[BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS IN CZECH REPUBLIC] 34
stated in the claim registration or if the right to satisfy the claim from collateral is denied. A creditor with an unenforceable claim that has been disputed by the insolvency trustee may file a lawsuit against the insolvency trustee with the insolvency court after the review hearing or after the decision on approving the review report becomes effective. Conversely, if the insolvency trustee has denied an enforceable claim, it is the trustee who must file a lawsuit (against the creditor). Czech insolvency law includes a specific penalty to protect against the filing of non-existent or exaggerated claims. If, after reviewing the claim by the insolvency trustee (or by the insolvency court in incidental proceedings initiated after the rejection of the claim) it becomes apparent that the actual amount of the claim is less than 50% of the amount stated in the application, the registered claim shall not be taken into account at all. A similar penalty is also provided for by law in cases where a claim is filed as secured, even though it is not actually secured. The insolvency court may also order (on the basis of a trustee´s motion) the creditor to pay the amount up to difference between the amount stated in the application and the amount actually determined in the proceedings. The creditor can avoid this risk by not exercising their rights in the insolvency proceedings. Incidental Disputes Incidental disputes are disputes that arise during insolvency proceedings, and are heard and decided upon at the request of an entitled person, filed with an insolvency court. The most common incidental disputes include those concerning the authenticity, amount, or priority of registered claims, as well as disputes based on a lawsuit to set a transaction aside.
Another common type of incidental dispute is lawsuits seeking the exclusion of a particular
asset from the insolvency estate. Methods for Resolving Insolvency Liquidation bankruptcy
Liquidation bankruptcy is a method of resolving insolvency, whereby the creditors' established claims are satisfied proportionally from the proceeds of liquidating the debtor's insolvency estate. Upon the declaration of liquidation bankruptcy, the right to manage the insolvency estate, as well as the right to exercise rights and perform obligations related to the estate, passes to the insolvency trustee. Any lawsuit initiated by the debtor in violation of the Insolvency Act after the insolvency trustee has assumed control of the insolvency estate is ineffective against the creditors. The Insolvency Act provides four methods for selling assets from the insolvency estate (the first two being more commonly used, while the latter two are less frequent):
Public auction,
•
• Direct sale of the property by the insolvency trustee to a potential buyer (sale of the property outside of an auction), • Sale in court pursuant to the provisions of the Civil Procedure Code on the enforcement of judgments, and, • Auction at a bailiff’s office under the Enforcement Code. The insolvency trustee, with the consent of the creditors' committee, decides on the method of liquidation of the individual assets or the debtor's enterprise as a whole. If the liquidated property is subject to security, the insolvency trustee must act in accordance with the instructions of the secured creditor.
ILN Restructuring & Insolvency Group – Bankruptcy, Insolvency & Rehabilitation Series
Made with FlippingBook Online newsletter maker