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.
On 14 February 2017, the president of the Czech Republic signed a comprehensive amendment to the Czech Insolvency Act which will enter into force on 1 July 2017, and will significantly affect a vast number of insolvency institutions.
The purpose of the amendment is to lessen the administrative burden on the courts, protect against unjustified 'frivolous' insolvency petitions (literal Czech translation is bullying petitions), enhance the transparency of insolvency proceedings and regulate the advisors providing services in the area of debt relief.
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.
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.