On May 1, 2004 the Czech Republic joined nine other eastern European countries in becoming an associate member of the European Union. The Czech Republic has been considering sweeping changes to its insolvency law since 2001 (perhaps in anticipation of its entry into the EU). The reforms being considered for the Czech insolvency law are anticipated to be more than the historical "band-aid" remedies for the law. Although the Czech Republic had no insolvency law from 1950 (when it was enveloped behind the Iron Curtain) until 1991 (when the Bankruptcy and Composition Act of 1991 was enacted), in the 13 years since the current insolvency law has existed in the Czech Republic, it has been amended no less than 22 times. Essentially all of the amendments to the Czech insolvency law strengthened creditors' rights, yet universally recognised log-jams in the Czech system remain, resulting in poor recoveries to creditors under the existing law. Even those recoveries take years to accomplish. It is an unfortunate and widely recognised reality that existing Czech insolvency law is an inadequate solution for financially distressed business enterprises.
To request a free electronic copy of the article, please click here.