26. 10. 2023

Act on Preventive Restructuring Finally There!!!

The all new act on preventive restructuring allows an entrepreneur (a legal person) to conclude an agreement with its creditors (all or some of them) in the form of a restructuring plan on how to resolve its financial difficulties.

A restructuring plan may include various measures such as, in particular, asset restructuring, restructuring of liabilities, restructuring of equity or operational changes. However, preventive restructuring is only permissible if the entrepreneur is not insolvent and, taking into account all the circumstances, it can reasonably be expected that the failure to adopt restructuring measures would lead to insolvency. At the same time, the entrepreneur must have a good faith belief that the measures taken will lead to the maintenance or restoration of the viability of its production.

The restructuring plan is drawn up by the entrepreneur and submitted to the creditors affected by the restructuring plan for approval. The position of other creditors shall remain unaffected by the restructuring plan. The creditors shall vote on the adoption of the restructuring plan in groups consisting of creditors with identical legal status and economic interests. A group of creditors shall accept the restructuring plan if a ¾ majority of votes is in favour of acceptance. The restructuring plan shall be approved if all creditor groups have accepted it. However, confirmation by the restructuring court is still required for the restructuring plan to take effect. The court may also confirm a restructuring plan that has not been accepted by the creditors concerned. In the period from the commencement of the restructuring proceedings until the restructuring plan becomes effective, the entrepreneur may request that the court orders a moratorium (against all or only some creditors), during which time, in particular, insolvency proceedings cannot be commenced against the entrepreneur at the proposal of the creditor, execution cannot be conducted and the time limits for the exercise of creditors‘ rights against the entrepreneur do not run. The insolvency court may appoint a restructuring trustee to control the course of restructuring and the performance of other tasks under the conditions set out by law. Preventive restructuring ends in particular if the restructuring plan is fulfilled or not fulfilled, by the legal force of the decision on the insolvency of the entrepreneur or the cancellation of the restructuring plan by the court.

By JUDr. Ondřej Rathouský

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G&P Newsletter 2/2023 (PDF)

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JUDr. Ondřej Rathouský

JUDr. Ondřej Rathouský

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