We use cookies to give you the best online experience. By using our website you agree to our use of cookies in accordance with our cookie policy. Learn more here.Close Me
In the last week of January, the Czech Government passed
an amendment to the Insolvency Act, which was prepared by the
Ministry of Justice. The aim of the amendment is to respond to the
growing widespread practice of the filing of unjustified insolvency
petitions by creditors. The amendment intends to allow courts to
reject such petitions.
The commencement of insolvency proceedings is of an informative
nature only. It does not automatically mean the bankruptcy of the
debtor; such bankruptcy is to be confirmed by the insolvency court
which will review the debtor's financial situation and decide
on bankruptcy. The fact that insolvency proceedings have been
initiated in respect of a certain company (irrespective of whether
the company is bankrupt or not) is immediately recorded in the
insolvency register, which is publicly accessible.
Information about the commencement of insolvency proceedings is
negatively perceived by the public. It is assumed that the
respective company is in financial difficulties. Certain creditors
misuse this fact by filing unjustified insolvency petitions which
can lead to liquidation consequences, even for economically sound
companies. Some creditors have been filing insolvency petitions
against their competitors with an aim to harm their reputation and
to exclude them from competition. The amendment wants to prevent
this.
The key points of the approved amendment include an option of
the court:
to reject the creditor's insolvency petition for being
apparently unjustified;
to determine a pecuniary penalty for the apparently unjustified
insolvency petition;
to limit, for reasons that are worthy of special consideration,
some of the effects associated with the commencement of insolvency
proceedings (as a result, debtors will not be limited e.g. when
disposing of their assets);
to impose a duty on creditors to give security (based on the
debtor's proposal) for securing compensation for damage or
other harm incurred by the debtor as a result of the unjustified
commencement of insolvency proceedings and measures adopted in the
course of such proceedings, namely until a decision on the
insolvency petition is delivered.
The amendment should be submitted shortly to the Chamber of
Deputies.
This article was written for Law-Now, CMS Cameron
McKenna's free online information service. To register for
Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance
only. The information and opinions expressed in all Law-Now
articles are not necessarily comprehensive and do not purport to
give professional or legal advice. All Law-Now information relates
to circumstances prevailing at the date of its original publication
and may not have been updated to reflect subsequent
developments.
The original publication date for this article was
08/02/2012.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Where a solvent company goes into liquidation voluntarily its creditors can expect to recover everything due to them. But what happens if a creditor’s claim is contingent?
The English Supreme Court’s eagerly awaited decision on the Eurosail litigation, concerning how the "balance sheet" test for insolvency should be applied, was released today.
A discussion relating to a recent decision, which has important implications for insolvency procedures and particularly the difference between Cayman Islands law and the UK and USA.
A commentary on the UK Supreme Court judgment in the joined cases of Rubin and another v Eurofinance SA and others and New Cap Reinsurance Corporation (in liquidation) and another v A E Grant and others [2012] UKSC 46, which has been anxiously awaited by the UK's restructuring and insolvency community.
In line with the trend of the first reform to the Spanish Insolvency Act of 2003 carried out on March 2009 (the 2009 Reform), new amendments to the Spanish Insolvency Act (the SIA) were approved on 4 October 2011 (the Amendment). This Amendment will enter into force on 1 January 2012.
The relationship of agent and principal does not always give rise to fiduciary obligations on the part of the agent to hold monies due to the principal on trust.
A contingent creditor may not be entitled to stop a liquidator making a distribution particularly where the contingency is not imminent.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
