Strategic options of distressed companies in the Czech legal environment

Alexander Kosovský

Master's thesis

Abstract:

The thesis provides a detailed overview of crisis resolution options available to distressed companies in the Czech legal environment. The work starts by describing the most common causes of corporate distress in attempt to understand the process of decline and define the key steps to prevent crisis in the early stage. We then proceed to discuss the methods of resolution that can be applied in the early pre-bankruptcy stages of distress, including downsizing and divestitures, out-of-court settlement with creditors, mergers with or acquisition by strategic or financial investors, or voluntary liquidations. Further on, the work provides a comprehensive summary of the Insolvency Act, the Czech legislation governing bankruptcy proceedings, concentrating on the option that could preserve business operations of troubled companies -- reorganisation. In the practical part of the thesis, the author evaluates the reorganisation plan of ČKD Kutná Hora, a.s., focusing on the company-specific issues and assessing the viability of the plan according to a number of success and risk factors, as well as the objectives stipulated by the Insolvency Act.

Abstract:

The thesis provides a detailed overview of crisis resolution options available to distressed companies in the Czech legal environment. The work starts by describing the most common causes of corporate distress in attempt to understand the process of decline and define the key steps to prevent crisis in the early stage. We then proceed to discuss the methods of resolution that can be applied in the early pre-bankruptcy stages of distress, including downsizing and divestitures, out-of-court settlement with creditors, mergers with or acquisition by strategic or financial investors, or voluntary liquidations. Further on, the work provides a comprehensive summary of the Insolvency Act, the Czech legislation governing bankruptcy proceedings, concentrating on the option that could preserve business operations of troubled companies -- reorganisation. In the practical part of the thesis, the author evaluates the reorganisation plan of ČKD Kutná Hora, a.s., focusing on the company-specific issues and assessing the viability of the plan according to a number of success and risk factors, as well as the objectives stipulated by the Insolvency Act.

Keywords

Reorganisation, Insolvency Act, Distressed Company

Keywords

Insolvency Act, Reorganisation, Distressed Company

Language used: English

Date on which the thesis was submitted / produced: 18. 1. 2011

Thesis defence

• Date of defence: 20. 9. 2012
• Supervisor: Jiří Hnilica
• Reader: Tomáš Krabec

Vysoká škola ekonomická v Praze

Master programme / field:
Ekonomika a management / International Management