6. März 2024
RI Update - March 2024 – 3 von 3 Insights
Czech Republic has recently implemented the Act on Preventive Restructuring (the Act), with effect from 23 September 2023, which offers companies in financial difficulty a chance to restructure their assets, liabilities, and capital structure.
The preventive restructuring process may be initiated by a company if it:
The company draws up the restructuring plan and informs its creditors and shareholders. The creditors and shareholders, divided into groups, vote on the plan.
Even if some of the groups disagree with the plan, the court may approve it nonetheless. After the approval, the company must implement and adhere to the measures as set out in the plan.
The restructuring administrator, appointed by the court from a list of insolvency practitioners with special authorisation, supervises the company during the preventive restructuring process.
A new general or individual moratorium protects the company from certain actions by creditors (eg court enforcement of debts). An individual moratorium can be granted in relation to up to three specific creditors. If granted, a moratorium lasts for three months and may be extended for an additional three months in certain cases.
It is a private process and there is no obligation to publish all documents and notices.
The Act provides a promising tool for companies facing financial difficulties and offers a preferrable alternative to insolvency proceedings. Hopefully, the newly implemented measures will reduce the number of bankruptcies by keeping companies operational.
To discuss the issues raised in this article in more detail, please contact a member of our Restructuring & Insolvency team.
7. March 2024
von Amy Patterson
6. March 2024
von Mgr. David Volek