Page 6 - IDEA Zmeny insolvencni zakon Covid-19 4 brezen 2020

(b) entitles the defaulting entity’s creditors to launch insolvency proceedings and (c) involves the courts relatively intensively in the process, the insolvency law in force could – regardless of other government measures – potentially trigger a massive wave of business insolvencies. That wave could easily entirely overrun not only the decision-making capacity of the insolvency justice system, but also the capacity of the market for insolvent defaulters’ assets.
 This text therefore presents a proposal for discussion, consisting of several temporary measures in Czech insolvency law, which aim to “flatten the curve” of the epidemic of business insolvencies that will very likely follow on from the Covid-19 epidemic. The primary aim is to boost the effectiveness of the country’s other anti-crisis measures and so prevent insolvency justice system in the Czech Republic from becoming overrun and obstructed.
 These temporary changes could come into force upon the pronouncement of an amendment to the Insolvency Act, once they had been accepted during the state of legislative emergency. The obligation for defaulting business owners and members of their statutory bodies to submit a motion of insolvency could, for the effective duration of the changes, be temporarily suspended. Similarly, creditors’ rights to submit an insolvency motion could also be temporarily suspended. For cases in which these two essential exceptional measures did not suffice, an exceptional automatic moratorium on the individual recovery of debts by creditors could be made available to defaulting businesses. It would seem appropriate to consider, in addition, a temporary moratorium on the fulfilment of previously approved reorganization plans.
 The temporary alterations discussed in detail in the following text have, naturally, a range of pros and cons. Their great “pro” would certainly be that they are very simple changes that would work almost entirely without the need for court decisions: this is the only kind of change that can really help in the present situation. Thanks to their limited scope and temporary validity, they could be adopted swiftly, which is another indisputable advantage in the current situation.
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