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Automatic notifications from the Czech Insolvency Register not to be relied upon

Czech insolvency law relies heavily on the operation of the insolvency register, which is accessible to anyone on the web page of the Ministry of Justice (the MoJ).16

All court decisions and other relevant documents concerning insolvency proceedings are published in the insolvency register. The MoJ also operates, as a separate and free service, a so-called "web service" to which anyone can link their IT systems and thereby receive automatic notifications of certain important events in the insolvency proceedings as they are published in the insolvency register. These include the issuance of a court decision which declares a debtor insolvent (from which the period for filing claims starts to run).

The Czech Supreme Court has held in the past that flaws in the operation of the insolvency register must not be held against its users, that is mainly creditors. However, in a recent decision, the Supreme Court ruled that this principle does not extend to deficiencies in the operation of the web service. In the present case, a decision declaring a debtor insolvent, in which the court had set a 30-day deadline for filing claims, was published in the insolvency register on 28 November 2013. But a corresponding notification via the web service was, for unknown reasons, only made on 6 February 2014. A bank, which relied on the web service, filed its claim on 14 February 2014. The bank's filing was rejected as late by both the insolvency court and the appellate court.

The Supreme Court confirmed the lower courts' decisions, ruling that the date of publication in the insolvency register must prevail. Otherwise, the deadline for filing claims would be different for those creditors who rely on the insolvency register and those who use the web service. This would – in the Supreme Court's view – prefer the latter creditors at the expense of the former and is therefore undesirable.

As a result, there will be no relief for banks who rely solely on the web service in monitoring their borrowers' insolvency and who file their claims late due to the web service's malfunction. Given these difficulties it is therefore prudent for banks to monitor the insolvency register manually in important cases.


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Legal and Regulatory Risk Note