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Příčiny neúspěchu prosazování sanačních postupů v insolvenční realitě
[Reasons for the Failure to Implement Financial Rehabilitation Procedures in Insolvent Reality]

Author

Listed:
  • Luboš Smrčka
  • Markéta Arltová
  • Jaroslav Schönfeld

Abstract

The study brings a new approach to the problem of the currently low use of financial rehabilitation methods in Czech economic reality. We examine several aspects of this problem, but consider the main problem to be the fact that entrepreneurial subjects enter into insolvency proceedings with a very small amount of assets compared to their liabilities. In such a situation, however, willingness on the part of creditors to enable reorganisation cannot be assumed - especially given that attempts to revive such a business are in the majority of cases clearly mistaken. Insufficient debtor property is also reflected in the fact that creditors receive satisfaction only to an insufficient degree; in comparison to OECD countries, the Czech Republic most of the time significantly behind the OECD country average when comparing insolvency proceedings. One of the possible ways of improving the prognosis for using the financial rehabilitation principle and the prognosis for investors to achieve adequate fulfilment during insolvency proceedings would be to tighten present regulations regarding the possibilities of indebting a business. This is presently done by the definition of over-indebtedness, according to which the liabilities of an entrepreneurial subject may not exceed the value of his property.

Suggested Citation

  • Luboš Smrčka & Markéta Arltová & Jaroslav Schönfeld, 2013. "Příčiny neúspěchu prosazování sanačních postupů v insolvenční realitě [Reasons for the Failure to Implement Financial Rehabilitation Procedures in Insolvent Reality]," Politická ekonomie, Prague University of Economics and Business, vol. 2013(2), pages 188-208.
  • Handle: RePEc:prg:jnlpol:v:2013:y:2013:i:2:id:894:p:188-208
    DOI: 10.18267/j.polek.894
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    References listed on IDEAS

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    1. Blazy, Régis & Chopard, Bertrand & Fimayer, Agnès & Guigou, Jean-Daniel, 2011. "Employment preservation vs. creditors' repayment under bankruptcy law: The French dilemma?," International Review of Law and Economics, Elsevier, vol. 31(2), pages 126-141, June.
    2. Sergei A. Davydenko & Julian R. Franks, 2008. "Do Bankruptcy Codes Matter? A Study of Defaults in France, Germany, and the U.K," Journal of Finance, American Finance Association, vol. 63(2), pages 565-608, April.
    3. Ondøej Knot & Ondøej Vychodil, 2005. "What Drives the Optimal Bankruptcy Law Design? (in English)," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 55(3-4), pages 110-123, March.
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    More about this item

    Keywords

    bankruptcy; insolvency; insolvency law; debtor; creditor; reorganisation;
    All these keywords.

    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

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