Under Czech law, insolvency petitions (regardless of whether they are filed by a creditor or debtor) and all other insolvency documents must be published in the Insolvency Register by the insolvency court within two hours of receipt. The register is publicly accessible online. Since the launch of the register in 2008, it has served as an effective, modern and transparent tool within the insolvency regulation framework. However, this transparency has also had negative side effects.
On September 9, 2016, Citibank’s London Branch filed a claim as collateral agent for the bondholders of New World Resources (NWR) with the High Court in Ostrava in the insolvency proceedings of OKD. OKD owns seven coal mines in the Czech Republic, employing over 13000 people. The low cost of coal and the refusal of the Czech Government to bail it out led to OKD filing for a Czech restructuring process in May 2016.
Key Points
Under Czech law, a parent company, controlling entity or influential entity may be liable for the obligations of a bankrupt corporation under its control. Respective controlling entities' liability is a frequently discussed issue and closely related to the common law doctrine known as 'piercing the corporate veil'. The judiciary and legal academic community are torn when it comes to applying particular provisions of the Corporations Act in such situations.
Victoria, Samnuggur and Titaghur
The Scottish Court of Session considers the interaction of Indian insolvency proceedings for three Scottish Companies that had also been placed into Administration in Scotland.
Background
The Victoria Jute Company Limited ("Victoria"), The Samnuggur Jute Factory Limited ("Samnuggur") and Titaghur plc ("Titaghur") were all incorporated in Scotland, but had been carrying out their business in India.
A syndicated loan involving several lenders requires a plain and transparent security structure that will be easy to enforce if an event of default occurs. For this purpose a security agent is often appointed, who holds all of the established security interests. In these cases a parallel debt is typically created according to which any amounts owed from time to time by any of the borrowers and/or guarantors to the lenders are also owed to the security agent (abstract acknowledgement of debt).
On 14 February 2017 the President of the Czech Republic signed an extensive amendment to the Insolvency Act. The amendment brings significant changes to a number of aspects pertaining to insolvency proceedings, including security of contingent claims (including bank guarantees), the assessment of a company's insolvency and insolvency petitions, and discharge of debts. The amendment, inter alia, seeks to provide better protection against illegitimate insolvency petitions, and to clarify when a firm is actually insolvent.
A significant amendment to the Czech Insolvency Act will take effect on 1 July 2017. It has been stated that the main aim of the amendment is to introduce measures against so called “insolvency mafia” and regulate consultancy services providers in connection with solving personal debts. The amendment brings changes to rules for personal bankruptcies, which are to be solved through a discharge from debts.
(Beschluss des Obersten Gerichts der Tschechischen Repub-lik, Az. 29 NSCR 31/2013, vom 30. April 2015)
Der Revisionsführer hat das Oberste Gericht mit der Frage angerufen, ob der im Verlauf des Insolvenzverfahrens eingenommene Mietzins aus der Vermietung verpfändeter Immo- bilien dem gesicherten Gläubiger obliegt.
(Czech Supreme Court Resolution No. 29 NSCR 31/2013 of30th April 2015)
The applicant for an appellate review turned to the Supreme Court with the question of whether a secured creditor is entitled to rent obtained during insolvency proceedings from the leasing of mortgaged real estate.