Changes to Corporate Restructuring Laws in the Czech Republic During the Covid-19 Pandemic

Abstract

AbstractIn the course of the Covid-19 global pandemic, corporate restructuring laws worldwide underwent a stress test as the financial health of companies significantly deteriorated. In response to public demand, legislators in the Czech Republic adopted various bail-out programmes and bail-in measures in order to provide debtors who ran into temporary problems in connection with the Covid-19 pandemic with additional protection against individual creditors to help solve their financial troubles. This paper outlines the various bail-in and bail-out measures that were introduced during the critical phase of the pandemic in 2020–2021 and analyses the extraordinary measures that were adopted in the Czech Republic. After the pandemic, once the temporary emergency measures were lifted, the number of insolvency petitions and proceedings surprisingly decreased in comparison to previous years. This may suggest that financial aid programmes in the Czech Republic may even have been too generous. While public debt in the Czech Republic increased dramatically during the pandemic as a result of the governmental bail-out/financial aid programmes, the ‘helicopter money’ contributed significantly to accelerating the increase in the country’s inflation rate.