Bankruptcy law (insolvency law) in Czech republic
Act on insolvency and its resolution no. 182/2006 Coll., which replaced act no. 328/1991 Coll. on bankruptcy and settlements, came into force on 1st January 2008. The new insolvency law fundamentally changes the legal environment for resolution of bankruptcy situation of debtors. The law firm FABIAN & PARTNERS offers the following services concerning insolvency proceedings:
- counselling clients – creditors in all stages of insolvency proceedings and their representation in related lawsuits and legal proceedings (i.e. especially in incidence proceedings, proceedings on determination of legitimacy, amount or sequence of the claim and on exclusion of property from the bankruptcy estate)
- submitting proposals for insolvency declaration
- representation in creditor bodies and in negotiations with a debtor
- counselling clients – debtors in all stages of insolvency proceedings including protection against illegitimate insolvency (bankruptcy) declaration
- counselling clients in reorganization
When is a debtor in the state of bankruptcy?
- according to the insolvency act, a debtor becomes bankrupt, when he has more creditors and liabilities, and he cannot meet his liabilities within 30 days after the due date. Insolvency is the state when a debtor stops payments of a substantial part of his financial liabilities within 3 months after the due date or it is not possible to achieve satisfaction of some of the outstanding debts by distraint.
- debtor who is a legal person or physical person – entrepreneur becomes bankrupt even if he is overindebted. Overindebtedness occurs when a debtor has more creditors and the total amount of his liabilities exceeds the value of his property.
Obligation to solve bankruptcy
In this context it is necessary to note that a debtor is obliged to solve overindebtedness of his company according to the new insolvency law. This obligation applies to persons who are authorized to put forward a proposal for initiation of legal proceeding on behalf of the debtor (that is a statutory body of the company – authorized representative, board of directors in particular). The debtor is obliged to put forward the insolvency proposal without undue delay after he was informed about his bankruptcy (or he should have been informed in case of proper care). If the debtor does not comply, he is responsible to creditors for any resulting harm, criminal liability may be imposed.
Company emergency and insolvency (bankruptcy) settlement interferes with more expert fields and therefore the best solution is to address a company specialized in this sphere. The law firm FABIAN & PARTNERS deals with such problems in a complex way, in cooperation with experts, not separately for each expert field.
