Czech Republic: new rules for individual’s business debt relief

By Thomas Rechberger

When the debt relief procedure for natural persons was introduced in 2008, it was considered that it should be available only for a natural person’s non-business debts. One of the amendments to the Insolvency Act that came into force on 1 January 2014 is the possibility for natural persons who are insolvent entrepreneurs to make use of the debt relief procedure to deal with their business and non-business debts. This may at first sight seem to be a radical change. Yet if one considers the prior case law of the Supreme Court, it is simply a reflection of that court’s attitude to the Insolvency Act prior to its amendment. The Supreme Court had decided on a number of occasions that the debt relief process was available in some circumstances where both private and business debts were to be compromised under the debt relief procedure.

The 2014 amendment to the Insolvency Act now makes it clear that the fact that a certain debt is a business debt does not prevent the use of the debt relief process to solve the debtor’s actual or impending insolvency, provided certain criteria are fulfilled…

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