Category: Czech Republic

Clifford Chance has advised Ceska Sporitelna on the financing for the acquisition of Sanborn by Czech Machining Holding, a direct subsidiary of the Oriens Fund III SCSp.

According to Clifford Chance, Sanborn “stands as an innovative manufacturer of parts for the energy, petrochemical, and transport industries, providing essential components to global manufacturers of generators, turbines, power companies, thermal power plants, and diesel engine manufacturers.”

Oriens operates as an independent privately owned industrial holding, with a focus on private equity investments in the Czech Republic, Hungary, Germany, Poland, and Slovakia.

The Clifford Chance team included Partner Milos Felgr, Associate Bara Mika, and Junior Lawyer Pavlina Tomeckova.

Clifford Chance could not provide additional information on the deal.

Editor’s Note: After this article was published, Kinstellar announced it had advised Genesis Private Equity on the sale of Sanborn to Oriens. The firm’s team included Partner Jan Juroska, Managing Associate Michal Kniz, and Associate Denisa Simanska.

Subsequently, GT Legal announced it advised Oriens. The GT Legal team included Founding Partner Lukas Zahradka, Senior Associate David Fabian, and Junior Associate Jan Nespor.

.. as well as other legislation news and case law in litigation:

Case law

A real estate agency cannot force a buyer to conclude a purchase contract by threatening a contractual fine

• If a reservation contract concluded between a buyer, seller and real estate agency stipulates the obligation of the buyer to conclude a follow-up purchase contract under the threat of a contractual penalty, it is a void provision, as the Real Estate Mediation Act expressly prohibits this (Supreme Court judgment, Case No. 33 Cdo 1507/2022 of 20 June 2023).

Additional verification may be required for a qualified electronic signature

• When using qualified electronic signatures, the signature in question must also be registered in the basic population registers with the relevant signatory, otherwise it is legally flawed and in such a case the same verification as for handwritten signatures is required (Resolution of the High Court in Prague No. 3 VSPH 610/2023-A-122 of 28 June 2023).

A change in the employee’s circumstances must be proved by the employer

• When an employer seeks an adjustment or waiver of the obligation to pay an employee compensation for loss of earnings after incapacity for work, it is the employer who must prove a change in the employee’s circumstances relevant to the determination of the amount of the compensation. If the courts shift the burden of proof to the employee, they violate, in particular, the employee’s right to judicial protection (Constitutional Court ruling No. I.ÚS 463/23 of 27 June 2023).

The court may moderate contractual penalties even in the case of certain public contracts

• The conclusion of a contract in the context of public procurement does not automatically exclude the possibility of moderation (reduction) of the contractual penalty by the court. Previous court decisions were based on a specific situation where the contractor itself determined the parameters of the contractual penalty in a public tender and its subsequent modification would violate the rules of public competition. However, this rule cannot be applied across the board to all contractual relations within the framework of a public tender on a blanket basis and moderation of the contractual penalty is therefore admissible depending on the specific case (Supreme Court Judgment Case No. 23 Cdo 2921/2022 of 28 June 2023).

Legislation

Act on class action

• The bill on class action has passed its first reading in the Chamber of Deputies. The scope of the law is limited to relations between consumers and businessmen. Other claims will not be possible in class action proceedings. Consumers will have to actively opt-in to the collective proceedings, so an opt-in option has been chosen.

As of today, when a single illegal activity affects a large group of consumers, the courts must hear individual cases in separate proceedings. The new class action act will allow these cases to be consolidated into one, making such court proceedings more efficient, relieving the courts, saving costs for consumers and defendants, and ensuring that the same cases are decided in the same way.

By Tomas Jelínek, Senior Associate, and Eliska Miklikova, Associate, Eversheds Sutherland

Rowan Legal has advised Oriens Fund II on its acquisition of Sogos Fanam.

Oriens Fund II is a private equity fund.

Czech Republic-based Sogos Fanam is a spin-off company of Sogos, an automated production company.

The Rowan Legal team included Partners Martin Subrt and Jan Mekota, Senior Associate Michaela Jirikova, Associate David Orsulik, and Junior Lawyers Barbora Ungrova and Martin Horak.

Rowan Legal did not respond to our inquiry on the matter.

Kocian Solc Balastik has advised Jet Investment on its acquisition of building insulation producer Likov via the Jet 3 Qualified Investor Fund.

Likov is a Czech Republic-based family-owned manufacturer of building profiles for external building insulation systems.

According to KSB, since its inception in 1997, Jet Investment has focused on investing in majority stakes in industrial companies in Central Europe, particularly in the energy, engineering, advanced materials, rail, petrochemical, chemical, and gas sectors. “The Jet 3 Qualified Investor Fund plans to acquire industrial companies in the energy, engineering, and advanced materials segments over the next few years and to assist in their development and growth while striving to take into account ESG principles.”

The KSB team included Partner Jan Lasak and Lawyer Jan Beres.

KSB was unable to disclose further information on the deal.

Kinstellar has advised S Immo on its acquisition of a property portfolio in the Czech Republic, valued at EUR 481 million, from the CPI Property Group.

S Immo is a real estate investment company.

According to Kinstellar, “the property portfolio comprises 11 office and retail properties, as well as development land. The transaction’s property value is EUR 481 million, with an annual rental income of approximately EUR 29 million.”

Earlier in 2023, Kinstellar advised S Immo on its acquisition of another asset portfolio including a Czech Hotel and office buildings from CPI (as reported by CEE Legal Matters on May 11, 2023).

The Kinstellar team included Partner Klara Stepankova, Managing Associate Martin Holub, Senior Associates Jakub Stastny, Radka Justova, and Matej Vecera, Associate Artom Gnedin, and Junior Associates Dominik Sevcu, Dominik Ctvrtnicek, Zuzana Mihalikova, and Zuzana Konecna.

Weinhold Legal has advised WLSCo Investment and Lama Energy on the acquisition Fonergy. CHDO Advokati reportedly advised on the transaction as well.

Lama Energy is a supplier of natural gas and electricity.

Fonergy is active in the retail supply of natural gas and electricity.

The Weinhold Legal team included Partner Martin Lukas, Senior Managing Associate Jakub Nedoma, Senior Associate Daniel Kinkor, and Junior Associate Martin Pesl.

Glatzova & Co has advised the Vitkovice foundries on the negotiation and preparation of the reorganization plan and the approval of the prepackaged reorganization, including the preparation of credit financing to ensure liquidity during insolvency proceedings.

According to Glatzova & Co, “this process was completed by the successful authorization of the reorganization by the Regional Court in Ostrava, when the reorganization plan received the support of 100% of secured creditors and more than 56% of unsecured creditors. The approval of the prepackaged reorganization plan was the first milestone in the recovery process. Another will come when the final reorganization plan is approved next year.”

Back in May, Glatzova & Co also advised on the restructuring of 16 loans, amounting to almost CZK 600 million in total, for Vitkovicke Slevarny (as reported by CEE Legal Matters on May 23, 2023).

The Glatzova & Co team included Counsel Vaclav Zalud, Senior Associate David Kytler, and Trainee Tomas Farnik.

Clifford Chance has advised Ceskoslovenska Obchodni Banka on the financing for the acquisition of Gastro-Menu Express by Oriens Holding. Rowan Legal reportedly advised Oriens.

According to the firm, the transaction strengthens Oriens’ position in the food and retail market. Oriens is an independent privately owned holding, with a focus on private equity investments in the Czech Republic, Hungary, Germany, Poland, and Slovakia.

Gastro-Menu Express, founded in 1998 in the Czech Republic, specializes in the production of food products and their subsequent distribution to retail chains and the retail network.

The Clifford Chance team was led by Partner Milos Felgr and Associate Bara Mika and included Junior Lawyer Tomas Kubala and Paralegal Radek Sikora.

Editor’s Note: After this article was published, Rowan Legal confirmed it had advised the Oriens Fund III SCSp through Stroga Holding – a subsidiary wholly owned by Deli Holding, which is owned by Oriens – on the acquisition of Gastro-Menu Express. The Rowan Legal team was headed by Partner Martin Subrt and included Partners Jan Frey and Jan Mekota, Associate David Orsulik, and Junior Lawyers Barbora Ungrova and Veronika Kvapilova.

The Czech Republic appears to be in the middle of rapid advancements in digital transformation and cybersecurity, according to DLA Piper Partner Tomas Scerba, who sheds light on the significant legislative changes propelling the country to the fore of digital innovation.

“The Czech Republic has made significant progress in digitization in recent months,” Scerba begins. “New laws have been introduced, enhancing the development of digital infrastructure. The transition from paper documents to digital versions is remarkable, including the implementation of digital ID cards from January 1, 2024,” he reports. This digital shift also extends to employment contracts, streamlining recruitment and termination processes.

“Cybersecurity is a key aspect,” Scerba continues. “The Czech Republic was the first in Europe to enact comprehensive cybersecurity legislation – we contributed to designing the EU’s NIS1 directive, and now we’re moving towards the NIS2. The new cybersecurity bill, which is in the intergovernmental process, is expected to be enacted by the end of October 2024,” he reports. According to him, this will significantly elevate cybersecurity standards across the country. “The cybersecurity changes are profound,” he goes on to say. “The upcoming legislation will impose higher fines, similar to GDPR breaches, affecting a wide range of companies. This has created numerous opportunities for legal experts in technology – our lawyers, for instance, have been advising the national agency and are well versed in this area.”

Moreover, Scerba says that AI is another hot topic. “Currently, we don’t have specific AI laws, so we’re relying on the civil code and copyright laws. The debate mainly revolves around authorship, with three views: it could be the AI user, the AI software developer, or a joint authorship between both. We don’t have a landmark code for guidance, so it’s an area of ongoing discussion and exploration,” he elucidates.

Focusing on other areas of note, Scerba shares that “ESG reporting is becoming a crucial part of compliance. The EU directive, soon to be transposed into national law, will come into force in two months.” He says that this is a “significant change, especially for larger and financial companies, as it imposes more stringent compliance requirements.”

Additionally, he reports that “the energy sector and companies focusing on ESG compliance are doing well. Household names like LEGO and IKEA are navigating supply and labor shortages successfully and there’s also a noticeable uptick in the gaming industry and a recovery in the restaurant sector.” Finally, Scerba notes that there is even some “cautious optimism about the M&A sector – we expect a rise in activities soon,” he concludes.

JSK has advised the Genesis Private Equity Fund IV on its acquisition of STT Servis in the Czech Republic alongside some of the company’s management. Wolf Theiss reportedly advised the sellers.

GPEF IV is a private equity fund of Genesis Capital that offers financing for growth and development to small and medium-sized companies in Central Europe. Since its foundation in 1999, Genesis Capital has advised six private equity funds with a total volume exceeding EUR 350 million.

STT Servis is a supplier of quality precision machine components and assemblies. It is headquartered in Dlouha Loucka, the Czech Republic.

According to JSK, “simultaneously with GPEF IV, key managers also invested in the company. The common goal is to accelerate the group’s growth through expanding production capacity, developing cooperation with existing customers, and gaining new business partners.”

Earlier in 2023, JSK also advised Genesis Private Equity on its PFX investment (as reported by CEE Legal Matters on October 9, 2023).

The JSK team included Partner Tomas Dolezil and Senior Associates Klara Smidova and Daniel Pospisil.

Editor’s Note: After this article was published, Wolf Theiss confirmed it had advised the founders of STT Servis. The firm’s team included Counsels Tereza Naucova and Tomas Kren, Senior Associate Michal Matous, and Associate Maros Kandrik.