The proposals for modification made by the upper chamber of parliament centered around the terms to be met by debtors to become eligible for debt relief; in this respect, the senate showed even greater benevolence, however, finally there was almost no support by MPs.
A government bill for an amendment to the Insolvency Act, known as the “Debt Relief Amendment”, garnered much attention last year among experts. In fact, the envisioned possibility of a moratorium of up to one year during which repayment would be suspended, and the criteria under which debt relief would be granted, stirred up a discussion even beyond professional circles.
In contrast to the existing framework for personal insolvencies, which require that the receivables of unsecured creditors be satisfied, as a rule, in an amount of at least 30% for debt relief to be granted, the amendment envisions a marked expansion of the options to attain debt relief and reinstatement by turning the debtor’s estate into cash, which caused a debate also among the general population.
The bill which was sent to the senate by the house of deputies stipulated highly liberal criteria for debt relief, but was returned to the house with senatorial modifications that went even further in accommodating delinquent debtors. The house version had stipulated the following alternative requirements which need to be fulfilled in order to attain debt relief: repayment of all receivables of unsecured creditors; repayment of 50% of unsecured creditors over the course of three years; repayment of 30% within five years. A final alternative in the house version requires repayments over five years and no cancellation of the personal insolvency, provided, however, that the debtor made every effort to repay their debts which could reasonably be expected from them. Whether the debtor cleared this hurdle or not was to be determined by a court. For the purposes of the assessment of this question, the assumption was to apply that the debtor made proper repayments without any breach of obligations if they repaid at least 30% of the receivables of unsecured creditors.
The senate’s proposals for modifications of the bill focused in particular on the terms to be met by debtors to become eligible for debt relief; the senate asked the house of deputies to accept, within the context of the debt-relief alternative mentioned last above, five years of repayment efforts by the debtor with no additional conditions whatsoever.
However, the Chamber of Deputies approved on Tuesday, January 22, the method of debt relief originally advocated by MPs. The senators’ comments were rejected by the majority of Members, namely 181 deputies, according to the voting protocol for the original version of the law. The fate of the amendment is therefore definitely decided. The final word gets the president. So far, he has not yet mentioned in any of his statements that he should have any comments.
Parliamentary press No. 71 – amendment bill – Insolvency Act – EU
Parliamentary press No. 12/0 – amendment bill – Insolvency Act – EU Act No. 182/2006 Coll., on insolvency and the manners in which to resolve it (Insolvency Act)