Czech Republic
of a filed application for insolvency against the debtor and giving him a short period (usually 15 days) to provide a list of assets and liabilities. Not only does the online commercial reg-
ister (
www.justice.cz) contain some informa- tion on insolvency proceedings against regis- tered entrepreneurs, but a special insolvency register exists (
https://isir.justice.cz/isir/com- mon/
index.do) in which the notice of insol- vency and also the entire insolvency proceed- ings including claims filed by creditors, are registered. Any petition for the opening of insolvency proceedings is to be entered in the register within two hours following the deliv- ery thereof to the court. The register is administered in Czech only. Decisions made by insolvency courts are deemed to be effec- tive upon publication in the electronic regis- ter.
Effects of ruling on bankruptcy The court will look first to see whether the debtor’s assets and the deposit are sufficient to cover the costs of proceedings, and if not the court will refuse the application due to lack of assets and the company will be deleted from the commercial register. Once bankruptcy has been declared, an
insolvency trustee (who may have already been appointed before as a preliminary trustee or administrator) will be appointed. There are certain requirements as to who a trustee can be, and an insurance policy is also required. So far, the Czech Republic has not seen any large specialised insolvency firms springing up. The trustee is usually a local lawyer who is quite often unskilled in han- dling international transactions. Creditors may replace the trustee with another at the
first creditors’ meeting. Voting rights at such meetings are proportionate to the amounts of the claims of creditors. The trustee, and any creditor, may investi-
gate suspicious transactions effected before insolvency. They may reject acts and con- tracts up to five years back if there was an obvious intent to harm creditors. Due to the costs involved, actions taken in foreign coun- tries are less likely than cases when a Czech decision can be enforced. As opposed to other countries, acts per-
formed before the insolvency are much less scrutinised under criminal law, even though various acts performed before and during insolvency proceedings are subject to the pro- visions of the Criminal Code.
Filing a claim Registration of claims with the insolvency court is a task that should not be underesti- mated by the creditor and is one that requires an individual who speaks Czech and has an experience with such registrations. Claims must be filed in the court along with suffi- cient evidence on a special form in Czech. All registrations must be denominated in CZK and are immediately visible in the electronic register. Whereas the claims may be filed any time
after the insolvency proceedings has been opened, the first surprise for many creditors is the effect of the term to file these claims. For Czech and non-EU creditors, the term comes to an end within 30 days (on rare occasions within 60 days) in the decision on bankruptcy of the debtor and there is no possibility of any later filing. Due to this very strict sanction, it is worth checking the insolvency register or using special software operated by many law firms
and commercial providers announcing any changes in the insolvency register. Should the trustee reject a claim, an action
must be filed with the court. The competent court is always the insolvency court, even if the original contract stipulates another jurisdiction. The court fee (CZK1,000) for such an action is modest and the insolvency court usually does not take too long to decide. Any settlement in such disputes requires the approval by the cred- itors committee, Under certain circumstances, such as war-
ranty cases, it is possible and recommended to file a conditional claim. Great prudence must be taken when filing a
claim as the Czech insolvency law applies unique sanctions for exaggerated claims. Should the claim not be asserted in later pro- ceedings, or be found to have been filed by at least 50% more the actual amount due but the creditor has voted at the creditors’ meetings for the full amount, the creditor will not only lose the entire claim but also be obliged to pay the difference between the claim as finally deter- mined and the original amount of the filed claim as penalty. Moreover, the person signing the claim registration document (unless a lawyer acting under a power-of-attorney) is personally liable for such penalty. There is no possibility under the
Insolvency Act to register claims later than the standard 30 days granted in the court decision on insolvency, unless it is for credi- tors from other EU member states. Known creditors from other EU member states must be informed by the court, without undue delay, of the commencement of proceedings provided the existence of the creditor was known to the court and only then their term for registration of claims begins to run.
About the author David Vosol was admitted to the bar in the Czech Republic in 2004 and to the bar in the Slovak Republic in 2007. He studied law at Charles University in Prague and at the Ruprecht-Karl-University in Heidelberg, Germany. He also studied economics and holds an MBA degree from the IPFM in Prague (university programme of Charlotte and Göttingen universities accredited by FIBAA). He has been a partner of bpv Braun Partners since 2006. His main practice area is banking and finance law, company
restructuring and M&A, but he also advises on energy law and litigation. He is often involved in solving complex legal issues within project
Contact information
David Vosol Braun Partners Ovocný trh 8 CZ-110 00 Prague 1 T: +420 224 490 000 F: +420 224 490 033 E:
prague@bpv-bp.com W:
www.bpv-bp.com www.bpv-legal.com
financing transactions, and restructuring of companies, where he can employ his legal expertise as well as his understanding of the business environment and its needs. Vosol has been lecturing at the IPFM since 2006 and at the Charles University in Prague, and is author of various professional articles and publications. He speaks Czech, German, English and Russian.
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IFLR|RESTRUCTURING & INSOLVENCY 025
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