[BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS IN CZECH REPUBLIC] 32
A debtor's insolvency petition must contain a list of their assets, liabilities, employees, and documents proving their insolvency or imminent insolvency. Liability of Members of the Statutory Body A debtor or the person responsible for filling an insolvency petition who fails to do so, or files it incorrectly or late, is liable to creditors for damages. The amount of the damage (caused to individual creditors) is calculated as the difference between what the creditor would have received if the insolvency petition had been filed on time, and what the creditor actually received during the insolvency proceedings. Members of the statutory body may be exempt from paying damages if they can prove that the failure to file an insolvency petition had no impact on the amount which the creditor actually received in the insolvency proceedings, or that the obligation to file an insolvency petition could not be fulfilled due to unforeseeable and insurmountable obstacles arising independently of their will. In addition to the sanctions set out in the Insolvency Act, the Business Corporations Act regulates the liability of members of statutory bodies who contribute to a company's insolvency by breaching their duties. The court may, for example, impose an obligation on a member of a statutory body to pay the difference between the company's total debts and assets. Effects Associated with the Commencement of Insolvency Proceedings As stated above, the commencement of insolvency proceedings takes effect upon publication of the notice in the insolvency register. This usually happens on the same day that the court receives the insolvency petition. After the commencement of insolvency proceedings, creditors cannot pursue their
claims or other rights relating to the insolvency estate through a lawsuit. Enforcement proceedings (execution) that would affect the debtor's property or other property belonging to the insolvency estate may be ordered or commenced, but cannot be carried out. Unless the insolvency court decides otherwise, the debtor is restricted in disposing of the insolvency estate. The debtor must refrain from anything that would lead to substantial changes in the composition, use or purpose of such assets, or their significant reduction. Any legal act that contradicts this rule is ineffective. However, this restriction does not apply to the ordinary operation of the business, the fulfilment of legal obligations or measures necessary to avert imminent damage. Moratorium A moratorium temporarily protects the debtor from creditors, giving the debtor time to overcome or avert insolvency, or to consider, realistically, restructuring options. No declaration of insolvency may be issued during the moratorium. An Insolvency court grants the moratorium if the majority of creditors, calculated according to the amount of their claims, give their written consent. The moratorium lasts for the period specified in the motion, but no longer than three months. The insolvency court may extend the moratorium by a further 30 days at the debtor's request, provided that the majority of creditors give their written consent. During the moratorium, contracts for the supply of energy and raw materials or other contracts for the supply of goods or services that had been in force for at least three months on the date of the announcement of the moratorium cannot be terminated by the other party due to the debtor's delay in paying for goods or services
ILN Restructuring & Insolvency Group – Bankruptcy, Insolvency & Rehabilitation Series
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