Abstract
This paper focuses on pre-packed insolvencies prepared in the Czech Republic according to Act No. 182/2006 Coll. on bankruptcy and settlement. The analysed time period covers the years 2008-2017. The data sample contains all identified pre-packed insolvencies from the insolvency register and the financial data was extracted from the Albertina corporate database. Pre-pack insolvencies are insolvencies that begin with an insolvency proposal and accompanied by a reorganisation plan already approved by creditors. First, the paper describes the sample from different points of view and is focused on the size of the enterprise, the field of activity, the length of insolvency proceedings and the proposed insolvency administrator accompanied by an expert. Second, the paper analyses the financial situation of affected companies. The evaluation of the financial situation is based on IN indices. The insolvency proposal with a suggested reorganisation can be solved differently. The reorganisation does not need to be approved by the court or if approved, can be turned in the bankruptcy during the insolvency proceedings. The results of pre-packed insolvencies in the case of successful rehabilitation or bankruptcy are the most important findings.
Highlights
The Insolvency Act (Act No 182/2006 Coll. on bankruptcy and settlement), which has been in place in the Czech Republic since 2008, enables two possibilities for solving insolvency – a reorganisation procedure and a liquidation procedure
We focused on the relevance between the presence of a moratorium in the insolvency proceedings and the result of the pre-packed insolvency
The presence of the relevance between the industry and the success of the process confirmed that the product is an important determinant in the prepacked insolvency proceedings
Summary
The Insolvency Act (Act No 182/2006 Coll. on bankruptcy and settlement), which has been in place in the Czech Republic since 2008, enables two possibilities for solving insolvency – a reorganisation procedure and a liquidation procedure. On bankruptcy and settlement), which has been in place in the Czech Republic since 2008, enables two possibilities for solving insolvency – a reorganisation procedure and a liquidation procedure. The reorganisation procedure relates to corporate rehabilitation and maintaining the going concern principle. The European Union (EU) has attempted to move the insolvency law away from liquidation towards more reorganisation-friendly insolvency regimes (de Weijs and Baltjes, 2018). The option of pre-packed insolvency (“pre-pack”) is perceived as a fast and effective way of reorganisation in the Czech Republic (Schönfeld, 2018). Reorganisations, in general, are subject to the size and other constraints set out in Section 316 Article 4 of the Insolvency Act in the Czech Republic.
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