Category: Czech Republic

Allen & Overy has advised joint lead managers Ceska Sporitelna and Komercni Banka on a CZK 1.98 billion Czech law-governed standalone issuance by CZG — Ceska Zbrojovka Group SE.

Ceska Sporitelna is the biggest Czech bank measured by the number of clients with its headquarters in Vienna. It is a part of the Erste Group. Komercni Banka is the parent company of KB Group, a member of the Societe Generale international financial group.

Ceska Zbrojovka Group is a holding company for the Czech firearms and related industries, which is based in Prague. Its principal firearms brands are Ceska Zbrojovka and Colt.

Allen & Overy’s team included Partner Petr Vybiral, Associate Tomas Kafka, and Junior Lawyer Denisa Jonasova.

Glatzova & Co. has advised Pale Fire Capital SE on the acquisition of a majority stake in the Spanish company Arpem Networks S.L.

Pale Fire Capital is a Czech private equity fund focused on supporting technology innovations.

Arpem Networks operates an insurance comparator of the same name. 

Last year, Glatzova & Co. advised Pale Fire Capital on its acquisition of Virtual Training (as reported by CEE Legal Matters on August 18, 2021) and, in 2019, on its acquisition of Aukor (as reported by CEE Legal Matters on July 1, 2019).

Glatzova & Co. did not reply to our inquiry on the matter.

Former Eversheds Sutherland Partners Jan Krampera and Tomas Prochazka have founded a new firm in the Czech Republic: Aegis Law.

Both Partners had been with their previous team since the Dvorak Hager & Partners days (the firm joined Eversheds Sutherland in 2018 as reported by CEE Legal Matters on December 4, 2018).

Krampera was the Head of the Litigation and Dispute Management practice at Eversheds. He first joined the Dvorak Hager & Partners team in 2009, as an Associate. He was appointed to Senior Associate in 2011 and then to Principal Associate in 2012. He became a Partner in 2018.

At Eversheds, Prochazka led the Employment practices. He first joined the Dvorak Hager & Partners team in 2005 (Dvorak & Spol at the time) as an Associate and became a Partner in 2011. Prior to that, he was a Lawyer with the Czech Social Security Administration, between 2004 and 2005.

The new firm’s team consists of ten lawyers in total – all ex-Eversheds.

“We founded Aegis Law as a long-term project to help others overcome their legal struggles and to work with the people we trust and like,” commented Krampera.

Havel & Partners has advised Czechoslovak Capital Partners on the acquisition, reconstruction, and subsequent lease of the Tusarova 52 residential building in Prague. The building was acquired from an unidentified Italian owner. Advokatni Kancelar Holub reportedly advised the seller.

The Czechoslovak Capital Partners investment group is the successor of Sesty Uzavreny Investicni Fond, which was established in 2012. According to Havel & Partners, “the group has extensive experience across the entire investment spectrum and has invested more than CZK 3 billion since its establishment.”

Last year, Havel & Partners had advised Czechoslovak Capital Partners on the acquisition of a building on the very same street (as reported by CEE Legal Matters on December 14, 2021).

Havel & Partners’ team included Partner Lukas Syrovy, Managing Associate Lena Frycova, and Associate Jorika Nemcova.

VGD Legal has advised the Czech family owning Profimix Svijany on the sale of the company to Puratos. Havel & Partners advised the buyer.

Founded in 2007, Profimix specializes in the development, production, and distribution of bakery and confectionery mixes for medium-sized and larger bakeries.

Puratos is a Belgium-headquartered group offering food ingredients and services for the bakery, patisserie, and chocolate sectors. The company provides services for artisans, retailers, industrial, and food-service companies in over 100 countries.

The VGD Legal team was led by Managing Partner Jan Suma and Partner Robert Musil and included Associates Dominika Dolezalova and Dominika Pazoutova and Paralegal Darek Dolezal.

The Havel & Partners team was led by Partner Jan Koval and included Counsel Natalija Traurigova and Senior Associate Vladimir Ivanov.

Former KPMG Associate Director Jan Frey has joined Rowan Legal as Partner.

Specializing in M&A, before joining Rowan Legal, Frey spent over a year with KPMG. Prior to that, he spent almost 11 years with Havel & Partners, preceded by almost a year with BBH and over a year with Clifford Chance.

“After completing my studies, I dedicated my entire professional career to transactional legal consulting,” Frey comments. “Developments in this particular legal sector are very dynamic and turbulent. If you want to be familiar with all the rules, you must not give up on self-education. This is the only way to provide clients with really good legal services. It is obvious that we are in agreement with Rowan Legal in this respect, which I perceive as the basis of productive and effective cooperation.”

BBH has advised the PPF Group on the merger of its Air Bank and Home Credit subsidiaries with Moneta Money Bank. Skils advised Moneta on its CZK 25.9 billion acquisition of the Air Bank Group.

The transaction remains contingent on regulatory approval.

According to Moneta Money Bank, “through the acquisition, Moneta will acquire 100% of Air Bank Group’s shares from the PPF Group for a total purchase price of CZK 25.9 billion.”

Founded in 1991, the PPF Group is an international investment group with operations in 25 countries across Europe, North America, and Asia. It focuses on financial services, telecommunications, media, real estate, mechanical engineering, and biotechnology.

Moneta Money Bank is a Prague Stock Exchange-listed bank. Its portfolio includes banking and financial services, insurance, building savings, investments, financing of cars, machinery, and other equipment.

“We are very pleased that the necessary majority of shareholders have agreed to the acquisition and its financing,” Moneta Money Bank Management Board Chairman Tomas Spurny commented. “We believe that the acquisition of the Air Bank Group will create a strong Czech banking champion for entrepreneurs and retail customers in the domestic banking market. In this context, we will be a stable pillar of the Czech economy and an important competitor for other large banks operating in the Czech Republic, which control 70% of the domestic market. With this decision, we have created the basis for the realization of this vision.”

The BBH team included Partners Petr Precechtel, Tomas Sedlacek, and Vladimir Uhde and Senior Associates Andrea Adamcova, Adam Necas, Tomas Johanna, and Kristyna Zivanska.

The Skils team was led by Partners Karel Muzikar, Karel Drevinek, and Pavel Grim and included Senior Associates Ivo Trojan, Vit Kropjok, and Adam Jaros.

A long-awaited bill on preventive restructuring (Bill), implementing the directive on preventive restructuring frameworks, will introduce a brand-new legal tool preventing the insolvency of viable enterprises in temporary financial difficulties.

The Bill is in the legislative process and should become effective as of July 2022. Although it may still undergo some changes, it is already obvious that it will revolutionize Czech insolvency law.

Objective

Today, a distressed company in the Czech Republic may try to achieve an out-of-court arrangement with its creditors. This is a contract-based solution requiring the consent of all affected creditors with the terms of such restructuring. If a timely agreement with all affected parties cannot be achieved, the distressed company risks the deterioration of its financial situation or even insolvency.

The aim of the Bill is to enable debtors to restructure effectively at an early stage and to avoid insolvency, prevent the unnecessary liquidation of viable enterprises, and restore them to economic health. Unlike today, it will be possible to accomplish preventive restructuring with the involvement of key creditors only.

Qualification Conditions

Access to preventive restructuring is limited to legal entities that meet the following fundamental conditions: (1) the entity should be in good faith that its restructuring plan, as a key document of the whole process, will prevent the likelihood of insolvency; (2) the entity is not insolvent in the form of illiquidity – preventive restructuring should not apply in case of serious insolvency situations, but is aimed at continuation of the business by restructuring its assets and liabilities and by implementing operational changes; and (3) the financial difficulties are significant enough that declining the adoption of restructuring measures would – by the mere passage of time – result in the entity’s insolvency. This should exclude the preventive restructuring of financially healthy entities manipulating their creditors or business partners to provide relief beyond the ordinary course of business.

Main New Features

Since the Bill will introduce a wide range of new measures, only some of the most distinctive aspects illustrating the preventive restructuring framework will be mentioned:

Restructuring with Key Creditors Only

Compared to insolvency proceedings, preventive restructuring does not have to involve all the existing creditors of the business entity. The circle of creditors (affected parties) is chosen by the entity itself and will likely include the key creditors only – usually the banks and the top business partners. The claims of unaffected parties will be set aside as unchanged and will be satisfied within the due dates.

Protection for New and Interim Financing

The Bill provides for special protection of new and interim financing, which should create a framework for willingness of the creditors, primarily the banks, to provide new financing to the distressed business entity.

Cross-Class Cram Down

Although preventive restructuring is based on the broadest possible consensus between the business entity and its creditors when it comes to the intended restructuring measures indicated in the restructuring plan, it is possible, subject to certain conditions, to also ‘impose’ the agreement on dissenting creditors.

Limited Court Involvement

During preventive restructuring, the court will be involved only partially and subject to specific conditions in case of “partial proceedings.” In insolvency proceedings, the entity is constantly a party to the court proceedings.

Conclusion

In the aftermath of the COVID-19 pandemic, which has caused some businesses in the Czech Republic to fall on hard times, the preventive restructuring process to be introduced by the Bill is now needed more than ever.

By Ondrej Havlicek, Head of Banking & Finance, and Natalie Rosova, Attorney at Law, Schoenherr

This Article was originally published in Issue 8.11 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Havel & Partners has advised Coast Capital Partners on its acquisition of real estate in Prague via the purchase of Zlicin Gate s.r.o. from Jelinek Holding and Karlin Port Real Estate. VGD Legal advised Avant, which provided the financing for the acquisition. Rutland & Partners reportedly advised the sellers.

Coast Capital Partners is an alternative investment and asset management firm.

Jelinek Holding, based in Prague, operates in the solid waste collection industry.

Karlin Port is a real estate investment and real estate advisory firm.

Avant is a Czech investment company founded in 2007 and specializing in the establishment, management, and administration of qualified investor funds.

Havel & Partners’ team included Partner Lukas Syrovy, Counsel Martin Vlk, and Senior Associates Vladimir Ivanov and Irena Munzarova.

VGD Legal’s team included Partner Martin Havelka, Lawyer Ondrej Suriak, and Junior Associate Roman Polacek.

The ongoing lockdown and changing restrictions as well as prices surging as a consequence of growing inflation are hitting the Czech economy hard, but the country is holding on mightily, according to PRK Partners Partner Martin Aschenbrenner.

“Europe has been trying to soldier on in spite of restrictions and lockdowns on the account of the pandemic, and the Czech Republic is no different,” Aschenbrenner says. “We have all learned to live with that reality, but we are still bracing to see all of the economic blowback that it carries with it.”

The Czech economy, much like other European economies, is experiencing strong inflation. “The Czech central bank has started raising interest rates aggressively late last year, and it continues doing so in 2022 as well,” Aschenbrenner reports. “While the inflation rate has been substantial – on par with the euro and dollar – the central bank has been quick to act.” He says that this trend will have significant implications for the wider economy, but that it is still difficult to predict exactly which.

“Also, the active chair of the National Bank will be stepping down soon, following two terms in office,” Aschenbrenner says. “A new chair will be appointed and it will be interesting to see how that manifests itself on all of the bank policies.”

On the business side, Aschenbrenner reports that things are working well. “I’d say that businesses seem to be doing fine but, at the same time, they are obviously adapting to the inflation and rising prices. The cost of finance has gone up as well, so they’re dealing with that too,” he says. “Apart from all of that, and the supply chain hurdles and issues, the economy seems to be rolling along quite well, from our perspective.”

Amidst all of this, the Czech Republic is also experiencing ongoing legislative changes. “An ongoing ordeal is the substantial overhaul of the construction code,” Aschenbrenner says. “The purpose of the amendments is to help developers by expediting the road to a building permit – at present, it is a long and complicated process.” 

The construction code changes have been an ongoing matter for some time now. “We have had a governmental change last October, following the general elections in which the opposition took the win,” Aschenbrenner reports. “While this change has been taken well by the wider business community, the new government has a somewhat differing view to the old one over what needs to be done with the construction code,” he says. For this reason, Aschenbrenner feels that the much-needed changes are still “likely to drag on for some more months, in 2022.”

Finally, analyzing the most active sectors driving the economy, Aschenbrenner outlines a few. “Of course, the IT sector and digital services are quite strong, but agriculture and manufacturing also seem to be doing great,” he says. “The sectors that have been hit hard and are still struggling are tourism, transport, and the wider hospitality industry.” Aschenbrenner reports that Prague has been particularly affected. “In normal times, Prague enjoys substantial tourist inflows which benefit the economy overall. With the pandemic still ongoing, the consequences are still felt country-wide.”