The Czech Government has prepared several measures that should help people and businesses in the challenging times related to the outbreak of COVID-19. These measures are currently divided into several draft laws, covering topics such as insolvency, loans, leases, employment, and court proceedings. We have chosen relevant fields briefly described below and we will provide more detailed information about these relevant fields once the final laws are passed by the Parliament (which should be shortly due to the state of legislative emergency).

On 1 July 2017 a new amendment to the Czech Insolvency Act came into force. One of the most significant changes introduced by the amendment relates to the assessment of insolvency of the debtor, performed by means of the cash-flow insolvency test.

Under Czech law, the debtor is insolvent if it has several creditors, due and payable debts for more than 30 days, and it is not able to fulfill them.

Welcome to the inaugural edition of 'Going concerns', in which we strive to bring you the latest updates on restructuring and insolvency law. For this issue, we focus on Singapore and provide:

The definition of insolvency is a key element of the insolvency law. It opens the gate for tools that enable creditors to safeguard their rights vis-à-vis their debtors. This week, the Czech Supreme Court published a ground-breaking decision which addresses a crucial aspect of balance-sheet insolvency. Many other issues, however, still remain unresolved.

Definition of insolvency

As in other jurisdictions, the Czech Insolvency Act anticipates two forms of insolvency -- cash-flow insolvency (illiquidity test) and balance-sheet insolvency (over-indebtedness).

Introduction

Regarding M&A deal activity in emerging Europe, 2019 seems to have been a year of mixed sentiments. While both the overall value and volume of M&A deals in the region were down year-on-year, many M&A professionals claim anecdotally that it was a more buoyant year than the previous one. There are also predictions that investment activity in emerging Europe will increase even further in the next 12 months. 

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 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. 

Short stories

Amendments to the Czech Insolvency Act 2016

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.