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News

Coronavirus update- questions and answers about contracts and regulation

27.05.2020
Company: Amcham

In connection with the spread of Covid-19, extensive crisis measures have been announced in the Czech Republic with a major impact on all business activities nationwide.

Below we provide answers to frequently asked questions, especially in the area of contracts and regulation. Employment law and related issues are dealt with in more detail in our Practical Guide for Employers and Covid-19: Antivirus Employment Retention Program for March - April 2020.

Updated on 26 March 2020. We continue to monitor the situation closely.

Question No. 1 – Can we claim compensation from the Czech Republic for damage caused by the crisis measures?

Yes, the State may be required to compensate damage suffered under certain conditions. We have prepared the following summary Covid-19: Business Interruption Loss Recovery.

 

Question No. 2 – What business support measures are available?

There are a whole host of financial measures to support businesses and we advise our clients based on their specific situation. One of the most important measures is the COVID II guarantee programme and the COVID Prague programme, brief descriptions of which we have prepared here: Covid-19: COVID II and and COVID Prague guarantee programmes.

 

Question No. 3 - We are currently paying off the loan and we need to temporarily postpone the installments. Can we do so without the bank's approval?

Yes, the law newly introduced a temporary option to postpone loan repayments; the bank only needs to be informed about this step.

The Senate approved and the President of the Republic signed a bill based on which both consumers and businesses can apply for the postponement of their payments for three or six months.

This option only applies to loans that were taken out and drawn before 26 March 2020, as well as loans that were taken out before 26 March 20 and which are secured by real estate or provided as special purpose (e.g. to acquire real estate or pay for the transfer of a share in a housing cooperative).

The debtor will be able to choose whether to postpone the instalments by three or six months or not to use this option at all.

The Act was promulgated in the Collection of Laws and entered into force on 17 April 2020.

 

Question No. 4 – As a result of the crisis measures, the other party is not fulfilling an already concluded contract. Is it entitled to provide fulfilment later and can we terminate the contract?

Even in view of the unprecedented nature of the situation, many clients prefer to take a business approach and try to find a mutually acceptable solution. We summarised other options in Covid-19: Contracts and force majeure.

 

Question No. 5 – As a result of the measures we had to close our business premises. Do we still have to pay rent?

With respect to this and other questions relating to lease agreements (both from the perspective of the tenant and the landlord), we have prepared the following practical summary: Impact of COVID-19 pandemic on rights and obligations under lease agreements.

 

Question No. 6 – We run a hotel and we already have reservations (partly paid and partly unpaid) during the crisis measures. What do we do? And may we accept reservations for the post-crisis period?

Unlike the previous measure, which was limited in time and from which it was inferred that reservations can be accepted for the period after the crisis measures, the current wording of the measure does not contain the latest prohibition date. Therefore, it is currently prohibited to sell all accommodation services with the exceptions listed below. The ban does not apply to hostels and spa facilities, if the spa service is covered by public health insurance at least in part, or school accommodation facilities.

According to the timetable for the opening of business and other activities published by the Ministry of Industry and Trade, the general sale of accommodation services should be possible from 8 June 2020. However, this is a non-binding material that the government puts into practice at weekly intervals.

Until this time, accommodation services may be provided only to persons for the purpose of professional or other business activity, to foreigners until they leave the territory of the Czech Republic and to foreigners with a work permit for the Czech Republic, as well as people whom the public health protection authority has ordered quarantine and those at risk of domestic violence.

Question No. 7 – Do all the obligations of a member of a statutory body continue to apply if our company goes bankrupt? And can our creditors file an insolvency petition?

Extraordinary changes in insolvency law have been approved. Some of them apply in general and some are limited to bankruptcy caused by the emergency measures related to the Covid-19 pandemic. The individual changes are described in more detail in Covid-19: Insolvency and extraordinary moratorium.

 

For more information contact

 

Tags: Law | Finance | Health |

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