On 4 September 2023, the President of the Czech Republic signed the Act on Preventive Restructuring (“ZOPR”), thus officially completing the difficult journey of the Czech Republic’s implementation of Directive (EU) 2019/1023 of the European Parliament and of the Council of 20 June 2019. The ZOPR provides for a zero-legislative deadline and will thus take effect on the first day after its publication in the Collection of Laws.
Key points of ZOPR:
- Introduces rules for resolving financial crises outside insolvency proceedings
- Can only be done with selected lenders
- The publicity of the process is severely limited
- Provides protection for new financing and selected transactions
The purpose of the ZOPR is to enable entrepreneurs in financial difficulties to resolve their situation in a timely manner, in an effort to avert bankruptcy and its resolution through insolvency proceedings, which have negative impacts on both the position of the entrepreneur and his creditors. It is therefore a kind of precursor to insolvency proceedings which, if successfully carried out, should prevent insolvency proceedings in the future.
Although expectations are high, what the ZOPR will really bring and how intensively it will be used will only be seen in future practice. It is a completely new legal instrument for which there is as yet no case law or much literature to follow in interpreting contentious situations. In order to make it easier for you to find your way around the new regulation, we would like to summarise below the basic parameters of the ZOPR and their impact on entrepreneurs in financial difficulties and their creditors.
The original article was written in the Czech language by Clifford Chance. You can read the full article here.