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New Insolvency Act
On 1 January 2008, the Act on Bankruptcy and Settlement, otherwise knows as the Insolvency Act, came into force. The aim of this piece of legislation is to modernise bankruptcy proceedings.
The new Insolvency Act introduces a lot of new concepts. The most important includes the launch of the Insolvency Register (http://isir.justice.cz), which should bring greater transparency during bankruptcy proceedings, as it is accessible not only to creditors and debtors, but to the general public as well. It also acts as a delivery mechanism, as most court decisions will be delivered using this register.
Other new concepts include expansion of the solutions available for resolving a debtor’s bankruptcy. Whereas in the past, practically the only solution was to sell the debtor’s assets, the Insolvency Act now introduces the concepts of reorganisation of an enterprise while keeping it in operation and debt relief for individuals.
Reorganisation is intended primarily for large enterprises with a turnover exceeding CZK 100 million or who have at least 100 employees. This is essentially a prudent organisation of relationships with creditors, with courts having the main say in the entire process of the “agreement”. In comparison, debt relief can only be used for debtors who are not undertakings.
In this case, a debtor has two possibilities for resolving his situation: either a one-off settlement of all debts consisting primarily in selling his assets or a five-year repayment schedule, during which the debtor hands over to creditors almost all his income above subsistence level. This method should help in particular honest debtors and low-income earners. It is therefore possible that after the debtor pays off 30% of the debt, the court can decide to waive the remaining debt. However, to use this way of resolving a debtor’s financial situation, the debtor has to fulfil very strict conditions, such as providing income and asset statements, spousal consent, etc.
The new regulations should lead to greater transparency and overall acceleration of insolvency proceedings.
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Stewarts
'No one has done as much for me as you,' Eva said.
Stewarts
"A visit to her daughter in London turned Eva's life upside down when she says she stepped into a crossing on a green light but was hit by a car. Despite her remarkable bravery, she faced a long treatment due to fractures in her pelvis, and the associated limitations and pain are likely to persist for the rest of her life. Regular headaches and impaired concentration compound her challenges.
Eva contacted us through an organization temporarily helping her manage her difficult living situation. At that time, she was destitute, relying only on subsistence payments. We were able to assist her because we specialize in personal injury and have contacts with proven colleagues abroad.
We worked with Stewarts, a UK law firm, on this case. Attorneys Klára Dvořáková and Rebecca Huxford helped Eva with the documentation in her case, explaining her options and the differences between the Czech and British systems of healthcare and social benefits reimbursement. Within a few months, thanks to the professional cooperation between the two offices, an offer of compensation from the insurance company of approximately CZK seven million was achieved. The client accepted this settlement because she did not want to deal with courts in the United Kingdom.
Subsequently, we assisted the client with related tax issues and contacted Auditone, a tax consultancy firm, which arranged for the filing of a tax return. Compensation for lost income is taxable, unlike most personal injury compensation.
'No one has done as much for me as you,' Eva said.
The fact that we were able to help Eva gives our work meaning and brings us great joy. We are very happy that, thanks to our many years of active involvement in the international professional organization PEOPIL, we can cooperate on such cases."
Livingstone, Tour Operator
Thank you again for your valuable advice. I breathe better when I know who to turn to.
Livingstone, Tour Operator
"Thank you again for your valuable advice. I breathe better when I know who to turn to."
Anders Thorsen Advokatanpartsselskab
It has been an absolute pleasure to work with you.
Anders Thorsen Advokatanpartsselskab
"It has been an absolute pleasure to work with you and your colleagues. Your advice and way of handling the matter and our communication has been of the highest quality and we are very happy with the outcome.
If any of my clients need assistance in matters in the Czech Republic in the future, I know who to recommend."