recently amended by the Government Emergency Ordinance no. 12/2012, published in the Official Journal no. 593 dated 20 August 2012.

The amendment refers to the order of distribution of the bankruptcy proceeds and repeals the former article regarding subordinated claims, insofar as such claims referred to loans made by shareholders holding more than 10% of the share capital of the bankrupt credit institution.  

The New Civil Procedure Code (NCPC) was postponed several times before eventually coming into force on 15 February 2013. The legislators anticipate that the new law will speed up proceedings and offer a greater level of protection to civil rights.

On 31 March 2020, the Czech government approved ‘Lex COVID-19’, a new act (and an amendment of the Insolvency Act and Enforcement Code) that should help mitigate certain effects caused by the COVID-19 epidemic, especially in relation to different proceedings (e.g. civil, administrative, criminal, insolvency and enforcement) and the corporate lives of legal entities.

Lex COVID-19 will now be debated in the Chamber of Deputies ahead of final approval.

In response to the anticipated economic impact of the Covid-19 pandemic, on 31 March 2020 the Czech Government approved the so-called ‘Lex COVID-19’ and sent the draft law to the Parliament for expedited legislative processing. This article focuses on the implications of the Lex COVID-19 on the insolvency proceedings in the Czech Republic. For wider implications of the Lex COVID-19, please see this article.

The recent Amendment on the Czech Insolvency Act (the “Amendment”) enters into force on 1 July 2017.

The Amendment states that a creditor is entitled to be satisfied from its security even when its contingent or future claim (such as bank guarantee) becomes actual after the start of the security provider’s insolvency.

The new Amendment on the Czech Insolvency Act (the “Amendment”) will enter into force on 1 July 2017.

The Amendment introduces a “liquidity gap” test, which will be used when a debtor (entrepreneur) needs to determine whether it is considered insolvent or not. The liquidity gap is the difference between a debtor’s due debts and its readily available funds. A debtor will only be considered insolvent if the liquidity gap is higher than 10% of its overdue debts.

I am delighted to present the third edition of The Issues, an annual publication brought to you by our team at CMS Prague. As is tradition, the articles will look at general legislative developments as well as new opportunities and legal issues that you will be facing in the year ahead. We also look at sector specific topics from across industries such as consumer products, energy, financial services, hotels & leisure, lifesciences, real estate and technology, media & telecoms.

In May 2015, the Czech Ministry of Justice submitted a draft amendment to the Insolvency Act to the Government (the “Amendment”).

In the last week of January, the Czech Government passed an amendment to the Insolvency Act, which was prepared by the Ministry of Justice. The aim of the amendment is to respond to the growing widespread practice of the filing of unjustified insolvency petitions by creditors. The amendment intends to allow courts to reject such petitions.

During the current economic downturn the number of insolvency proceedings in the Czech Republic continuously increases. The insolvency legislation plays a key role in insolvency proceedings. Given the tough conditions on the market, we are witnessing higher numbers of bullying insolvency petitions submitted against debtors.