15 April 2020
On 7 April 2020, the lower house of the Czech Parliament, the House of Deputies (in Czech Poslanecká sněmovna České republiky), approved a draft bill on certain measures regarding loan repayments in relation to the COVID-19 pandemic (in Czech návrh zákona o některých opatřeních v oblasti splácení úvěrů v souvislosti s pandemií Covid-19) (document no. 813) by decree no. 1024. The revised draft bill, under Senate document no. 229, will be discussed in the upper house of the Czech Parliament, the Senate, in the near future, and subsequently presented to the President for his signature, sealing the legislative procedure. As such, the new rules could become effective by their publishing in the Collection of Laws this post-Easter week by the middle of this week.
A detailed reading of the version of the bill presented to the Senate raises a number of questions and uncertainties about the impact of the proposed rules on relationships between borrowers and lenders. If adopted in their current form, the rules, in addition to their ambiguities, will affect the dynamics of commercial relationships throughout the loan market. This briefing provides a review of the likely impacts of such rules in the field of large corporate financing. Although there will be a relatively low number of such cases, the impacts will be magnified by the huge amounts of money in question; the future of big domestic companies and their holdings may be (negatively) influenced. In this context, the ambiguities found and questions raised within the contemplated rules may be surprising. We focus and briefly discuss a selected number of such rules below.