How to check that the seller is not insolvent

Are you closing an important deal and need to do a good background check on your potential business partner? Or have you already closed the deal, the money isn’t coming in and you want to find out where the catch is? Use public registers to do so. We can advise you on what can be found in them and what to do if the counterparty is indeed insolvent.

Muž hledá informace v insolvenčním rejstříku
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It is not enough to have well-written contracts to close a good deal. You also need to know who you are contracting with. Depending on the type of contract you are entering into, you can then check various public sources and do some research on the counterparty.

Bysimply entering the name of an individual or company, we can find out many interesting things: economic or criminal cases in the media, various reviews and statements by clients or former business partners. If we want to dig a little deeper, there are various registers.

Does anyone owe you money?

Did someone violate your rights? In our experience, a pre-suit notice is the most effective and least expensive way to protect your rights. It serves as a last warning before a lawsuit.

Do you want to make a strong defense? We’ll stand up for you. We’ll help you get what’s coming to you with a pre-suit demand. The advantage is that it can be done without having to file a lawsuit, pay court fees, and risk paying the opposing party’s litigation costs.

Which registers to look at?

For basic information, we’ll probably head to the commercial register. Here you will find all the essential information such as the company’s registered office, who can act for the company, what its share capital is and so on.

Tip: If you are interested in how to read and search the Commercial Register, read our article.

If we expect mutual financial transactions, then the debtors’ register should be at the centre of our concern. However, there are several types of regist ers and it is always important to distinguish which one is being discussed.

The most important of these is the Central Register of Executions, operated by the Chamber of Executors. In it we can find information on pending executions conducted by members of the Chamber. However, not all pending foreclosures are registered here, for example those conducted by state authorities or health insurance companies. Another very useful resource is SOLUS, where different economic sectors share information on outstanding debts (more than three months). These include, for example, banks, building societies, non-bank financial institutions, telecommunications providers and energy distributors.

TheInsolvency Register ISIR, operated on the website, collects records of entities within the Czech Republic that are undergoing so-called insolvency proceedings. This is a special type of legal proceeding for cases where someone is unable to meet their financial obligations for a long period of time. The insolvency procedure allows the debtor’s debts to be settled and the debtor can start with a clean slate and at least partially pay off creditors’ claims.

What if a business partner is insolvent?

If you find out that a person in the crosshairs of your interest is insolvent, what exactly does that mean?
In order to declare insolvency, several basic conditions must be met:

  • the debtor has at least two creditors,
  • the debtor has at least two debts more than 30 days past due,
  • the debtor is unable to pay his debts.

Subsequently, a proposal for insolvency must be filed and approved by the insolvency court. A person in insolvency must gradually start to repay his debts, but at the same time he is left with a certain amount of uncollectible money. This can increase, for example for married people and parents with children. The amount of the non-forfeitable amount can be calculated in the insolvency calculator, which is also available on

If the debtor has filed for insolvency, he is obliged by law to list all creditors to whom he owes money. If one of the creditors has filed a petition, it is up to the other creditors to add their claims.

Tip: Want to know how the insolvency register can protect your finances? Read our article.

How to proceed if your debtor is insolvent?

As a creditor, you can file an application in the insolvency proceedings to assert your claim against the debtor. By doing so, you express your wish for the debtor to pay you a part of the insolvency proceedings. The application must be made on the prescribed form, with supporting documents to prove the existence and amount of the claim. The deadline for filing the application is very important and must be respected by the creditor, otherwise his claim will not be included in the insolvency proceedings.

The only exceptions are claims against the assets and claims equal to them, which can be filed at any time during the insolvency proceedings and which are not filed. However, this generally does not apply to ordinary creditors, mainly the insolvency administrator’s remuneration and expenses and other claims listed in the Act which arose after the decision declaring insolvency.

There is a specific mandatory electronic form for filing a claim, so it cannot be filed in any other way.

Tip: Has a friend asked you to guarantee his loan? Consider well whether the friendly service is worth the potential trouble. If you think it is, study everything beforehand to be sure, consult a lawyer about the contract, and maybe read our article on how not to get into trouble as a guarantor.

How do insolvency proceedings end?

Debtors sometimes mistakenly believe that they have to send the court an application to end the insolvency proceedings. In reality, however, the insolvency procedure ends with the court’s decision approving the insolvency administrator’s report on the implementation of the insolvency procedure. As part of this decision, the debtor is released from the obligation to pay outstanding debts or debts that were not (and should have been) entered into the arrangement at the time of its approval. In this context, the debtor should serve the court with a petition for exemption from payment of the remaining debts. The debtor’s exemption from repayment of unsatisfied debts does not apply to debts incurred through criminal activity or incurred during the period of the arrangement.

In words of numbers, the insolvency proceedings end after the debtor has repaid either 100 % of his debts, 60 % of the debts within three years, 30 % of the debts over five years or if the court so decides.
Records are kept in the register not only during the insolvency proceedings but also for five years afterwards. This period cannot be shortened or waived in any way. Thereafter, the deletion from the register is made by the insolvency court. A special application for expungement is not required for this.

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Author of the article

JUDr. Ondřej Preuss, Ph.D.

Ondřej is the attorney who came up with the idea of providing legal services online. He's been earning his living through legal services for more than 10 years. He especially likes to help clients who may have given up hope in solving their legal issues at work, for example with real estate transfers or copyright licenses.

  • Law, Ph.D, Pf UK in Prague
  • Law, L’université Nancy-II, Nancy
  • Law, Master’s degree (Mgr.), Pf UK in Prague
  • International Territorial Studies (Bc.), FSV UK in Prague

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