Filing a Claim in Insolvency Proceedings in Czech Republic

Comprehensive Guide to Filing a Claim in Insolvency Proceedings

Filing a claim in insolvency proceedings is a standard legal procedure that enables creditors to assert their rights and obtain at least partial satisfaction of their claims. Thousands of insolvency proceedings are initiated annually in the Czech Republic, and many creditors unfortunately lose their claims simply because they did not know how to act correctly and in a timely manner. This article provides a comprehensive guide on how to file a claim in insolvency proceedings in the Czech Republic, explains the entire process step by step, highlights the most common mistakes, and advises how to maximise the chance of claim satisfaction.

What Are Insolvency Proceedings and Why Is Filing a Claim Essential

Insolvency proceedings in the Czech Republic serve to resolve situations where a debtor is unable to pay their obligations to multiple creditors simultaneously, i.e. is insolvent. The rules governing insolvency proceedings are set out in Act No. 182/2006 Coll., on Insolvency and Methods of Its Resolution (the Insolvency Act).
Under Czech law, a debtor is insolvent if the following cumulative conditions are met: the debtor has multiple creditors (at least two), has monetary obligations more than 30 days overdue, and is unable to fulfil these obligations. Inability to fulfil obligations is presumed particularly when the debtor has ceased payments on a substantial part of their monetary obligations, or has failed to fulfil them for more than 3 months after the due date, or it is not possible to obtain satisfaction of any of the due monetary claims against the debtor through enforcement of judgment or execution. Business entities (both legal entities and natural persons conducting business) are also insolvent if they are over-indebted – meaning they have multiple creditors and the sum of their liabilities exceeds the value of their assets.

Once insolvency proceedings are initiated against a debtor, standard methods of debt recovery (execution, judicial enforcement) are stayed. The only way to assert a claim and achieve its (even partial) satisfaction is to properly file it in the insolvency proceedings. If the prescribed deadline is missed, the creditor loses the right to satisfaction from the debtor's assets. Although the claim does not formally cease to exist, it practically becomes unenforceable because after the conclusion of insolvency proceedings, the debtor (legal entity) is typically dissolved and struck off from the Commercial Register.

The Insolvency Register – Primary Source of Information

The Insolvency Register is a publicly accessible database maintained by the Ministry of Justice of the Czech Republic, available at isir.justice.cz. This register contains all information about all insolvency proceedings conducted in the Czech Republic, including all court decisions, party submissions, and documents of the insolvency practitioner.

For creditors, it is essential to understand that the Insolvency Register is not merely an information portal – it is the official method of service in insolvency proceedings. Once a document is published in the register, it is deemed served on all parties to the proceedings. Neither the court nor the insolvency practitioner are obliged to send you letters or emails. This means that if you do not actively monitor the Insolvency Register, you may miss the commencement of proceedings, the deadline for filing claims, requests to amend your proof of claim, and challenges to your claim. A legal defence of "I was not informed" will not succeed in Czech insolvency proceedings.

Filing a Claim in Czech Insolvency Proceedings

Deadline and Its Consequences

The insolvency order contains essential information: the deadline for filing claims, the date and place of the claims review hearing, the date and place of the creditors' meeting, and the name of the appointed insolvency practitioner.

The deadline for filing a claim in Czech insolvency proceedings is always 2 months from the insolvency order (Section 136(2)(d) of the Insolvency Act). This is a procedural deadline – it is met if the proof of claim is dispatched on the last day of the deadline at the latest. This deadline is preclusive (final), meaning that proofs of claim submitted even one day late are disregarded by the insolvency court (Section 173(1) of the Insolvency Act). Relief from failure to meet the deadline is not permitted in insolvency proceedings (Section 83 of the Insolvency Act).

Proof of Claim Form and Its Requirements

A proof of claim must be submitted exclusively on the official form issued by the Ministry of Justice, available at isir.justice.cz. Foreign creditors from EU countries may alternatively use the form pursuant to Article 55 of EU Regulation No. 2015/848 on insolvency proceedings.

The proof of claim must contain:

Creditor details (name/company name, address, identification number)
Debtor details (name/company name, company registration number, case reference number)
Claim details (legal basis, principal amount in CZK, ancillary claims such as interest, due date, whether secured or unsecured)
For secured claims: type and subject matter of the security

Claims in foreign currency must be converted to Czech koruna (CZK) at the Czech National Bank exchange rate applicable on the date of commencement of insolvency proceedings (or the due date of the claim, if earlier).

Documents proving the existence and amount of the claim must be attached to the proof of claim: contracts, invoices, delivery notes, bank statements, court judgments, etc. For documents in a foreign language, it is recommended to attach a certified translation into Czech.

The proof of claim is submitted to the insolvency court conducting the proceedings. Possible methods of submission include in person, by post, via data box, or electronically with a recognised electronic signature. The proof of claim is always submitted to the court, not to the insolvency practitioner.

What Happens After Filing the Proof of Claim

Role of the Insolvency Practitioner

After the proof of claim is filed, the insolvency practitioner reviews it for correctness, completeness, and validity. The practitioner verifies whether the claim actually exists, whether it is documented, and whether the claimed amount is accurate. If formal defects are identified, the practitioner invites the creditor to correct or supplement the claim within 15 days (Section 188(2) of the Insolvency Act). The invitation is published in the Insolvency Register, so it must be monitored carefully.

Claims Review Hearing

At the claims review hearing, the insolvency practitioner and the debtor review all filed claims (Sections 190 et seq. of the Insolvency Act). They may admit or challenge each claim – as to its validity (whether it exists at all), amount (whether the claimed sum is correct), or priority (whether it is a secured or unsecured claim, or a subordinated claim).

Challenge of a Claim

A claim may be challenged by the insolvency practitioner or the debtor (Section 192 of the Insolvency Act). In bankruptcy (liquidation), only a challenge by the insolvency practitioner has legal effect – a challenge by the debtor has no impact on the satisfaction of the claim (Section 201(1)(a) of the Insolvency Act). In debt relief proceedings, the situation is different: a challenge by the debtor has the same effect as a challenge by the practitioner (Section 410(2) of the Insolvency Act).

Importantly, a challenge of a claim by the debtor always results in the adjusted schedule of admitted claims not constituting an enforcement title to the extent of the challenge (Section 192(3) of the Insolvency Act) – even if the claim was ultimately admitted.

Incidental Proceedings as a Defence Against Challenge of a Claim

If a claim is challenged, the creditor must actively defend their rights by filing an action for determination of the claim. This court dispute is called incidental proceedings and takes place as separate proceedings within the insolvency.

The decisive factor is whether the claim is enforceable (awarded by a final court judgment, arbitration award, notarial deed with an enforceability clause, etc.) or non-enforceable.
For a non-enforceable claim, the creditor must file the action within 30 days of the claims review hearing (Section 198(1) of the Insolvency Act). The defendant is the party that challenged the claim (the insolvency practitioner, or in debt relief proceedings also the debtor). If the creditor fails to file the action in time, their claim is disregarded.

For an enforceable claim, the situation is reversed – the action must be filed by the party that challenged the claim (typically the insolvency practitioner), also within 30 days (Section 199(1) of the Insolvency Act). If they fail to do so, the claim is deemed admitted. A creditor with an enforceable claim is therefore in a stronger position.

Effects of an Admitted Claim in Bankruptcy and Debt Relief

Bankruptcy (Liquidation)

After the conclusion of bankruptcy, the creditor obtains the right to enforce their admitted claim (or its unsatisfied portion) against the debtor. The extract from the adjusted schedule of admitted claims has the effect of a final court judgment after the conclusion of bankruptcy – it is therefore an enforcement title on the basis of which execution may be conducted (Section 312(4) of the Insolvency Act).

The condition is that the claim was admitted in the insolvency proceedings and was not challenged by the debtor. If the debtor challenged the claim, the extract from the schedule of claims is not an enforcement title to the extent of the challenge – in such case, the creditor must pursue their claim by action in separate proceedings.

A special limitation period of 10 years from the annulment of bankruptcy applies to enforcement on the basis of the extract from the schedule of claims (Section 312(4) of the Insolvency Act). The claim does not become time-barred during the insolvency proceedings, and the limitation period runs anew only from the conclusion of bankruptcy.

This rule has practical significance primarily for natural persons and for legal entities that are not dissolved after bankruptcy (e.g. if bankruptcy ended due to lack of assets, but the company was not struck off). In these cases, the creditor may file a petition for execution on the basis of the extract from the schedule of claims or continue previously initiated execution.

Debt Relief (Personal Insolvency)

In debt relief proceedings, the situation is fundamentally different. After completion of the debt relief, the insolvency court issues a ruling upon the debtor's application releasing the debtor from payment of claims included in the debt relief to the extent they have not yet been satisfied (Section 414(1) of the Insolvency Act).

Upon the debtor's discharge, the claims do not formally cease to exist but become so-called natural obligations – following successful debt relief, the creditor has no ability to judicially enforce the unsatisfied portion of the claim. Therefore, in debt relief proceedings it is crucial to file the claim in time and in the correct amount so that the creditor obtains the maximum possible satisfaction within the payment schedule or realisation of the insolvency estate.

The discharge also extends to claims of creditors who failed to file their claims in the insolvency proceedings even though they should have done so (Section 414(2) of the Insolvency Act).

Exceptions are claims excluded from discharge (Section 416 of the Insolvency Act):

Pecuniary penalties or other property sanctions imposed on the debtor in criminal proceedings for an intentional criminal offence
Claims for damages caused by intentional breach of a legal obligation
Claims for damages caused to health
Maintenance claims
Claims of creditors that the debtor intentionally failed to include in the list of liabilities

These claims may be enforced by the creditor even after the conclusion of debt relief proceedings.

Sanctions for Overstatement of a Claim

Czech insolvency law contains strict sanctions for overstatement of a claim. However, their application is not automatic and depends on the fulfilment of several conditions (Sections 178 to 182 of the Insolvency Act).

The basic rule provides that if it is established that the actual amount of the claim is less than 50% of the filed amount, the filed claim is disregarded even to the extent it was admitted (Section 178(1) of the Insolvency Act). Additionally, the insolvency court may, upon the insolvency practitioner's application, order the creditor to pay into the insolvency estate an amount up to the difference between the filed and admitted claim.

However, this sanction does not apply in all circumstances:

Exception for expert opinion or court's discretion – the sanction does not apply if the decision on the amount of the claim depended on an expert opinion or the court's discretion (Section 178(1) of the Insolvency Act). This exception is aimed at situations where the basis of the claim is undisputed, but its precise amount can only be determined with disproportionate difficulty.
Non-exercise of rights associated with the claim – the obligation to pay the amount under Section 178 or Section 179 cannot be imposed on a creditor who did not exercise rights associated with the unadmitted claim during the proceedings (Section 180 of the Insolvency Act). Exercise of rights means in particular voting at the creditors' meeting, participation in the creditors' committee, or other activity that could have influenced the course of the insolvency proceedings.
Timely withdrawal of the proof of claim – a creditor may avoid the sanction by effectively withdrawing the proof of claim before the effect of the challenge occurs (Section 178(2) of the Insolvency Act).

However, withdrawal of the proof of claim does not protect the creditor if they made an act in the insolvency proceedings that worsened or could have worsened the position of another creditor, or if they did not file the claim in good faith (Section 182 of the Insolvency Act).

The purpose of this regulation is to prevent intentional manipulation of proofs of claim to strengthen creditors' influence at the creditors' meeting and in creditor bodies. Creditors are therefore advised to file only the precise and provable amount, and in case of doubt about the amount of the claim, to consider refraining from exercising rights associated with the claim until it is admitted.

Foreign Creditors

Foreign creditors have the same rights in Czech insolvency proceedings as Czech creditors and must observe the same deadlines and procedures. Although known foreign creditors may receive an extended deadline after service of a formal notice, do not rely on this exception – assume that the standard two-month deadline applies.

Contracts in foreign languages are generally valid, but we strongly recommend obtaining certified translations of key documents into Czech to facilitate review and reduce the risk of the claim being challenged.

Most Common Mistakes to Avoid

Missing the deadline – The two-month deadline is absolute; missing it means losing 100% of the claim
Using the wrong form – Only the prescribed form is accepted
Insufficient documentation of the claim – The claim must be properly evidenced
Overstatement of the claim – May lead to disqualification and a penalty
Failure to monitor the Insolvency Register – Missing notices or deadlines for incidental proceedings

Conclusion

Filing a claim in insolvency proceedings in the Czech Republic is a crucial step in protecting a creditor's financial interests. The entire process has strict rules and absolute deadlines – failure to comply may result in complete loss of the claim. The key to success is to act quickly, monitor the Insolvency Register, meet the two-month deadline, use the correct form, properly document your claim, and continuously monitor the progress of the proceedings.

Filing a claim in insolvency proceedings may seem like a simple administrative task, but it is a legally complex process with many pitfalls. Professional legal representation ensures correct and timely filing of the proof of claim, continuous monitoring of the Insolvency Register, representation at the claims review hearing, defence against challenges to the claim, and representation in creditor bodies. If you have a claim against a debtor that has entered insolvency proceedings in the Czech Republic, do not hesitate to contact our law firm. We will be happy to provide you with comprehensive legal services and help you maximise the chance of satisfaction of your claim in Czech insolvency proceedings.

For more information, contact us at:

JUDr. Mojmír Ježek, Ph.D.

ECOVIS ježek, advokátní kancelář s.r.o.
Betlémské nám. 6
110 00 Praha 1
e-mail: mojmir.jezek@ecovislegal.cz
www.ecovislegal.cz

About ECOVIS ježek advokátní kancelář s.r.o.
The Czech law office in Prague ECOVIS ježek practices mainly in the area of Czech commercial law, Czech real estate law, representation at Czech courts, administrative bodies and arbitration courts, as well as Czech finance and banking law, and provides full-fledged advice in all areas, making it a suitable alternative for clients of international law offices. The international dimension of the Czech legal services provided is ensured through past experience and through co-operation with leading legal offices in most European countries, the US, and other jurisdictions. The Czech lawyers of the ECOVIS ježek team have many years of experience from leading international law offices and tax companies, in providing legal advice to multinational corporations, large Czech companies, but also to medium-sized companies and individual clients. For more information, go to www.ecovislegal.cz/en.