Decree No. 190 / 2017 Coll.
Article 3 (3) of the Insolvency Act (Insolvency Order)
Valid
Effective from 01.07.2017
190
DECLARATION
of 28 June 2017
to implement Section 3 (3) of the Insolvency Act (Insolvency Order)
The Ministry of Justice provides pursuant to Section 431 (f) of Act No. 182 / 2006 Coll., on the bankruptcy and methods of its resolution (Insolvency Act), as amended by Act No. 64 / 2017 Coll.:
Subject matter
This decree regulates
(a) the content, scope and method of drawing up the liquidity statement and the outlook for liquidity developments;
(b) the organisation, labelling and content of the items of property, liabilities, costs, revenues, revenue and expenditure in the liquidity statement and the outlook for liquidity developments;
(c) the length of the period for which the liquidity outlook is drawn up; and
(d) requirements for persons who are entitled to draw up a liquidity statement or a liquidity perspective.
Requirements for processors
The processor compiling the liquidity statement or the outlook for liquidity developments may be:
(a) a statutory auditor or audit firm, where they are entitled to conduct audit activities under the law governing the audit activities;
(b) an expert entered in the list of experts kept by the Ministry of Justice under the law governing the activities of experts authorised for the field of Economics, the sector of Accounting, or an expert institute registered in the list of expert institutes maintained by the Ministry of Justice under the law governing the activities of experts authorised to pursue the field of Economics; or
(c) a person engaged in economic advice in the field of insolvency and restructuring, and a liquidity statement or outlook for liquidity, shall process through the persons referred to in (a) or (b).
Compilation by complete documentation
The liquidity status statement and the outlook for liquidity developments shall be drawn up on the basis of the data and supporting documents provided by the debtor and only if the processor has access to the complete supporting documents required to be compiled, in particular all accounting books, accounting documents and other accounting records of the debtor as well as any documents of the debtor relating to his business.
Compliance with accounting rules
(1) The items of the liquidity statement and the outlook for liquidity developments have the same content as the correctly identified items of the balance sheet or profit and loss account under Decree No. 500 / 2002 Coll., implementing certain provisions of Act No. 563 / 1991 Coll., on Accounting, as amended, for entities that are entrepreneurs accounting in the dual accounting system.
(2) In the case of a debtor not covered by Decree No 500 / 2002 Coll., those items of the debtor's financial statements which correspond to them shall be used for the items of the liquidity statement or liquidity outlook. If the debtor's financial statements do not contain an item that corresponds in substance to an item of the liquidity statement or the outlook for the development of liquidity, the content definition in accordance with Decree No 500 / 2002 Coll. shall apply mutatis mutandis, taking into account the debtor's accounting methods used.
Liquidity statement
(1) The liquidity position statement shall indicate the size of the coverage gap to assess whether such a coverage gap reaches a tenth of the amount of the debtor's cash liabilities due.
(2) The liquidity statement shall include the asset side, the liability side and the processor's comment, which shall explain and supplement the information contained on the asset side and on the liability side. The comment shall always contain a statement by the processor that he had at his disposal all the supporting documents which he deemed necessary to draw up the liquidity statement and a list of them.
(3) The party to the property contains a summary of the debtor's available funds and a summary of its payable cash liabilities.
(4) The organisation and labelling of the liquidity statement items are set out in Annex 1 to this Decision.
Date of liquidity assessment
(1) The liquidity statement shall be drawn up on the last day of the calendar month preceding the month in which the insolvency proceedings of the debtor (hereinafter referred to as the "liquidity assessment date") began.
(2) The debtor or insolvency court may provide that the liquidity statement shall be drawn up at the date preceding the liquidity assessment date by a month ("different liquidity assessment date") if:
(a) the liquidity statement shall be drawn up before the end of the 20th day of the month in which insolvency proceedings started;
(b) the debtor operates through the organisational component of his establishment abroad; or
(c) there are other serious reasons for such a procedure.
(3) Where a different date for the liquidity assessment has been determined by the debtor, the processor shall indicate in the notes to the liquidity statement the reasons for that.
Data source
(1) The debtor shall draw up interim accounts at the date of the liquidity assessment or at a different date of the liquidity assessment on which the liquidity statement is based for the purpose of drawing up the liquidity statement.
(2) Where the processor deviates in the liquidity statement from the status of the individual items shown in the balance sheet which forms part of the interim financial statements, he shall describe and justify this derogation in the notes.
(3) In drawing up the liquidity statement, the processor shall take into account any liquidity statement of the same debtor published in the insolvency register in the last 3 years before the liquidity assessment date or different liquidity assessment date.
Party of property
(1) On the asset side, only short-term financial assets under heading C.IV are included in the liquidity statement. 1. Cash in the cash register and C.IV.2 Cash in accounts, where applicable, under item C.III.2 Other short-term financial assets, active parties of the balance sheet according to § 12 and 12a of Decree No. 500 / 2002 Coll. The processor shall indicate in the commentary how he verified the physical existence of the funds in the borrower's treasury.
(2) From C.IV.1. Cash in the cash register and C.IV.2 Cash in the accounts shall be included in the money on the way only if it is transferred to the disposition of the debtor or credited to the account. Of the funds in tied accounts, notarial or judicial shelters and similar schemes, only those corresponding to the liabilities included on the side of the liquidity statement's liabilities shall be included.
(3) From item C.III.2. Other short-term financial assets shall include only securities or book-entry securities and shares which are admitted to trading on a regulated market in the Member States of the European Union or in countries that are members of the Organisation for Economic Cooperation and Development only at the level of their fair value. A list of such securities or book-entry securities shall be provided by the processor in the notes.
(4) Undrawn overdraft or similar loans granted by banks may be included on the assets of the liquidity statement provided that their conditions are met and are not terminated. In such cases, the processor shall verify in particular compliance with the terms of the loan by the debtor and the amount of the funds not spent and shall provide details in the notes.
(5) The processor may also, on the assets of the liquidity statement, provide an overview of all other assets of the debtor if it considers this appropriate in view of the nature of the debtor's business.
Party of commitments
(1) On the liability side, all cash debts of the debtor due at the date of the liquidity assessment or at a different date of the liquidity assessment shall be included in the liquidity statement, in particular debts recognised under heading C.II. Short-term liabilities under Section 18 and Annex No 1 to Decree No 500 / 2002 Coll.
(2) Debts for which creditors have agreed to defer their maturity shall not be deemed to be due. The deferral of maturity shall be demonstrated in a credible manner consistent with the relevant contractual documentation. The number, total amount and type of such debt, including the basic parameters of the agreed deferral of maturity, shall be described by the processor in the comment.
(3) Items that are otherwise recognised as short-term liabilities, in particular under item C.II.8.6. Outstanding passive accounts that do not represent repayable and enforceable debts shall not be included in the liabilities of the liquidity statement. Liabilities arising from overdraft and similar loans under item C.II.2. Liabilities to credit institutions shall not be included if their conditions are respected and are not terminated; the processor shall describe the verification of these facts in the comments.
(4) The processor shall verify that all outstanding debts of the debtor are correctly recognised under the items referred to in paragraph 1, in particular by checking other items of the balance sheet party's liabilities; taking into account also the claims entered and applied in insolvency proceedings of the debtor.
(5) On the part of the liabilities of the liquidity statement, the weighted average of past due periods shall also be reported for each item determined by the amount of each debt under the item. The number of days past due for each item may be replaced by a categorisation according to the debtor's accounting.
(6) The processor shall also provide, on the part of the liabilities of the liquidity statement, an overview of all the debtor's debts, including any outstanding amounts, unless it considers this inappropriate in view of the nature of the debtor's business; the reasons for which it considers the disclosure of all undertakings inappropriate shall be explained in the comments.
Group liabilities and subordinated liabilities
(1) The liabilities payable to the persons with whom the debtor forms a group are included on the part of the liabilities of the liquidity statement. This is not the case if the creditor declares in writing that he agrees to defer the maturity of the debt by more than 12 weeks from the liquidity assessment date or by more than 16 weeks from the different liquidity assessment date.
(2) The liability corresponding to subordinated claims under Section 172 (2) of the Insolvency Act shall be included on the part of the liabilities of the liquidity statement if they are subject to only certain obligations of the debtor. Liabilities subordinated to all other obligations of the debtor shall not be included on the liability side. The list of subordinated liabilities shall be provided by the processor in the commentary.
Debate liabilities and netting
(1) On the part of the liabilities of the liquidity statement, the claims of creditors to which the debtor has eligible claims may be excluded unless there is a reason to prevent the debtor from making the netting. The processor shall check compliance with the legal or contractual terms and conditions and describe its findings in the comments.
(2) It is also possible to exclude from the liabilities of the liquidity statement the claims of creditors which are disputed if the debtor denies the existence of such claims in a credible manner, in particular in the case of a claim which relies on invoices issued without supporting the performance of the creditor or the behaviour of the debtor. The facts on the basis of which the debtor denies claims shall be examined by the processor. The processor shall, in the commentary, provide information on the amount and the reasons for such claims, the reasons for their denial by the debtor, as well as any impact on the coverage gap set out in the liquidity statement, if any.
Additional available funds
The processor shall not disclose in the liquidity statement a finding on the existence of a cover gap if the debtor submits instruments authorising it to draw sufficient funds to cover all the debts assigned to the liability of the liquidity statement on the basis of the liability of the financial institution, and if the processor concludes, after assessing the creditworthiness of such financial institution and other circumstances, that the additional funds available under the instruments submitted allow the debtor to fulfil without any limitation any obligations assigned to the liability of the liquidity statement at the date of drawing up the liquidity statement. The processor shall indicate in the commentary the manner in which it has examined the relevant facts, the designation of the relevant financial institution, the total amount of the credit framework and the amount of its undrawn part.
Method of drawing up the liquidity statement
(1) When drawing up the liquidity statement, the processor shall examine the data and supporting documents provided by the debtor and, where appropriate, request access to the other supporting documents required for the establishment, and in particular:
(a) assess the consistency of the data and supporting documents provided with the supporting accounting books, analytical records, main book and interim financial statements drawn up at the liquidity assessment date or at a different liquidity assessment date;
(b) assess the consistency of the interim accounts drawn up at the date of the liquidity assessment or at a different date of the liquidity assessment with at least two previous sound financial statements and assess any significant deviations;
(c) acquaint themselves with the debtor's activity in order to identify any discrepancy between the debtor's activity and the data and supporting documents provided; and
(d) check the formal accuracy of the figures in the supporting documents provided.
(2) In examining the data and supporting documents provided by the debtor and drawing up the liquidity statement, the processor shall, in particular:
(a) the existence of cash in the cash register, usually by agreeing on the documentation from the cash register inventory to the treasury stock in the debtor's accounts;
(b) the existence of funds in the debtor's accounts, usually by agreeing to bank statements on the status of funds in the debtor's accounts;
(c) the admission of securities or book-entry securities and trading shares on a regulated market in the Member States of the European Union or in countries which are members of the Organisation for Economic Cooperation and Development;
(d) compliance with the conditions for drawing on undrawn overdraft and similar loans granted by banks and compliance with the conditions which would infringe the debt arising from overdraft and similar loans due by means of confirmation received from those banks or by establishing the indicators on which compliance with the conditions for drawdown may depend;
(e) the completeness of short-term debts, usually by assessing the correct classification of long-term debts and other liability items in the debtor's accounts, taking into account the claims entered into and applied in the insolvency proceedings of the debtor; and
(f) the subordination of liabilities subordinated to all other obligations of the debtor, usually by means of a certificate issued by the creditor of the subordinated debt.
Liquidity developments outlook
(1) The outlook for liquidity developments is a short-term plan for the development of current assets, short-term liabilities and cash flows of the debtor. Its purpose is to assess the debtor's ability to meet its due liabilities in the period over which the liquidity outlook is drawn up.
(2) The liquidity development outlook shall include, for the period for which it is drawn up, an overview of the expected costs and revenues of the debtor, an overview of the expected revenue and expenditure of the debtor and an overview of the expected development of the selected items of the debtor's balance sheet, including an estimated liquidity status statement at the last day of that period. Furthermore, the liquidity development outlook shall contain a comment from the processor explaining and supplementing the data and information referred to in the first sentence.
(3) The arrangement and labelling of the liquidity outlook items are set out in Annex 2 to this Regulation.
Liquidity assessment period
(1) The liquidity development outlook shall be compiled for a period of 8 weeks from the date of the liquidity assessment ("liquidity assessment period ') as a weekly overview for that period.
(2) If the liquidity statement was drawn up at a different liquidity assessment date, the liquidity assessment period shall be 12 weeks from that date.
(3) In exceptional cases, the liquidity assessment period may be extended by a maximum of 4 weeks. The processor shall, at the request of the debtor, draw up a view of liquidity developments for a longer period only if:
(a) the debtor shall demonstrate that he is unable to meet his due liabilities in an unextended period due to the delay of a third party with the fulfilment of his obligation to the debtor and that there is no doubt as to whether or not that third party's debt to the debtor exists;
(b) the debtor shall demonstrate that similar delays by third parties are common in the relevant sector and that the reason for the delay is not a breach of the debtor's obligations; and
(c) the processor has no doubts as to the debtor's ability to close the cover gap in the extended liquidity assessment period.
(4) Where the outlook for liquidity developments is compiled for an extended period of liquidity assessment, the processor shall declare in the commentary that the conditions for such a procedure are met and explain how it has verified their compliance.
Data source
(1) The outlook for liquidity developments is based in particular on:
(a) interim accounts for information on initial stocks; where the data on initial stocks deviates from the status of each item in the balance sheet which is part of the interim financial statements, the processor shall describe and justify this deviation in the notes;
(b) the expected recovery times of the debtor's claims existing at the date of the liquidity assessment or at a different date of the liquidity assessment, and the processor shall examine in particular the maturity of the claims that are due at the date of the liquidity assessment or at a different date of the liquidity assessment;
(c) the expected returns on real estate contracts;
(d) expected maturity of claims on such contracts;
(e) the expected costs and payments of commitments corresponding to those costs, including the maturity of each undertaking; where the maturity of the obligations is not agreed, the processor shall use a maturity period of 15 days, unless the practice or documentation relating to the debtor's business results in another maturity period; and
(f) the possibilities of financing from foreign sources and the use of alternative forms of financing, in particular factoring.
(2) In the commentary, the processor shall describe in detail the development of the individual items referred to in paragraph 1, explaining the sources on which it was based when determining the individual items, as assessed by the credibility of those sources. In relation to the contested claims, Paragraph 11 (2) shall apply mutatis mutandis.
(3) Where this is consistent with the nature of the debtor's business, the processor may also include in the liquidity perspective:
(a) expected returns not supported by contracts, contracts or orders, where such returns can reasonably be expected on the basis of an analysis of the development of the debtor's business and the development of the sector in which it operates, within the five years preceding the liquidity assessment date or the different liquidity assessment date, and where such returns can be attributed to individual customers of the debtor;
(b) returns other than those referred to in (a), provided that the processor has verified that such returns are highly likely to be obtained.
(4) The processor shall describe in the commentary the various items referred to in paragraph 3 and the facts on the basis of which they have been included in the liquidity perspective.
(5) Unsubstantiated or doubtful income or income and proceeds from the sale of fixed assets shall not be included by the processor in the liquidity perspective.
(6) When compiling a liquidity development perspective, the processor shall take into account any liquidity developments of the same borrower published in the insolvency register in the last 3 years before the liquidity assessment date or different liquidity assessment date.
Method of establishing a credible view
(1) The liquidity development outlook shall be compiled to be credible.
(2) The outlook for liquidity developments is credible if it is based on realistic assumptions. The assumptions may be considered realistic, in particular if:
(a) the expected sales and sales are based on contracts already concluded or contracts which appear highly likely to be concluded;
(b) the expected cost of production is based on substantiated and justified calculations;
(c) the expected recovery of existing claims is not jeopardised by the insolvency or non-payment by the debtor's customers; and
(d) the maturity of the liabilities is 15 days or if the longer maturity of the liabilities is supported by a written contract.
(3) The processor shall verify the accuracy of the records under entries C.I. Stocks and C.II. Claims reported by the obligor at the date of the liquidity assessment or at a different date of the liquidity assessment and shall describe in the comment how it verified the existence of the reported stocks and claims.
(4) If they are under C.II. Claims also reported on related parties, the processor shall describe such claims in the notes and explain whether they are considered to be recovered and on what basis.
Group relationships
(1) If the processor builds on the debtor who is a member of the group, the outlook for the development of liquidity and for other members of the group, he will mention this in the comment. If it is not about the consolidated outlook for the development of liquidity for all members of the group, the processor shall describe in the commentary how the consistency of the compiled outlook for the development of liquidity is ensured with the prospects for the development of the liquidity of the other members of the group.
(2) If the processor does not also draw up a liquidity perspective for the other members of the group of which the debtor is a member, he shall briefly describe in the commentary the extent of the link between the business of the debtor and the business of the other members of the group and the assumptions relating to the continued existence of the link that he based on in the process of the liquidity perspective.
Method of compiling liquidity developments
(1) Paragraph 13 (1) shall apply mutatis mutandis to the processor's process of drawing up the liquidity perspective.
(2) The processor will, in particular, examine the budgets, plans and prospects of the sales provided by the debtor when drawing up the liquidity perspective.
(3) In examining the data and supporting documents provided by the debtor and drawing up the outlook for liquidity developments, the processor shall, in particular:
(a) expected costs and payments of commitments corresponding to those costs, including maturity periods of individual liabilities, normally according to the relevant contractual documentation relating to those obligations, based, where appropriate, on an analysis of the respective business relationship of the debtor;
(b) the likelihood of obtaining proceeds not supported by orders, contracts or orders, usually based on the results of the debtor's conduct with third parties and on an analysis of the development of the debtor's business and the development of the sector in which it operates;
(c) contracts concluded by the debtor and contracts which appear highly likely to be concluded, in terms of whether they constitute a basis for expected sales and sales;
(d) the calculation of the debtor in terms of whether they constitute the basis for the expected cost of production; and
(e) details of the obligor's liabilities and assets, if any, as published in the insolvency register in the last 3 years before the liquidity assessment date or different liquidity assessment date.
Efficacy
This Regulation shall enter into force on 1 July 2017.
Minister:
JUDr. Pelican, Ph.D., v. r.
Příloha č. 1
Annex No 1 to Decree No 190 / 2017 Coll.
Arrangement and labelling of liquidity statement items
Příloha č. 2
Annex No 2 to Decree No 190 / 2017 Coll.
Arrangements and labelling of liquidity developments items
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Regulation Information
| Citation | Decree No. 190 / 2017 Coll., implementing § 3 paragraph 3 of the Insolvency Act (Insolvency Order) |
|---|---|
| Regulation Type | - |
| Author | - |
| Collection | Code of Laws |
| Date of Promulgation | 30.06.2017 |
|---|---|
| Effective from | 01.07.2017 |
| Effective until | - |
| Status | Valid |
The regulation text is for informational purposes only.
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