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Can an Insolvency Trustee Be Appointed a Liquidator of a Company Without His Consent?

Can an Insolvency Trustee Be Appointed a Liquidator of a Company Without His Consent?

Czech Republic
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The Supreme Court confirmed in a recent decision that the court can appoint an insolvency trustee as a liquidator of a legal entity that is being dissolved even without his consent. Under what conditions can the court do so and which insolvency trustee can it appoint?

In general, liquidators, like the members of elected bodies, must give consent to their appointment and can in fact resign from their office at any time. Furthermore, according to Section 191 Par. 3 of the Civil Code, if there is no person that is willing to perform the office of liquidator, the court can appoint a member of the statutory body as a liquidator even without his consent. This should ensure that the liquidation of a legal entity that is being dissolved goes ahead even if no one wants to assume the office voluntarily. Only provided that the court is not even able to appoint any of the members of the statutory body as liquidator (e.g. because there are none or because such member cannot be fairly requested to perform the duties of liquidator), according to Section 191 Par. 4 of the Civil Code the court may assign any person listed in the register of insolvency trustees as liquidator.

Despite the fact that the wording of Section 191 Par. 3 of the Civil Code is different from the wording of Section 191 Par. 4, and although Par. 4 does not expressly stipulate that an insolvency trustee can be appointed as liquidator even without his consent, the Supreme Court concluded in its decision Ref. N. 27 Cdo 2916/2018 of 15.4.2020 that the purpose of these Sections is the same, and therefore it is possible to appoint a person listed in the register of insolvency trustees as a liquidator, without the need for that person to give ad hoc consent.

At the same time, according to the above-stated decision, the liquidator appointed from the list of insolvency trustees cannot resign from his office and the only option for leaving his office is an exemption from the office granted by the court on condition that the insolvency trustee proves that he cannot fairly be required to perform this duty.

Another interesting question relates to the conditions for choosing a particular insolvency trustee that the court can appoint as liquidator. Considering the fact that the legal regulations do not specify any criteria in this respect (in contrast to the Insolvency Act), according to the conclusions expressed by the Supreme Court in this decision, the only way to make the choice is to consider the circumstances of the given case, particularly the distance between the offices of the insolvency trustee and the dissolved legal entity, the alleged complexity of the liquidation, the availability of the insolvency trustee, etc.

By Martin Subrt, Partner, Ondrej Krizek, Managing Associate, Lucie Kacerova, Associate, and Tereza Majerova, Junior Lawyer, Rowan Legal

Czech Republic Knowledge Partner

HAVEL & PARTNERS, attorneys-at-law, with offices in Prague, Brno, Bratislava, Pilsen, Olomouc, and Ostrava, has a team of 220 lawyers, tax advisors and 500 employees in total, is the largest independent law firm in Central Europe.

Our clients include large international companies, leading Czech and Slovak firms, including strategic state-owned companies and public sector authorities, as well as medium-size businesses, individual entrepreneurs, and investors. We advise approximately 100 of the Fortune 500 companies, and almost 50 of the Czech Top 100 companies. HAVEL & PARTNERS currently provides its services to a total of 2,000 clients. We have the most comprehensive international support available to both Czech and Slovak law firms. We provide legal and tax advice in 12 world languages in more than 90 countries around the globe. Up to 70 % of the transactions we deal with involve an international aspect.

HAVEL & PARTNERS was named the best law firm operating in the Czech Republic by the prestigious British rating agencies Chambers and Partners (2020) and Who’s Who Legal (2018, 2019). It is also the most successful law firm, providing the most comprehensive legal services in the Czech Republic and Slovakia, based on the total number of all nominations and awards in all years of the Law Firm of the Year awards. The firm became the absolute winner of this competition four times in the last six years, receiving the main award Domestic Law Firm of the Year in the Czech Republic (2015, 2017, 2018, 2020) and ranking as one of the most recommended law firms in all categories of law. Our company is also a three-time winner of the Law Firm of the Year award for Best Client Services (2015, 2016, 2019). In the field of M&A, HAVEL & PARTNERS is the best law firm in the Czech Republic based on the annual International Advisory Experts awards (2018, 2019). In Slovakia, it also won the prestigious global M&A Today Awards (2013–2018) for Mergers & Acquisitions six times in a row, and repeatedly won first place in the ranking by Lawyer International Legal 100 (2017, 2018). Prestigious international rating agencies EMIS DealWatch and Mergermarket have ranked HAVEL & PARTNERS among the leading law firms by the number of transactions completed in the entire CEE region since 2009. Based on annual awards of the Acquisition International magazine, HAVEL & PARTNERS has become the Law Firm of the Year 2019 in the M&A category in the CEE region.

Firm's website: https://www.havelpartners.cz/en/

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