Avoidance action in the Czech Republic: step by step

An insolvency administrator has just informed the owner that a transfer made eighteen months before the petition is being examined as a possible avoidance action. The owner assumed that a completed sale, paid and recorded, was final. The file the administrator opens now decides whether it stays that way.

An avoidance action lets an insolvency administrator ask the insolvency court to declare a debtor's earlier legal act ineffective and return its value to the estate. It runs under Czech insolvency legislation, inside the open insolvency proceeding, and the administrator must file it within one year of the decision on bankruptcy.

This page sets out who files, within what deadline, on what factual basis, and what a foreign party named in such an act should have on file before responding.

What is an avoidance action in Czech insolvency practice?

An avoidance action is the administrator's tool to reach acts the debtor made before insolvency that reduced the estate available to creditors. It targets acts that were disadvantageous, acts favouring one creditor over others, and acts made to a related party without adequate consideration.

The action does not undo the underlying contract for all purposes. It declares the act ineffective towards the estate, so the value – the asset, the payment, the discount – returns to the insolvency estate for distribution. The counterparty keeps its claim to whatever it gave up, but that claim ranks among the general body of creditors, not ahead of it. Where the disadvantageous act coincides with the period when the company was already insolvent, the same facts often also raise questions under directors' duties near insolvency.

The word "avoidance" here has nothing to do with tax avoidance; the closer English analogue is a clawback claim.

Acts caught by this action typically fall within one, two, or four years before the petition, depending on the category and on whether the counterparty was a related party. Once the insolvency court's decision on the action becomes final, the ineffectiveness of the transfer against the estate cannot be undone by agreement between the debtor and the counterparty.

Who can file it, and against whom does it run?

Only the insolvency administrator may file an avoidance action; a creditor cannot bring one directly, and the action runs against whoever received the value from the debtor's disadvantageous act.

The administrator files as a party representing the estate. The defendant is the person or company that received the payment, the asset, the release, or the discount – the counterparty to the original act, not the debtor. Where the recipient has since transferred the asset onward, the administrator may need a separate claim against the current holder.

A creditor who believes an act should be avoided can only raise the point with the administrator or with the creditors' committee; it is then the administrator's decision, on an assessment of the estate's prospects, whether to file. A creditor who wishes to preserve its own position while that decision is pending should also review the rules on registering a claim in insolvency.

In one matter, a Slovak counterparty needed close to a year to establish that a disputed discount fell outside the look-back period, once the underlying invoices were reconstructed (winter 2025).

Being named as a defendant in an avoidance action without the underlying record reconstructed leaves the owner arguing from memory against a file the administrator has already built. LISTINA delivers a factual report on the acts, dates and considerations at issue, drawn from the register and the available documents, within five to ten working days; representation before the insolvency court, where required, is provided by a collaborating advocate. Write to info@listinafirm.com.

What is the route, and what are the deadlines?

The administrator must file the avoidance action within one year from the day the decision on bankruptcy became effective; missing that window closes the route regardless of how strong the underlying claim is.

The action is filed with the insolvency court that is already running the debtor's insolvency proceeding – as a rule the regional court with jurisdiction over the debtor's registered seat or residence. It is not filed as a fresh, separate case in a different venue.

• Administrator reviews the debtor's acts in the look-back period against the register and the accounting records.
• Administrator identifies the act, the counterparty, and the value that left the estate.
• Administrator files the avoidance action with the insolvency court within one year of the decision on bankruptcy.
• Court serves the action on the defendant, who may raise objections and evidence in defence.
• Court decides; if the act is declared ineffective, the value is ordered returned to the estate.

The one-year deadline runs against the administrator, not against the defendant – the defendant's own deadlines start only once served.

Once the one-year deadline passes without a filing, the estate loses the route to recover that value, and no later creditor request can revive it.

What must the file contain?

The administrator's action must identify the specific act, the date it occurred, the value transferred, and the ground on which it is disadvantageous or preferential; a defendant answers most effectively with the same categories of document, produced before the deadline the court sets.

A foreign counterparty named in such an action should assemble, in parallel with any legal response, the record that shows what was actually agreed and paid:

• the contract or order underlying the disputed act, with any amendments
• proof of the consideration given in return – invoices, transfer confirmations, delivery records
• correspondence around the date of the act, showing the commercial reason for it
• an extract from the insolvency register showing the timeline of the proceeding
• any prior dealings with the debtor that establish this was not an isolated, one-sided act
• where the recipient later transferred the asset on, the record of that onward transfer

Whether the defendant counts as a related party often turns on the beneficial ownership record; see recent changes to the scope of beneficial ownership entries for what that record currently shows.

Documents and registers show what was recorded and when. They do not establish the debtor's intent at the time of the act, and they do not tell us, before the file is assembled, whether a given transaction falls inside or outside the look-back period – that depends on facts the administrator and the court weigh case by case.

Rebuilding this record from abroad, months after the act, under a deadline the court has already set, is where most of the delay sits. LISTINA reconstructs the transaction record and the insolvency register timeline into one factual report, delivered within five to ten working days; the report is the basis the collaborating advocate then argues from. Write to info@listinafirm.com.

Act, wait, or stop: what the owner does next

Whether to respond immediately, wait for service, or treat the matter as closed depends on where the owner stands relative to the insolvency proceeding and the one-year deadline.

• Owner sold or received value from a company now in bankruptcy, act inside the look-back period → reconstruct the transaction record now → owner, before any claim arrives → no fixed deadline, but delay costs evidence
• Owner has been served with an avoidance action → respond within the deadline set by the court → owner with the collaborating advocate → court-set deadline, missing it forfeits the objection
• Owner is a creditor who suspects a disadvantageous act by the debtor → raise it with the administrator or committee → administrator decides whether to file → within the administrator's one-year window
• Decision on the action is final, value ordered returned → comply or appeal on the available grounds → owner with the collaborating advocate → statutory appeal deadline

A defendant who ignores the served action does not stop the clock; the court decides on the record it has.

Waiting past the court's own deadline for a response does not pause the proceeding; the court decides on the record before it, and a defendant who filed nothing has, in practice, closed the route to being heard on the facts.

Frequently asked questions

Where is avoidance action filed?

The administrator files it with the insolvency court already handling the debtor's insolvency proceeding, not as a separate case in a different court. As a rule this is the regional court with jurisdiction over the debtor's registered seat or residence.

How long does the court take?

Czech insolvency legislation fixes a one-year deadline for the administrator to file, not a deadline for the court to decide. In practice, a contested avoidance action with evidence to weigh commonly runs well beyond a year before a final decision.

Can the other side object?

Yes. The defendant can contest the claim, submit evidence that the act was made for adequate consideration, or argue that it falls outside the look-back period, and the court weighs this evidence on the same footing as the administrator's. A documented commercial reason for the transaction carries the most weight here.

What follows the decision?

A common misconception is that the underlying contract is voided outright; in fact the decision only makes the act ineffective towards the insolvency estate, so the value is returned to the estate, and the counterparty's own claim, if any, ranks with the general body of creditors. Either side may appeal within the statutory appeal deadline.

LISTINA produces factual reports from documents and public registers. It does not provide legal advice and does not represent parties. Where a matter requires representation before a Czech court or authority, it is handled by a collaborating advocate.

Klára Bartošová works on insolvency in numbers: registers, claims, distributions.

An avoidance action turns on dates, considerations and register entries that are easiest to establish before a deadline is running, not after. LISTINA delivers a factual report on the disputed act and the insolvency record within five to ten working days; where representation before the insolvency court becomes necessary, it is provided by a collaborating advocate. Write to info@listinafirm.com.