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
(Usnesení Nejvyššího soudu ČR sp. zn. 29 NSCR 31/2013, ze dne 30. dubna 2015)
Dovolatel se obrátil na Nejvyšší soud s otázkou, zda nájemné získané v průběhu insolvenčního řízení z pronájmu zastavených nemovitostí náleží zajištěnému věřiteli.
(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.
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