4th March 2013

Government: changes in the Insolvency Act approved

As one of pillars for the development of competition and entrepreneurship environment, the Government announced changes in the Insolvency Act (insolvenční zákon). According to the Government, the Insolvency Act ensures the predictability of the economic environment and helps resolve any financial instability of entrepreneurs (in fact, the Government emphasizes the importance of the European Charter of Small Entrepreneurships). 
The governmental proposal that has been prepared by the Ministry of Justice clarifies the process of insolvency. The Ministry aims at regulation of the process of insolvency and execution trustee (revolving trusteeship enhancing transparency and impartiality). The primary intention of the suggested amendment is to enhance and further ensure debtors' rights as they may not be declared insolvent for no reason. Furthermore, the amendment also emphasizes the insolvency process decreasing any side-costs as this measure would lead to possible encouragement to set another entrepreneurship up. The aim of the Ministry is also to improve the position of an (possibly accidental) insolvent person. Doing so, the Ministry emphasizes the cooperation of the debtor with the creditors. For small entrepreneurship, the Ministry intends to simplify the process of debts payments so that the process would not burden the enterprise with administration during restructuring.  
In fact, the Bill introduces changes not only to entrepreneurs’ environment, but also to the citizens’ environment. The Bill also reflects legal changes that are connected to the promulgation of the New Civil Code (nový občanský zákoník).
The Bill is heading to the Chamber of Deputies.
For further information, click here (explanatory report).

Members of the American Chamber of Commerce in the Czech Republic