TITLE: Reasoning Disqualification of Financial Rehabilitation: Current Practices in Insolvency Process
KEYWORDS: Insolvency, insolvency law, debtor, creditor, bankrupt, reorganisation
ABSTRACT: Paper summarizes information and statistical data on the development of insolvency proceedings and what precedes them, on the development of proceedings conducted according to the law on bankruptcy and settlement. On the basis of these facts, the author arrives at the conclusion that problems with applying the financial rehabilitation principle of solving the problem of company decline have less to do with the quality of legislation than with the work of courts and creditors' expenses for insolvency proceedings. We consider the main reason for the failure of the financial rehabilitation principle (amended in the Insolvency Act as reorganisation) to be rather the fact that companies in the Czech Republic claim bankruptcy relatively late and at a time when their assets not only do not adequately cover liabilities to creditors but, most importantly, are basically expended in the endeavour to keep the company in operation. At the close of the study, we propose a general acceptance of certain overall amendments to the law in Czech legislation so as to increase pressure on company managers and owners so that they may claim bankruptcy on their own as soon as the company arrives at serious difficulties suggesting its decline.
