Background

By way of introduction it should be stated that under Czech law, certain legal acts (voidable transactions) can be opposed pursuant to the Civil Code as well as the Insolvency Act. There are therefore two kinds of opposition rights: general (i.e. outside of insolvency) and insolvency right to oppose, whereby the latter can be generally applied during insolvency proceedings, while the former cannot.

The decision

Key points

Yet another major amendment to the Insolvency Act has been recently approved by the Czech government and passed to the Chamber of Deputies. The amendment is expected to become legally binding at the beginning of 2017. However, this timing does not allow for any potential obstacles or prolonged proceedings, which are common features of the Czech Parliamentary process.

Revising existing methods for the allocation of insolvency cases

Am 19. April 2016 hat die Regierung der Abgeordnetenkammer als Parlamentsdrucksache Nr. 785 den recht umfangreichen Entwurf der Novelle des Insolvenzgesetzes vorgelegt. Neben verbesserter Aufsicht ber die Ausbung der Funktion des Insolvenzverwalters oder Regulierung der sich mit Entschuldungsdiensten befassenden Subjekte strkt der Entwurf insbesondere den Schutz vor schikanierenden Insolvenzantrgen.

On 19 April 2016, the Government submitted the Chamber of Deputies with Parliamentary Bulletin No. 785, a rather extensive bill amending the Insolvency Act. In addition to strengthening oversight of insolvency administrator performance or the regulation of entities providing services related to the institute of debt relief, the bill also bolsters available protections against bullying insolvency petitions.

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.

Debt relief procedure

KEY POINTS

Reorganisation is one of the means of resolving a company’s insolvency under Czech law. In the course of reorganisation the debtor’s enterprise continues to carry out its business activity within the framework set out by the reorganisation plan. The aim of reorganisation is a recovery of the debtor’s business and settlement of the relationships between the debtor and his creditors.

Generally, the reorganisation is not available to company which is;

Since the early Nineties, Czech insolvency legislation has undergone a number of positive changes. Creditor position improved, including that of secured creditors, and the protection of both the debtor and the bankrupt has also been strengthened. Moreover, with the new Insolvency Act effective from 2008, reorganization began to be more widely used in addressing bankruptcies. In Czech insolvency procedure, however, certain problematic areas still remain. One of them involves frivolous insolvency petitions filed by both creditors and debtors themselves.

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