Two years ago, the European Union has two years ago passed a directive that obligates Member States to allow so-called preventive restructuring on their territory, i.e. the possibility of agreeing with a majority of creditors on a joint solution of bankruptcy before actually declaring bankruptcy. This long-awaited business tool is especially gaining in importance at these times. The period for implementation of this directive is about to end on 17 June 2021.
Unfortunately, the Czech Republic has not yet transposed the directive into Czech law and will probably not be able to do so within the prescribed period. This is despite the fact that the bill on preventive restructuring is supposed to be submitted to the Chamber of Deputies during the summer holidays. Late implementation will in accordance with EU law result in the legal situation, that at least some parts of the Directive may be applied even before the adoption of the Czech law. This brings new prospects unknown to the wider public and possible court decisions that, based on the application of rights under the directive, may disrupt the current insolvency practice. This new situation must therefore be carefully analysed in case one of the parties to a legal relationship is at risk of insolvency or if the intended measure deviates in any way from the ordinary course of business, and whether the intended actions are in line with legal limitations.
We will continue to inform you about changes in the field of restructuring and insolvency.
We remain at your disposal should you have any questions.