Czech Insolvency
Reorganisation, creditor empowerment and faster proceedings are the highlights of the new Czech Bankruptcy Act, in force from 1 January 2008.
A local perspective is given in Czech Business Weekly, emphasising strict deadlines on courts, debtors and creditors - the court has two hours to publish a petition for insolvency and has to declare bankruptcy or otherwise within 10 days. This should reduce the length of the average Czech insolvency proceeding from its current 5 years.
There has been a shift in philospophy as regards creditors:
"The new law grants power to creditors, and the administrator in bankruptcy is more the 'executor' of the will of creditors in insolvency proceedings."
The new reorganisation procedure, which has shades of the US Chapter 11, is limited to businesses with turnover above CZK100m (c. EUR3.3m) or more than 100 employees. A stay provides 120 days for the submission of a reorganisation plan. Further details are available in a Clifford Chance briefing paper here.
