While the Czech government has not yet enacted the June 2019 EU Directive on restructuring and insolvency, it has proposed another debt relief measure, the Milostivé léto or 'Debt Jubilee'. This will give debtors the opportunity to discharge debts owed to the Czech state.
Background
The measure will provide relief for debts where interest repayments substantially exceed the principal amount. The measure follows on from the previous 'Debt Jubilee' between 28 October 2021 and 28 January 2022 when 42,000 debt enforcement proceedings were cancelled.
Key Information
- Individual debtors who owe the state/or a state entity money can have debt enforcement proceedings stayed provided the proceedings started prior to 28 October 2021 and by paying the principal amount and a flat cost contribution fee (CZK 1,500 or around EUR 60).
- The measure should be in force from 1 September 2022 to 30 November 2022.
- The relief is not available for financial penalties imposed for intentional crimes, maintenance claims, and claims for compensation for damage caused by deliberate breaches of legal duty or by bodily harm.
- It applies to debt owed to the state/state entities only.
Expected Impact
As the cost of living rises in the Czech Republic, the 'Debt Jubilee' should, according to the legislators, alleviate the pressures on debtors stuck in debt traps and allow for a new start.
Find out more
To discuss the issues raised in this article in more detail, please contact a member of our Restructuring & Insolvency team.
