Possible causes of delay in default in the Czech Republic
by Tatiana Škerlíková; Lucie Rudolfová
International Journal of Economic Policy in Emerging Economies (IJEPEE), Vol. 8, No. 4, 2015

Abstract: This paper analyses the causes of the delay in commencement of insolvency proceeding. We tested two possible causes. First one is inappropriate reaction of the financially distressed entity to the worsening financial situation. As a second cause of the delay we consider unsuccessful filing due to incorrectly prepared insolvency petitions. In our sample, companies postpone commencement of insolvency proceedings measured by bankruptcy models at least by two years. Moreover, it seems that even the companies, which normally disclose financial statements (this is obligatory for all companies in the Czech Republic) suspend disclosing as their financial situation deteriorated. The petitions were dismissed by the court 15 times in our sample of 50 companies. We consider the most of them as almost sufficient to declare default.

Online publication date: Thu, 10-Dec-2015

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