Preventive Restructuring: Business Viability in Impending Insolvency
Preventive Restructuring: Business Viability in Impending Insolvency

Author(s): Klára Vítková, Ondřej Zezulka
Subject(s): Law, Constitution, Jurisprudence, Law on Economics, Commercial Law
Published by: Societatea de Stiinte Juridice si Administrative
Keywords: impending insolvency; insolvency proceedings; preventive restructuring; resolution;
Summary/Abstract: The Directive (EU) 2019/1023 on restructuring and insolvency lays down rules on preventive restructuring frameworks available for debtors in financial difficulties when there is a likelihood of insolvency, with a view to preventing the insolvency and ensuring the viability of the debtor. The impending insolvency represents a critical condition on the verge of total economic and business failure. Until now, the Czech legal system has only offered the tools of formal insolvency proceedings to resolve such difficulties (particularly the concept of formal reorganization). The article examines whether the impending insolvency can also be averted by using the new procedure of preventive restructuring and to what extent the maximum degree of economic distress of the debtor may be still accepted. For such purposes, the authors assess a concept of a viability test.

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