On 1st of July, 2017, an extensive amendment to the Insolvency Act, which among other objectives aims to defend debtors against misused insolvency petitions, became effective.
To achieve the goal, a new provision has been included in the act enabling the insolvency court, should there be doubts about legitimacy of the petition, to decide whether the insolvency petition and other related documentation in the insolvency file are to be published in the insolvency registry or not, which decision is to be made without unnecessary delay. If the petition is not rejected on as obviously unsubstantiated, the court declares the commencement of insolvency proceedings following the standard procedure – by means of a public notice published in the insolvency registry no later than 2 hours after the beginning of the office hours of the first following working day within a 7-day period after the petition has been filed. Only the insolvency debtor and creditor will be allowed to inspect the court file during the period.
The novelty based on a preliminary assessment of the insolvency petition should protect economic subjects’ reputation and credibility from being harmed by ungrounded insolvency petitions, e.g. as a means of competitive strategies etc.