Restructuring/Insolvency

About

Provided by CERHA HEMPEL

Over recent years, our restructuring and insolvency team has consistently reinforced its strong position in the Czech market, handling a number of key matters while further advancing mandates initiated in previous years.

From a broader market perspective, the past year once again confirmed the ongoing trend of increasing distress situations, driven primarily by geopolitical tensions and sustained economic uncertainty.

Beyond the traditionally affected sectors—such as manufacturing, trade, and construction—recent developments have highlighted a notable rise in distress among bond issuers and investment funds. These entities frequently target retail investors, who, in many cases, risk losing their life savings when such investments fail.

In the Czech Republic, the regulatory framework governing bond issuances as a financing tool, as well as similar instruments, remains relatively lenient. This enables such entities to raise substantial funds from retail investors, which they are often ultimately unable to repay. A contributing factor is the frequent overvaluation of their underlying assets.

As a result, we are increasingly encountering creditor structures in insolvency proceedings that involve a large number of smaller creditors. In such circumstances, the prospects for successful out-of-court restructuring—or even formal reorganization—are significantly reduced and, in practice, rarely realized.