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
The key points of the approved amendment include an option of
to reject the creditor's insolvency petition for being
to determine a pecuniary penalty for the apparently unjustified
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
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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  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.
A contingent creditor may not be entitled to stop a liquidator making a distribution particularly where the contingency is not imminent.
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