Page 5 - IDEA Zmeny insolvencni zakon Covid-19 4 brezen 2020

IDEA anti COVID-19 # 4
Insolvency during the Coronavirus
period: a proposal for temporary
changes to the Insolvency Act3
MARCH 2020
Tomáš Richter4 Brief summary
 The economic situation that the Czech Republic is facing and will continue to face for some time, as a result of the Covid-19 epidemic and the restrictions imposed by the government in response to it, is utterly exceptional. This kind of situation demands exceptional counter-measures, not only in terms of budgeting and monetary policy, but also in private law, because the effectiveness of the steps the state takes in terms of fiscal and other policy to mitigate the expected recession should not be weakened by institutions of private law.
 Insolvency proceedings, i.e. the procedural instruments designed to deal with business entities’ financial failure, at the individual level rather than at the sectoral level or for the majority of the economy, are one such institution.
 In its current form, which inter alia (a) obliges the defaulting entity and its management to launch insolvency proceedings, if the defaulter goes out of business,
3 This study represents the author’s own views and not the official position of the Czech Academy of Sciences’ Economics Institute nor of the Charles University Centre for Economic Research and Graduate Education (CERGE). We are grateful to the following people for helpful comments on the working version of the text: Pavel Boguský, Petr Chytil, Marek Kapička and Daniel Münich. Any inaccuracies or errors are the author’s responsibility. The study was produced with support from the Czech Academy of Sciences as part of its AV21 Strategy programme and Foundation Experientia.
4 The author is a barrister at Clifford Chance’s Prague offices. He also holds a lectureship in commercial law at the Institute of Economic Studies, Faculty of Social Sciences, Charles University, is a member of the Academic Board at the Harry Pollak Centre for Restructuring and Insolvency at the University of Economics – VŠE in Prague, Chair of the Academic Forum at INSOL EUROPE and a member of the Board of Directors at the International Insolvency Institute.
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