The President approved the Law on preventive restructuring and the amendment of the Law on the stay of foreigners
Preventive restructuring
On Monday 4 September, the Law on Preventive Restructuring, which aims to help entrepreneurs in temporary financial difficulties avoid bankruptcy, was signed by the President of the Republic Petr Pavel. The project is based on a European directive, the implementation of which in the Czech legal system has so far been delayed by about a year.
According to lawmakers, the new institution should encourage Czech companies to tackle their problems before they reach insolvency. In any case, business bankruptcy levels in the Czech Republic remain at a non-alarming level, as indicated by data from CRIF – Czech Credit Bureau.
The law, which will come into force in the coming weeks, will give companies a new tool for dealing with difficulties. The management of a company in crisis will be able to approach a group of its creditors and offer them a recovery plan, while creditors not involved in the plan will not see their claims changed. A major advantage, highlighted by the legislators, is that the entire process is not made public as in bankruptcy proceedings.
The key principle of preventive restructuring will be the entrepreneur’s agreement with his main creditors while keeping the company’s business intact. The purpose of this instrument will be to prevent bankruptcy and to maintain or restore the company’s operation. In practice, the entrepreneur should achieve reorganization primarily through negotiations with creditors on restructuring plans. The creditor will be chosen by the entrepreneur, while the so-called ‘non-interested creditors’ will retain all their rights. A non-interested creditor is defined as one who is not contacted, e.g. because the claims are insignificant.
The prior restructuring process starts with the entrepreneur calling the selected creditors. At the same time, it will send the creditors a so-called rehabilitation project, so that the timing and modalities can be addressed together.
Against insolvency proceedings, the entrepreneur may only involve selected key creditors in the preventive restructuring. The difference from actual insolvency proceedings is also that the court will not publish information on the restructuring in order to limit the impact of negative publicity as much as possible.
The Amendment of the Act on the residence of foreigners in the territory of the Czech Republic
Foreigners from extra-EU countries, who are long-term residents of the Czech Republic, will no longer be obliged to take out health insurance with Pojišťovna VZP as they will be able to activate it with any insurance company that offers it.
The amendment of Act No. 326/1999 Coll. on the residence of foreigners in the territory of the Czech Republic was another of the regulations signed by Petr Pavel. This amendment will allow foreigners to terminate their contract with Pojišťovna VZP, a subsidiary of the General Health Insurance Company (VZP), within three months. According to the amendment, insurance companies will have to renew travel health insurance for policyholders who show interest. The aim is to avoid situations where a sick foreigner would be left without insurance on Czech territory.
In addition, the amendment provides for the creation of a health insurance register for foreigners, which will be managed by the Czech Office of Insurers. The register is to be set up within one year and will be compiled by insurance companies with selected data on commercial health insurance taken out for foreigners. Medical facilities and, if necessary, authorities such as the police will have access to it.
Sources: https://advokatnidenik.cz/; https://forbes.cz/; https://www.camic.cz/
Sources of images: https://www.bbc.com/; https://www.simonasacri.com/
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