The way in which creditors’ claims are satisfied depends on the insolvency method. In general, secured creditors’ claims are satisfied from the collateral security; unsecured creditors’ claims are satisfied pro rata.
The insolvency estate is realised in bankruptcy procedure. This means that all assets belonging to the estate are monetised so that the funds can be used to satisfy creditors’ claims on a pro rata basis. If the proceeds from the realisation of the estate are not enough to satisfy all the claims, the insolvency practitioner’s fee and cash expenses are settled first, followed by creditors’ claims arising during the moratorium, creditors’ claims from credit financing, the costs of insolvency estate maintenance and administration, the labour-law claims of the debtor’s employees, and then creditors’ claims to maintenance and, ultimately, claims to compensation for damage to health. Other claims are satisfied pro rata.
In reorganisation proceedings, creditors’ claims are satisfied according to the approved reorganisation plan, while in debt relief proceedings, they are usually satisfied by means of an approved repayment schedule, and also, where appropriate, by the realisation of the insolvency estate. In cases of debt relief, as a matter of principle secured creditors’ claims are satisfied only by monetising the collateral security.read more
Reference to legal acts
Sections 165 to 172 and Section 283 et seq. of Act No 182/2006 on bankruptcy and the management thereof (the Insolvency Act), as amended
Responsible Public Authority
Ministry of Justice of the Czech Republic
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