Changes for creditors in Czech insolvency proceedings
Amendments to the Czech Insolvency Act, expected to take effect from July 2017, introduce a requirement for a creditor to disclose its beneficial owners in certain circumstances, and also affect holders of security over future and conditional claims.
- A creditor must disclose its beneficial owners in certain circumstances: if a creditor acquires a claim against a debtor within six months prior to the commencement of, or during, insolvency proceedings of the debtor, it must disclose its beneficial owners. This change was introduced to improve transparency of insolvency proceedings and to prevent purposive division of a single claim among several creditors ultimately controlled by a single person.
- Security over future and conditional claims will be treated as secured on insolvency: future or contingent claims secured under Czech law will be newly treated as secured in insolvency proceedings even if such claims come into existence or become unconditional after the commencement of the insolvency proceedings. Previous controversial case law had caused concern for secured creditors because such claims were treated as unsecured.
This case summary is part of the Allen & Overy Legal & Regulatory Risk Note, a quarterly publication. For more information please contact Karen Birch – email@example.com, or tel +44 20 3088 3710.