Webinar: Debt Recovery

Mgr. Oliver Uraz: First, we would like to introduce the internal recovery process, which my colleague Mr. Dořičák will guide you through. It will focus on how to approach the receivable from an internal perspective, what to watch out for, what pays off, and what doesn't. Then, of course, we would move on to the next phase of resolving the receivable, which is the phase of handing it over to a law firm for enforcement. This is essentially the most crucial part for a smooth transaction, for a smooth process of handing over the receivable to a law firm.

At the same time, we will also touch upon the tax aspects, specifically the tax advantages for an active creditor who manages their receivable in such an active manner. And the final topic would be the issue of the receivable enforcement itself from a lawyer's perspective—what we can set up, expedite, or analyze for you, or for other clients, generally for creditors, and what might be more effective in a given situation and what might not.

At the beginning, and we can of course return to this at any time, we will present some aspects that have a specific financial impact, particularly in terms of cost items and what is economically worthwhile for creditors, using a standard model case that we have prepared for you. For the purposes of this webinar, it is a very simple situation that you have certainly encountered many times in your practice and activities. But it is based on this: let's imagine we have a purchase agreement where the creditor's position is that of the seller.

Both contracting parties are entrepreneurs and have agreed on a total price for the goods of CZK 600,000 plus value-added tax. The payment of the price was divided into three invoices, each for CZK 200,000 plus VAT, due on the dates you see on the screen: July 1, 2019, October 1, 2019, and January 1, 2020. Regarding the basis of the contractual documentation and the content of the contractual relationship, we are starting from a fairly typical situation where we do not even have a strictly written contract, but an order and its confirmation were made via email communication.

The buyer, who is in default and has not paid any of the invoices to date, not even partially, has agreed to the seller's general terms and conditions, which, among key parameters, include an agreement on contractual default interest at a rate of 15% per annum and a contractual penalty of 0.1% per day.

So, based on this model case and generally on all relevant parameters that we will get to, we would proceed to the first topic that will concern us, namely the aforementioned internal recovery process and its setup. With that, I would like to hand over to my colleague, Lukáš Dořičák, who will tell you more about it.

JUDr. Lukáš Dořičák: Good morning, ladies and gentlemen, I also welcome you to today's webinar. I will now share my screen so you can see the relevant presentation. It should now appear on your screens.

Internal Recovery Process

In this section, we will deal with the internal recovery process, how to set up the recovery process when you are carrying it out through your employees, or essentially in the phase before it is handed over to a lawyer. We will therefore talk about how to improve the starting position for recovery, how to test the recoverability of the receivable you want to enforce, where to get information to assess the recoverability of the receivable, and we will also focus on what requirements your internal pre-action letter, which you will use to call on debtors to pay, should meet. And also, why it is actually important to send this pre-action letter to debtors.

Essentially, the key to success in recovery is to have well-drafted contracts, general terms and conditions, and framework agreements that you conclude with your contractual partners and, by extension, potential debtors. Basically, the moment you have these contracts, general terms and conditions, and framework agreements well-drafted, the better the process of recovering receivables will be, the faster it will be, and the less costly it will be.

I have an example here of just a few phrases that can appear in your contracts and that will help you with this. Of course, it always depends on the subject of your business what exact provisions to include in the contracts, but here are some examples. Basically, you can, if I return to the model case mentioned by my colleague, where you are in the position of the seller and are entitled to payment of the purchase price, you can agree in the contracts, general terms and conditions, or in framework agreements on default interest for the case that the debtor, or in this case the buyer, falls into default with the payment of the purchase price.

And alongside that, you can also agree on a contractual penalty. So you can then enforce not only the principal itself, but also the default interest and essentially the contractual penalty for the delay in payment.

Another, let's say, advantageous formulation for your contracts is the so-called fiction of delivery of a document. This can be enshrined, for example, as in this text, where in the case of documents that are delivered for personal delivery or that are delivered with an advice of delivery, these documents are considered delivered no later than the tenth working day after they are sent, if they are sent within the Czech Republic, or the fifteenth working day after they are sent, in the case of sending them abroad.

As for other documents that are not delivered for personal delivery or are not delivered with an advice of delivery, a fiction can be set that they are considered delivered on the third working day after being sent within the Czech Republic, or on the fifteenth day in the case of being sent abroad. This way, you will essentially prevent disputes about whether the document in question, in this case, for example, a pre-action letter or a calculation of a contractual penalty, was actually delivered to the other contracting party or not, and when this delivery essentially occurred.

At the same time, it is advisable to include, for example, an extension of the statute of limitations period in your contractual documents. This is for the case that, let's say, a receivable gets lost in your accounting, and you somehow get to its recovery after a longer period when, under normal circumstances and the standard legal regime, it would have already become time-barred. But by extending the statute of limitations period, it will allow you to enforce the receivable even after a longer period of time.

With this, I will smoothly move on to the next slide, where we will focus on how, in addition to the correct setting of contractual conditions, to set up or improve your starting position for recovery. Of course, before entering into a contractual relationship, it is always advisable to check your potential contractual partner. Of course, this is not always so easy, especially when a contract is concluded directly at a branch, where the room for any vetting of the given contractual partner is small.

On the other hand, if the contract is concluded with a longer time lag, it is certainly always advantageous to vet the contractual partner in some way. Whether in the Central Register of Executions, to see if it is a person against whom multiple execution proceedings are being conducted, or to find out about their real estate property from the Land Registry, and so on. I will discuss this in more detail in the next slide.

At the same time, it is advisable to find out as much contact information as possible about the contractual partner and, by extension, the future debtor. It is advisable to get from them, for example, an email to which you can subsequently send, among other things, the pre-action letter and urge the debtor, or possibly a phone number for a telephone reminder.

Of course, it is always advisable to conclude contracts in writing, precisely for a better evidentiary position in case of a dispute, in case of enforcement through the courts, so that you are able to prove that a contract was concluded and that the contract stipulated these and these obligations. Furthermore, if you use general terms and conditions in your business practice, it is always advisable to strive to have your general terms and conditions become part of the contractual relationship with the contractual partner.

So, in the ideal case, try to get a reference to the general terms and conditions into, for example, the order, the order confirmation, the offer, the framework agreement you are concluding, etc. And at the same time, if the contractual document contains a reference to the counterparty's general terms and conditions, it is ideal to exclude this reference so that your general terms and conditions, which contain the provisions that actually give you an advantage for the future recovery process, apply.

As for the next slide, regarding the assessment of the recoverability of receivables, I have listed some sources from which you can obtain information to assess whether the receivable is recoverable and whether you can actually succeed in recovering this receivable or not. It is always advisable to check the debtor from whom you want to recover the given receivable in the Insolvency Register. For example, to see if they are in insolvency, if it is not appropriate to, for example, file the given receivable in the insolvency proceedings, etc.

Another such source for you can be the Central Register of Executions. From the Central Register of Executions, you can find out about your debtor, how many execution proceedings are being conducted against them, and possibly what amounts are being enforced against the given debtor in the individual execution proceedings. If you are aware of any real estate property of the given debtor or contractual partner, it is always advisable to check this real estate property in the Land Registry.

To find out if the debtor is still the owner of the given property, if, for example, the property is not subject to an execution order for the sale of the given property, etc. You can also vet the debtor through remote access to the Land Registry to find out the extent of their real estate property. Again, for future execution, from what you can essentially satisfy yourself in the case of that execution.

And last but not least, it is good to also look into the Commercial Register and consider the extent to which the debtor fulfills their obligations towards the registry courts, the extent to which they file, for example, financial statements in the collection of documents, because if, for example, they have not filed a financial statement in the collection of documents for a long time, it is another indication for you that this debtor will not be active and that the receivable from them will be difficult to enforce.

As for the process of internal recovery of receivables itself, it is always advisable to have an internal template for a pre-action letter. Regarding the requisites of your pre-action letter, it is advisable to always include in the pre-action letter some reference to the fact that you are entitled to default interest and a contractual penalty, ideally also to quantify the default interest and the contractual penalty as of the date you will be preparing the pre-action letter.

At the same time, it is advisable in your internal pre-action letter template to refer to the costs associated with the enforcement of the receivable according to the relevant government regulation, to which you are entitled if you are enforcing a receivable against another entrepreneur in the amount of CZK 1,200. And basically, you can then work with these claims within the pre-action letter in the context of so-called motivational clauses for the debtor. In the first clause, the text, you are essentially telling the debtor: "Debtor, pay the principal, let's say the purchase price, because if you don't pay it, I will not, or rather if you do pay it, I will not demand, for example, the default interest from you, or I will not demand the contractual penalty from you, or the costs associated with the enforcement of the receivable."

And thus increase the debtor's motivation to pay the principal. Or another such motivational clause can be the threat that: "Debtor, if you do not pay, I will hand the matter over to a law firm and your debt will increase by the costs of the court proceedings." If you would like to get some inspiration for preparing your internal pre-action letter template, you can use the template prepared by my colleague Mgr. Uraz with Dr. Dohnal, a template for a pre-action letter, where basically these requisites that I have mentioned are enshrined.

Regarding the sending of the pre-action letter, you may be asking yourself, why is the pre-action letter actually sent, what is it for? The point is that if you initiate court proceedings, you must prove to the court that you sent a pre-action letter to the debtor seven days before you filed the lawsuit with the court. So, the pre-action letter is sent for this purpose. If you send the pre-action letter yourself, you can also save on legal representation costs, for example.

You can say, if the debtor pays nothing based on that pre-action letter, you can save on your legal service costs by telling the lawyer to proceed directly to filing a lawsuit, that they don't need to send a pre-action letter because you have already done so.

Furthermore, regarding how to send the pre-action letter, whether by data box or by post, the data box is of course always the most suitable. The data box both saves your costs and provides you with proof that you sent the pre-action letter, and also, with the delivery receipt from the data box, that it was delivered and when it was delivered to the debtor. You may be asking, to what address should the pre-action letter be sent? You should always send it to the last known address of the debtor.

And that usually follows from some contractual documentation you have agreed upon with them. If it is a debtor who is registered, for example, in a public register, it is possible to use that public register, whether it be the trade register or the commercial register.

Now the question is, how exactly to send the pre-action letter, whether by registered mail or with an advice of delivery. Basically, for the purpose of fulfilling the obligation towards the court so that you can be awarded the costs of the proceedings, it is sufficient for you to prove to the court that the pre-action letter was sent. So for that, it is enough if you send the pre-action letter by registered mail.

Because that way you will get either a posting sheet or a posting slip, from which it will be clear that you actually sent the pre-action letter to the debtor. What we, for example, recommend and often do, is that we also send the pre-action letter as a copy to the statutory bodies of the respective company, the respective debtor. And this is also done by ordinary mail. And this is precisely for the reason of increasing the probability that someone competent, let's say, will deal with it and will start to take some active steps in this matter.

Handing Over Information to a Lawyer for Enforcement

This brings me to the next section, which will be quite short, and it is about how to hand over documents and information to a lawyer for enforcement. The first prerequisite that you should set up within your internal processes is the proper maintenance of the file for the enforced receivable. The file that you will then hand over to the lawyer should contain the documents that I list on the following slide. And this is precisely so that the lawyer does not have to keep asking you for further documents. So it is ideal to send them the entire file that you keep for the receivable.

And what should the file consist of? Primarily, it is the documentation related to the contractual relationship. We can include here the contract, the framework agreement, the order and its confirmation, or the offer and subsequent order. Basically, how the contractual relationship came into being. Because when the lawyer takes over the case, they must first assess the receivable. And they must assess the legal framework that you have agreed upon, which you were essentially basing it on.

So, for example, they will conclude that the contract was concluded based on an issued order, that the order was confirmed, that the order contained a reference to the general terms and conditions. And based on that, they will determine: "Yes, when I evaluate the rights and obligations that govern the contractual relationship, I will look at the order, the order confirmation, then I will look at the general terms and conditions, and for the rest, in the unresolved matters, I will look at the law." And they will know on what legal basis to assess your claim.

Furthermore, it is necessary to provide the lawyer with any relevant email communication, especially if you have agreed with the contractual partner on an extension of the delivery deadline or on some, let's say, change in the subject matter, etc. Then, documentation regarding security, if you have secured the receivable either in the form of a lien, a guarantee, or if, for example, the debtor contacted you based on the pre-action letter and signed a payment plan with you or acknowledged the debt to you.

It is also advisable to hand over these documents to the lawyer. Likewise, if, for example, a partial payment was made. Furthermore, the lawyer needs the invoices issued for the given receivable and some proof of how they were sent and delivered to the debtor. Documentation that proves the obligation was fulfilled is also necessary, whether in the form of a handover protocol, a delivery note, etc.

Then, of course, ideally also the well-prepared internal pre-action letter together with the posting sheet, and perhaps with the delivery receipt from the data box. And last but not least, it is necessary to provide the lawyer with the debtor's reaction as well, so that the lawyer can get an idea of what the debtor will argue with, what they use to justify the non-payment of the receivable.

This brings me to the end of my slide, so I will hand over to Hana Erbsová, who will tell you something about the tax implications related to the recovery of receivables. Mgr. Hana Erbsová: Thank you, Lukáš. Hello to all our listeners and viewers. A moment of patience, I will share my part of the presentation with you. You should see it on your screens now. My part of the presentation is dedicated to the tax aspects of receivables, their payment, or their management. And on the other side, on the debtor's side, of course, the tax aspects of debts.

Allow me to emphasize at the outset, to avoid any misunderstandings, that my part of the presentation also focuses primarily on a standard receivable from a business relationship between two entrepreneurs, and specifically on the principal. We are not primarily talking about, unless explicitly mentioned, accessories or contractual penalties, but we are talking about the largest and most important volume of those receivables, which are the principals of receivables from business, from commercial relationships.

Tax Aspects of Receivables and Debts

In short, one could say that, surprisingly, the tax authorities are on your side, but there's a catch. The tax authorities are on the side of the active creditor. Not just any creditor, but only an active one. Here, the tax consequences have a logical connection with what my colleague Lukáš talked about, that it is necessary to have a sufficiently good background for that activity and to create a sufficiently good background so that the creditor can actively enforce the receivable, or actively manage it in another way.

And for such an active creditor, there is then a glimmer of hope that not only will part of the receivable be paid in some way, but even if the receivable is not fully or partially paid, they can enjoy certain tax advantages.

Why do I emphasize the creditor's activity? Most of you probably know that it is possible to create so-called provisions for receivables that are a certain period past due, and to claim them as a tax-deductible expense or cost. This means reducing the volume of taxable income that is subject to income tax. However, this benefit ends the moment the receivable becomes time-barred.

It is not possible to create these provisions for time-barred receivables, and basically, the receivable will return to your assets, because I must remind you, normally, when you have a receivable from a business relationship, it behaves like revenue, it behaves like taxable income, even if you have not been paid, it is an asset.

If the receivable is a certain period past due, then of course the hope of its payment decreases, it loses value like any asset with the passage of time, or most assets with the passage of time. And the law responds to this precisely with the possibility of these provisions.

The law distinguishes, for those receivables that can be reflected in tax-deductible costs through these provisions, between small-value receivables, which are up to CZK 30,000—here we are talking about the nominal value—and are at least 12 months past due, for which it is possible to start creating a provision in the amount of 100% of the unpaid amount.

But there's a catch again. If you have several such small-value receivables from the same debtor, the unpaid sum that is reflected in costs in this way must not exceed CZK 30,000 in that tax period. For other receivables that cannot be reflected in tax costs as small-value, the due date limits are 18 and 30 months.

If a receivable is more than 18 months past due, it is possible to create a provision up to 50% of its unpaid value, i.e., a tax-deductible cost. And after more than 30 months past due, 100% of the unpaid value of the receivable can again be reflected as a tax-deductible cost. However, this ends with the statute of limitations.

So, if you write off the receivable through provisions into costs, claim it as a cost, you haven't won and you can't rest on your laurels. If your receivable becomes time-barred after several years, you must actually cancel the provision and the receivable will return to your assets. And if you subsequently write it off as uncollectible, it has no tax effect. So the write-off will not remove the receivable from your revenues, from your taxable income, it will not reflect it back into your costs. I will mention this in a moment, because it is very closely related.

The law also speaks of receivables that are actively filed in insolvency proceedings, for which it allows the creation of these provisions regardless of their age. This means that if they are not yet 12 or 18 months past due, if they are filed in insolvency, and the debtor is in insolvency, it is possible to start creating provisions immediately.

The law then mentions other exceptions, for which types of receivables or under what circumstances it is not possible to create these provisions. I mentioned time-barred receivables, receivables that have already been written off as uncollectible, it is also not possible to create provisions for them, and beware of related parties for receivables with related parties.

So if the debtor is your related party, typically your partner, has a share in the voting rights or in the share capital of at least 25%, or you have the same controlling persons and so on, the definition is contained in the Income Tax Act. So, receivables between related parties also cannot be reflected in tax costs through provisions.

These provisions are just the beginning, they essentially react to a situation where the receivable has clearly not been paid on time. The debtor is in default and the creditor is considering how to deal with the receivable, or is preparing to actively enforce it.

In a situation where the creditor actively enforced the receivable, asserted it against the debtor, and still did not get it paid, the law allows them to retain the advantage of tax-deductible costs and to leave such uncollectible receivables, or rather their unpaid part, as a tax-deductible expense or cost once and for all.

And the law defines the precise situations in which it is possible to leave the receivable as a tax-deductible expense, even if it is clearly uncollectible and sooner or later the unpaid part would become time-barred. Typically, this is a situation where a debtor's bankruptcy is cancelled because their assets are insufficient to satisfy their creditors, or an insolvency proceeding takes place and is concluded, and the receivable was duly claimed in it, but remained wholly or partially unpaid.

Similarly, an execution or public auction of the debtor took place and the receivable that was claimed in that execution, or for which the public auction was conducted, remained wholly or partially unpaid. Specific cases then include the dissolution of a legal entity without a legal successor.

So if a company is dissolved with liquidation and there are not enough funds left in the liquidation to pay the receivable, although there should normally be an attempt at insolvency, at insolvency proceedings. So if a company is dissolved without a legal successor, it is possible to write off the receivable as uncollectible and this has tax effects, the receivable remains a tax-deductible cost.

And in the case of the death of a debtor, a natural person, but there the law adds another condition, that it is not possible to enforce it on their legal successors. Either they had no legal successors, or they renounced the inheritance, or the inheritance is not sufficient to pay, or rather the estate today, is not sufficient to pay the receivables. In such cases, the active creditor can write off the uncollectible receivable in a tax-deductible manner, keeping it in their tax costs.

VAT payers know well that non-payment of an invoice is no excuse. And if their customer does not pay an invoice, they still have to pay the VAT from that unpaid invoice. They can try to ask for installments or a deferral of the tax payment. Until recently, however, tax authorities were very hesitant to grant these reliefs, especially for value-added tax, but otherwise, nothing pardons the creditor, and they simply have to pay VAT from an unpaid invoice as soon as a taxable supply has been provided.

There are two situations that can arise in the management and enforcement of receivables. One is that the debtor and creditor agree that the debt will be forgiven or that there will be some other settlement, the result of which will be the absolute extinguishment of the original receivable from the unpaid invoice, either in whole or in part. The Czech law does not explicitly provide for this situation, but the European VAT Directive allows in such a case to use the direct effect of the directive and authorizes the creditor to correct the tax base, i.e., to reduce their tax base by the part of the receivable that has definitively ceased to exist and was not paid, and thus also reduce their tax liability.

But here it is necessary to consult a tax advisor or a lawyer, because it is a slightly more complicated matter, the direct effect of the European directive is applied and it is a bit more advanced. So there is a greater chance of success with this procedure with professional consultation. On the other hand, the VAT Act finally allows for the correction of the tax base and the amount of tax for uncollectible receivables, i.e., existing receivables that cannot be recovered from the debtor by an active creditor.

Similar to the write-off for uncollectibility under income tax, the VAT Act allows for a correction, i.e., a reduction of the tax base by the uncollectible part of the receivable and thus a reduction of the tax liability only for those debts that the creditor actively enforces in some way, either through execution, claims in insolvency proceedings, or files in the liquidation of an estate, but is unsuccessful. Or the proceedings take so long that more than five years have passed since the moment the taxable supply occurred, in these cases. But again, the benefit is granted only to an active creditor, not to one who does not manage or enforce the receivable in any way.

One of the ways to resolve these receivables, or rather debts with customers and business partners, can also be a certain retreat from active enforcement. And if the creditor finds someone interested in buying the receivable, in assigning the receivable, a solution can also be the assignment of the receivable for a fee. Then the acquirer tries to enforce and collect the receivable. Here I would like to point out that if one's own receivables from one's own business or economic activity are assigned, it is not subject to VAT.

If a receivable that the creditor has already acquired by assignment from someone else is assigned, it is exempt from VAT without the right to a deduction. This means they cannot claim a deduction for input supplies used to then obtain the income from the assignment of that third-party receivable.

If it happens that the creditor first claims a reduction in the tax base and tax because the receivable can be classified as uncollectible and subsequently assigns the receivable, they are obliged to take this into account.

And if they have received part or all of the receivable paid in the form of the assignment fee, they must again adjust their tax base and tax liability back so that it corresponds to the payment they actually received.

A special VAT regulation applies to collection services and factoring, but that is not the subject of today's webinar, so I will just point it out. In the area of income tax, if you assign a receivable profitably, with a profit, of course, the profit from that assignment, i.e., the amount exceeding the nominal value, would be taxable income, but that is rather exceptional.

If you assign a receivable for its nominal value or acquisition price, the tax base is essentially zero. A loss from the assignment has no impact, meaning you cannot reduce your tax base by it. So if you assign for a lower amount than the nominal value of the receivable or its acquisition price, the loss basically does not affect your tax liabilities in any way, either positively or negatively. Accessories to a receivable, I would like to point out here, are taxed only upon payment. By accessories, we mean contractual penalties, default interest, late payment fees, penalties, and other sanctions. Normally, they do not enter the VAT base, but there are judgments of the Court of Justice of the European Union which, in certain cases where these penalty payments actually compensated the creditor for the payment of the price for their service or goods, stated that they are subject to VAT, that they should be increased by VAT. So be careful about that.

There are such attempts where suppliers set up contractual penalties in contracts in such a way that in case they do not get the full price for the service or goods paid, it is compensated to the original amount precisely by that contractual penalty. So be careful, if they are VAT payers, they may run into VAT. And for the debtor, I will just briefly mention. Of course, if a debtor's debt is forgiven, they have an obligation to increase their tax base by such an extinguished debt. Because it is essentially their income, their assets increase. They do not have to pay something that they normally should have paid.

We mentioned the assignment of a receivable. Here I would like to draw attention to a special provision. If a receivable is assigned for which no accounting entry was made. This means a receivable of a creditor who keeps accounts but did not account for the receivable, or a receivable of a creditor who keeps tax records and does not keep accounts, then the income is always the nominal value of the receivable, even if it is assigned at a loss. So be careful when assigning receivables that are not recorded in the accounting books.

For the debtor, it can act as a motivating factor, and in communication with them, it is advisable to point out that if they claimed their business debt as a tax-deductible expense and the debt is more than 30 months past due, meaning they are more than 30 months in default with that debt, they are obliged to pay tax on it. That is, to effectively cancel the expense, to increase their or decrease their tax-deductible costs in that tax period by the value of the unpaid debt.

So for the debtor, it is the same from a tax perspective whether they agree with you on debt forgiveness, thereby allowing you to apply for a VAT refund almost immediately. And it has the same effect for them if they play dead and let the debt sit for 30 months without payment, then they are still obliged to pay tax on it as if it had been forgiven. And we have already mentioned the accessories to the receivable for the creditor as well.

So that is all for my brief excursion into taxes, and I will hand over to my colleague Oliver. Thank you.

Mgr. Oliver Uraz: Thank you, Hana, for the floor. I will now share my presentation again. We will now return a little bit to the phase where my colleague Lukáš Dořičák left off. We will now go through this phase and the subsequent phases a bit more from the perspective of enforcement by a lawyer, by a law firm, and especially the added value that a lawyer can bring to the enforcement of a receivable, let's say, compared to the internal process. I will partially guide you through this part, regarding the section on court enforcement and executions. And then my colleague Lukáš Dořičák will take over again, and we will alternate like this.

Enforcement by a Lawyer - Law Firm

So, regarding the pre-action letter from a lawyer's perspective. To a large extent, my colleague Lukáš has already touched upon this, so of course, not to repeat myself, I would rather just point out some specific aspects of situations that a lawyer might notice better, or what a lawyer could bring to the process already within the framework of the pre-action letter.

Of course, the whole basic philosophy is based on the fact that sometime in 2013, a provision appeared in the Code of Civil Procedure that simply forced creditors to send some final pre-action letter before initiating court proceedings. And now, of course, this may seem from many perspectives like a purely formal act, especially for creditors who have already repeatedly called on the debtor, so they have another cost, another necessity to call on the debtor again. And they themselves no longer even hope that anything real could come from the pre-action letter. And sometimes, of course, it can never work 100%, but in a relatively solid number of cases, the pre-action letter can still be handled in such a way that it simply brings some real motivation for the debtor, if they are in any way contactable, to proceed with the payment, and for the creditor, it ultimately brings some savings.

Regarding the necessary and unavoidable requisites of the pre-action demand, everything that my colleague Lukáš mentioned applies. Of course, as soon as the contractual documentation is handed over to a lawyer, they should definitely think about all these mandatory requisites without further ado. It might be good to mention that if you already have the internal recovery process set up in such a way that, let's say, the letter demanding immediate payment already contains the mandatory instructions, which are basically what you have in the "what not to forget" column, the consequences of non-payment. That is, a warning about the possibility of court enforcement of the receivable and the possibility of incurring liability for the costs of the proceedings, then there are actually decisions that prove that by the very act of demanding immediate payment of the debt, which of course happens especially with lending institutions in the banking and non-banking sectors.

So if that letter demanding immediate payment already contains these requisites, it can already be considered a pre-action letter to perform. And in principle, it is not necessary to send a new one, unless the creditor explicitly wants to. Or rather, it can quite often serve as a kind of rescue moment if it happens that the separate pre-action letter is forgotten, or if due to some, let's say, error in the database, a transcription error, the pre-action letter is sent to the wrong address. So it is good not to despair even in such cases.

A pretty good thing to remember, if you have or may have debtors from bill of exchange relationships, probably the most typical position, is that we have several decisions that say that the pre-action letter to perform is fulfilled by the mere presentation of the bill of exchange for payment. So if there is some record that the bill of exchange was presented to the debtor for payment and they did not pay it, then it is not absolutely necessary and unavoidable to send a pre-action letter. So if this were somehow forgotten, it can be saved in this way for bill of exchange receivables.

There, of course, the question is or it is necessary to be careful with bills of exchange that are without protest, that is, bills of exchange for which no act is recorded in case of their presentation for payment to the debtor. There, the proof of this could probably not be given. These are basically rescue strategies that the lawyer should remember if the receivable is handed over to them in such a way that it is no longer possible to somehow produce the pre-action letter.

Otherwise, of course, everything that Lukáš said applies, and it is really crucial to be careful that all relevant parts of the receivable are handed over, especially regarding the contractual documentation for them and the ways they arose, because as soon as we get into a situation where the debtor is not warned that they have to pay some separately divisible part of the receivable, that some fees are omitted, or that a contractual penalty is omitted, we get into a problematic state in terms of awarding reimbursement of the costs of the proceedings even in case of success in a court dispute, where we already, with the legal consequence of not sending or not properly sending a pre-action letter, have the non-award of reimbursement of the costs of the proceedings even in case of success in a court dispute.

As for how to get the debtor, if it is really someone who is in some way contactable, to have some motivation to pay the debt and not to consider another pre-action letter as just another umpteenth piece of paper, then of course the first thing is that it really should not be the umpteenth millionth piece of paper that the debtor receives. So there is of course a much greater chance that if you are as quick as possible, also in cooperation with the lawyer, and you are the first qualified reminder, pre-action letter, that the debtor receives, there is a greater chance that they will still react to it and not get into that unsolvable spiral where they no longer deal with it at all.

And when you can still manage to catch the debtor like this, then of course what will work on them will be some financial motivation for them to consider that it will simply be better for them than to blow it off and let it go. What has definitely paid off for us historically is a bit of outright discount marketing with the debtor. It is of course not a mandatory requisite of the pre-action letter, but if you show the debtor that if they pay, let's say, the debt within five days, seven days, ten days, the receivable will only amount to so much.

Whereas if, let's say, the accessories, contractual penalty, default interest were to accrue for the duration of the expected court enforcement, which can take, let's say, for executions, one year, the final receivable, excluding costs, will grow by so much in contractual penalty, by so much in accessories, that the debtor will simply see the real financial motivation for themselves to pay it as soon as possible.

Of course, a more daring creditor can also resort to forgiving part of the debt in the pre-action letter in the case of immediate payment of the debt. That is one, of course, a slightly marketing thing, which is very advisable to combine with some acknowledgment of debt, which should be part of the pre-action letter.

And that acknowledgment of debt can of course be done by some standard written acknowledgment act, which will be part of the pre-action letter, or it can be, let's say, upgraded a bit, although that already requires some further cooperation or even further action on the part of the creditor, and that is by telling the debtor in the pre-action letter that you are giving them the option, based on that sort of acknowledgment of debt, to still pay the debt in installments.

And these installments will not be in the form of just some simple payment plan, but will be done in a very qualified form, which is then very advantageous for the creditor as well, and it will be done either through a notarial deed with a direct enforceability clause, or through a so-called, we can call it an expedited settlement. It is technically called a praetorian settlement according to the Code of Civil Procedure, but in principle, it is about you and the debtor signing a joint proposal, which you submit to the court, the content of which will basically be that there is such and such a debt, which the debtor acknowledges and undertakes to pay in such and such installments, and that you are asking the court to sanction it by issuing that settlement.

And the same thing basically happens through that notarial deed with the direct enforceability clause. More or less, the function of the court is supplemented by the notary, and it is basically up to you or the cooperating lawyer through whom you are handling it, whether this is handled more through the court or through some cooperating notary, if they have one.

What are the advantages of these things? For the debtor, firstly, of course, spreading the payment over time in installments, and secondly, that it can be shown to them quite simply that even though they will incur some costs for the drawing up of the notarial deed or the settlement for the proceedings on the payment plan, these costs are categorically lower than the costs that would arise in the case of standard enforcement. Basically, in the settlement proceedings, the costs that must necessarily be paid there for the approval of the settlement are in the amount of two percent of the claimed amount in the settlement.

Thus, if, to return to our model case, if we had an amount of 500,000 plus VAT and the contractual penalty, then as of today, let's say, the amount would be some 865,000 plus or minus some small change, and just the court fee for that expedited settlement would be about half lower than the court fee that the debtor would then be forced to reimburse in standard court proceedings. For the expedited settlement, it would come out to about CZK 17,000. For standard court proceedings, about CZK 34,000. It is a lower amount, both that the debtor will have to reimburse and, of course, it is also a lower cost for the creditor that they will have to incur in the first step compared to if they had to enforce it through standard court proceedings.

Likewise, with the notarial deed, where it is calculated from the notarial tariff, the statutory fees for the notary for drawing up the notarial deed with a direct enforceability clause are several categories lower than the court fee for standard court proceedings.

For both of these forms, the notarial deed and the expedited settlement, it holds that they then become a direct basis for execution enforcement if the debtor fails to comply with them. So there is no need to prove anything further, to conduct any complicated court proceedings, and so on.

When these documents are correctly and appropriately formulated, in case of default, the creditor is in a situation where they can directly execute and avoid any risks associated with classic court proceedings. As we said, it not only has a financial motivation for the debtor. It can also have significant advantages for the creditor, to approach the pre-action letter in that attractive way. Firstly, certainly from the perspective of the statute of limitations. Even if it were done only by a standard acknowledgment of debt without the qualified form, that alone of course has the effect of a ten-year extension of the statute of limitations period, and a debt that was already time-barred can be acknowledged in this way.

And of course, if we take it to the next level, the acknowledgment within the notarial deed or the settlement has the consequence that you no longer need to prove anything else to obtain an eligible execution title. And it must of course be appropriately formulated so that there is an immediate acceleration of the entire debt amount in the event that the debtor, let's say, falls into default with even a single installment, which is often the task for the cooperating lawyer, to set these aspects up in a suitable way. But in general, it is clear from this that it does not have to be just some formalism, but that through some other ways and further cooperation, it can be brought quite quickly and quite cheaply to a state where both parties can be satisfied.

And if the worst comes to the worst, the creditor has a pretty solid position. Which brings us basically to the next part, and that is the court phase of enforcement itself, which will of course occur in cases where this, for whatever reason, does not work out, and I would thus once again hand over to Lukáš, who will guide you through the court phase of enforcement again.

JUDr. Lukáš Dořičák: I thank my colleague for handing over the floor. I will share my screen with you again. You should now see the presentation.

Standard and Summary Court Proceedings

Exactly as my colleague said, for the purposes of this explanation, let's imagine that you have sent a pre-action letter, either through a lawyer or as part of the internal recovery process, and it was not successful, meaning the debtor paid nothing. And you are now faced with the situation that you have to sue for the debt, that you have to initiate court proceedings. Basically, we can divide court proceedings into two basic categories, namely standard court proceedings and summary court proceedings.

I have prepared two diagrams for you here, on which I will try to demonstrate the difference between standard court proceedings and summary court proceedings.

As for standard court proceedings, the sequence of the process is that you file a claim, that claim is somehow heard before the court. Evidence will be taken, the defendant will be heard, and so on, and the court will decide on the claim in some way.

Summary court proceedings, however, proceed quite differently. And that is, you file a claim, in this case, in the case of summary court proceedings, the claim is called or we can call it a motion for an electronic payment order or a motion for a payment order, and the hearing phase is omitted. And based on the filing of the claim, the court decides, and thus issues either an electronic payment order or a payment order, and now it serves the electronic payment order or payment order to the debtor, or in this case, the defendant.

If it fails to deliver the payment order or electronic payment order for personal delivery, or if it succeeds but the debtor files an opposition against the electronic payment order or payment order, it is cancelled, and thus the scheme is then identical again with standard court proceedings, where the claim is heard and a decision is made on it in some way. So while in standard court proceedings the scheme is filing a claim, hearing the claim, decision, in summary proceedings it is filing a claim, a decision is made directly, and then a possible hearing depending on whether the defendant starts to actively defend themselves in the court proceedings or not.

Regarding the explanation of some advantages of summary proceedings over standard court proceedings, the first one is obvious. If you initiate summary court proceedings, you can always count on the possibility that the defendant will miss the deadline for filing an opposition. I have copied for you the provision that appears in electronic payment orders, where it says: "The defendant shall pay a certain claimed amount or file an opposition against the electronic payment order within 15 days."

And if the defendant does not file the opposition against the electronic payment order or payment order within the specified period, then the decision, which we call an electronic payment order or payment order, acquires the quality of being a final and enforceable decision, meaning if they do not file the opposition, you can basically proceed to execution and enforcement of the given decision. That is the first advantage of summary proceedings over standard ones.

Another advantage is that in summary proceedings, there is usually a higher probability of a judgment by confession being issued. In those, I have again copied the relevant passage for you that appears in the electronic payment order, in which it basically says: "Defendant, if you file an opposition, that is not enough for me. I need you to explain to me within a certain specified period why you do not agree with the claimed motion and how you intend to defend yourself against this asserted motion." And it is stipulated that in case the debtor does not respond within the specified period for the statement, the period for electronic payment orders is usually 30 days from the day the period for filing the opposition expires, then in case they do not respond, the court will decide by a judgment by confession. Again, if it decides in this way, then if no appeal is filed against this judgment by confession and it becomes final, you can again proceed to execution enforcement. So that is another advantage of summary proceedings over standard ones, where in standard proceedings the court can make a similar call, that debtor, respond to the claim. If you do not respond, I will issue a judgment by confession, but it is not as common as with motions for an electronic payment order in the case of summary court proceedings.

So if I were to summarize it in some way, standard court proceedings take place with a hearing based on evidence and with the hearing of the defendant. The claim will be heard, evidence will be taken. The defendant will be able to comment on it in some way.

Summary proceedings take place in such a way that no hearing is scheduled, no evidence is taken, the defendant does not comment on the claim, or rather the motion for an electronic or standard payment order, and a decision is issued straight away, and only if the defendant files an opposition against the payment order or if it is not successfully delivered for personal delivery, only in such a case does the hearing, taking of evidence, and hearing of the defendant take place.

This brings us to the next slide, where we will look a little more closely at summary court proceedings. Among them, we can include proceedings for the issuance of an electronic payment order, proceedings for the issuance of a payment order. Also, proceedings for the issuance of a bill of exchange payment order and a cheque payment order, or proceedings for the issuance of a European payment order. The most common are precisely the proceedings for the issuance of an electronic payment order and a payment order. I would like to compare the differences between these proceedings here.

If you initiate court proceedings based on a motion for an electronic payment order, you can enforce a monetary claim. The same applies in the case of a payment order. Only a monetary claim can be enforced. In a standard lawsuit, you can demand both the enforcement of a monetary claim and, for example, that the debtor, or rather the defendant, refrains from interfering with your property rights, for example, by crossing your land, or that the court determines whether a contract has terminated due to the expiration of its term, and so on.

Another distinguishing criterion is that for an electronic payment order, the motion for an electronic payment order can only be filed if the amount claimed is not higher than CZK 1,000,000. In the case of a payment order and standard court proceedings, this monetary limit for a monetary claim is essentially removed. The electronic payment order is also specific in that the motion for an electronic payment order is filled out using a standardized electronic form, where you fill in the relevant boxes, affix a recognized electronic signature, and send it to the court. For a payment order, there is no such standardized form, nor for a standard lawsuit, and neither the motion for a payment order nor the standard lawsuit needs to be affixed with a recognized electronic signature.

If we move on to another advantage, and probably the most significant one, of the electronic payment order compared to a standard lawsuit and a motion for a payment order, it lies in the reduced court fee.

The court fee, to put it very simply, we can say is a payment to the court for hearing the given case and for deciding on it in some way. In the case of a motion for an electronic payment order, if the amount claimed is up to CZK 10,000, then the court fee is CZK 400. If the amount claimed is from CZK 10,000 to CZK 20,000, the court fee is CZK 800, and in the case that you are suing for an amount over CZK 20,000, it is four percent of the amount claimed. For a standard lawsuit and for a motion for a payment order, the court fee is higher. In the case that you are suing for an amount up to CZK 20,000, the court fee is CZK 1,000.

In the case that you are suing for an amount from CZK 20,000 to CZK 40,000,000, it is five percent, and so on, as stated on the slide. If we apply this again to the model case, where if we were to calculate the contractual penalty as of today and add it to the purchase price, it would give us an amount of CZK 865,800. And this amount, if the court fee is expressed from it, then in the case that you were to initiate the proceedings based on a motion for an electronic payment order, it would be CZK 34,632, whereas if you were to file a standard lawsuit or a motion for a payment order, the court fee would be CZK 43,290. It is clear that the court fee for proceedings on an electronic payment order is much lower.

I would also like to outline for you in this context a proposed amendment to the Act on Contractual Fees, where the rules I have outlined may change in the future if this proposal successfully passes the legislative process. And that is, if you file a motion for an electronic payment order and you are suing for an amount up to CZK 20,000, then the court fee will be CZK 1,500. If you are suing for an amount over CZK 20,000, then the court fee will be CZK 1,500 and four percent of the amount exceeding CZK 20,000.

If we look at the model case again and calculate the court fee, then in the case of the motion for an electronic payment order after the amendment, the court fee would be CZK 35,332, whereas in the unamended version it would be CZK 34,632. So it is clear that the increase in the court fee in the amended form is not so high, and it actually does not even aim to increase the amount of the court fee for higher-value disputes with a higher tariff value, with a higher amount claimed, but rather for lower amounts, for small-value cases, for example, for those CZK 20,000, to relieve the courts and not have to deal with receivables that are in the order of a few thousand crowns.

So, I have reached the end of my slide. I will now hand over to my colleague Oliver Uraz, who will talk to you about receivables in insolvency.

Mgr. Oliver Uraz: Thank you, Lukáš, for the floor. I will share the presentation again so we can go through it.

Receivables in Insolvency

Essentially, the last block that we will briefly discuss is how the lawyer representing you can use some alternative ways to enforce a receivable, when and how. If it is not possible to enforce it out of court and if standard court proceedings do not seem to be the most suitable.

The point is that the receivable can be enforced through insolvency, and we would briefly say when and why this might be the case. Certainly, of course, it can be enforced in such a way that you can achieve that bankruptcy is declared on your debtor, if bankruptcy is in some way advantageous for you. And bankruptcy is usually advantageous especially if you have the receivable secured in some way, typically by the debtor's property, the debtor's real estate, but you cannot get to that real estate very quickly, and possibly this factor in combination with the factor that it is a really high receivable, let's say in the order of millions, for which the court fee would be truly gigantic.

And if you find out that the debtor might be insolvent, which means you have to find out that the debtor has at least one other creditor different from you, and it can't even be that you assign a receivable to some cooperating entity and thus create a plurality of creditors, but truly another creditor, which you will typically find out from what Lukáš told you during the check, the vetting of the Land Registry and the Central Register of Executions, where you will simply see that another receivable is being enforced against the debtor, and then if this proves to be true, you are already heading towards the fact that the motion to declare bankruptcy should be successful.

And it can be brought to a conclusion especially if you cannot get to the security on the real estate precisely because of those other receivables, because those other receivables also block the real estate and also block execution orders for the sale of the real estate, which, even if they arose after the insertion of your lien, basically prevent you from getting to the collateral directly.

And that can be, I don't want to say circumvented, but basically resolved by the insolvency proceedings, because the decisive say about the property in question, the monetization of which is supposed to lead to the recovery of your receivable, returns to you, because within the insolvency, basically those execution orders from the other creditors that block the standard monetization of the real estate, more or less cease to be relevant, and what remains relevant is really just the classic security by a lien, with the decisive say belonging to the creditor who is first in line, which, when only you have a lien and the rest are just execution orders or there are some liens with a later priority, then you have the decisive say.

And you have that decisive say actually through the insolvency administrator, to whom you give instructions on how to deal with the debtor's property, how to monetize it.

You basically have a choice of several options for how this can happen. You can give them an instruction for a direct sale, an instruction for a sale through a public auction, or through a court executor. A direct sale often pays off, where you transfer the administration of the process that will lead to the monetization of the real estate to the insolvency administrator and just tell them in general what to do. And that they should, let's say, advertise it for a certain period and for such and such a minimum sale price, and then you can deal with it operatively.

You can file that instruction at the same time as your own claim in the insolvency proceedings, where if you file a motion to declare bankruptcy, and bankruptcy is declared, you must then file your claim there again, and as part of that claim, you can already make that instruction to the insolvency administrator on how to deal with it. So basically, it can be very fast, because after the deadlines for other creditors to file their claims expire and after some basic actions by the insolvency administrator, you can get to a state where the real estate is already being monetized and you have full control over it, within a matter of months from filing the bankruptcy petition.

And from a financial perspective, there is a quite significant cost efficiency, especially for very high receivables, as the court fee for filing an insolvency petition is a flat CZK 2,000 regardless of how high the receivable you have against the debtor is. It is true that a deposit of CZK 10,000 or CZK 50,000 must then be paid. CZK 10,000 is for non-entrepreneurs, CZK 50,000 for entrepreneurs, and these are the costs of the insolvency proceedings on the part of the creditor who files the petition.

And that deposit is also filed as a so-called priority claim and is satisfied first of all, so it should be returned to you relatively quickly. And even so, in total, it can be much less than some court fee. And the administrator is satisfied from the proceeds of the monetization, with their costs expected to reach about 14% of the proceeds, where you are able to estimate in some way whether the real estate should have sufficient value so that even after deducting those 14%, your entire or a sufficiently substantial part of the receivable remains for your satisfaction.

With insolvencies now, just briefly, because it is on the agenda and will not disappear for some time. With insolvencies, unfortunately, there are now extraordinary measures in connection with the coronavirus, so what we have said still applies, but it is now suspended for some time. Basically, until August 31, creditor insolvency petitions cannot be filed, which again is not such a dramatically long time. For most receivables, there will be no risk of becoming time-barred or any other weakening of the receivable. It is just necessary to remember that this path will only be possible to use from September 1, 2020.

And what is now particularly important for creditors and will probably apply until mid-2021 is that now, creditors who are registered in insolvencies, meaning not only insolvency proceedings that you initiated through a bankruptcy petition, but also insolvency proceedings where you simply registered your claim against the debtor, are no longer served with decisions against which the creditor can appeal. They are not served by a special route, i.e., by post or data box, but are only published in the Insolvency Register, which of course is now very burdensome for creditors, because especially for some more significant receivables, it is necessary to constantly monitor the insolvency proceedings. There is actually a whole series of decisions that are not served, but which can be quite crucial for the creditor.

An example could be a decision to reject a creditor's claim, or a decision to grant debt relief to a debtor-entrepreneur if the creditor did not agree with it. Or for example, a decision that is related to how the proceeds from the monetization in the insolvency are handled. So exactly the decisions that follow on from what we said at the beginning of this chapter, that after the monetization process is carried out, a formalized decision is then made where the proceeds are distributed. And until now, this was served to creditors so they could look at it, see if it is correct, if there is no error. Now it will not be served specially and will only be published on ISIR, so it is necessary to monitor it so that the objection period that the creditor has against those decisions does not expire in vain.

Also, in relation to the debtor, the measures regarding the granting of discharge after the completion of debt relief and also the non-cancellation of debt relief if the debtor is not complying are being relaxed in some way.

Everything is basically linked to some list of those extraordinary measures, where the debtor lost the ability to properly repay the debt relief. Which of course can also have a quite significant impact on the creditor sphere. But from the perspective of the creditor's activities, the insolvency petition and the service, or rather non-service, of those decisions are certainly the most important.

If we then look at the last part, through which receivables can be enforced a little differently, we will stick with secured receivables, but it can be approached a little differently, let's say from the side of the cooperating lawyer, and especially, let's say, if for some reason the conditions for filing a bankruptcy petition are not met.

So if you have the receivable secured in some way, which can of course also arise additionally in our case, even though the receivable was not originally secured. It is certainly possible to offer the debtor some payment plan, which will, however, be conditioned by the additional establishment of a lien on some property, on the debtor's real estate. Again, it is necessary to check the company or person in terms of our text on the recoverability of the receivable, whether it is worth securing at all and whether their real estate is not already blocked by execution orders from other creditors.

If such a situation arises and the lien can really be established without any dramatic difficulties, then it can lead the creditor to an alternative way of enforcing the receivable if the payment plan is not being paid, and that is through a simplified proceeding for the judicial sale of collateral.

And for the creditor, this can be very suitable from a financial point of view, because as for some initial fee at the Land Registry, that can of course be transferred to the debtor, and as for the fee for the proceedings on the judicial sale of collateral, that can again be significantly more advantageous than in standard court proceedings, because in the judicial sale of collateral, the court fee is CZK 5,000 for each title deed on which the real estate being monetized is located, which usually or in many cases will be just one title deed, so a court fee of CZK 5,000, which again for high receivables, as Lukáš said, where court fees were somewhere around CZK 35,000 to 40,000, is actually a seven or eight times lower court fee that you are obliged to pay in the first step compared to standard court proceedings.

And the process is very fast and very simple, if it gets into default due to non-compliance with the payment plan where you established the lien, then you actually file or the lawyer files a lawsuit for the judicial sale of collateral. The proceedings are then very simple. Basically, it is only proven whether a lien exists and a receivable exists.

The debtor's defense options are very limited, and after the issuance of the resolution on the judicial sale of collateral, you can proceed directly to execution, the sale of the real estate. It has, of course, the limitation that the title serves exclusively for the execution sale of the real estate, that no other property of the debtor can be attached. But if the vetting is done well and the real estate is valuable, then it can of course be more than enough, and the process is much faster and much more financially efficient than, let's say, classic enforcement.

And the second, basically last alternative for secured receivables is the possibility of using the institute of a public involuntary auction. The basic check is the same as for the judicial sale of collateral. There, however, it is necessary to remember that to get to the public involuntary auction, it is necessary to have a so-called classic execution title, i.e., a payment order or a judgment, and the resolution on the judicial sale of collateral cannot be used as a title for a public involuntary auction.

This means that it stands somewhere in between, that although the entry costs for a public involuntary auction are higher, because the classic court fee is paid there, which you have to go through as a result of having to obtain the standard title, which will be higher for high receivables than for the judicial sale of collateral, but then the realization costs can be much lower, as you do not pay an executor or the executor does not deduct their share of the fee, as none is involved, but an auctioneer is involved, which is the company that conducts the auction, and the fee according to the Public Auctions Act for these subjects is lower than for executors.

For an auctioneer, it is 10%, for an executor, it is 15%. So again, it may be useful to use this in the case where you have already gone through the process of classic court proceedings and have a secured receivable and you know that through the monetization of the real estate, your receivable should be satisfied, then it may turn out to be more effective, cheaper, and faster than sending it to classic execution.

The process is such that after establishing the lien and obtaining the classic title through the lawsuit, you as the creditor must conclude a contract with an auctioneer, which are companies licensed for this and whose list is publicly available, where the auctioneer's fee is agreed upon, up to a maximum of 10%. And if this is agreed and the conditions for the sale of the real estate are met, i.e., the debt is not being paid properly and on time, or rather the execution title is not being respected, then the auctioneer will conduct the public involuntary auction and monetize the real estate. One note, this is not effective to use for consumer debts, only for business debts, as unfortunately the Civil Code for consumers stipulates that in the case of this procedure, you must give the consumer an additional period of six months to pay the debt before you can actually proceed with the auction. So the effect of time speed, which is of course very important here, is then greatly lost. So, like it or not, it makes more sense to use it only for entrepreneurs.

With that, we have basically covered, in a whirlwind tour, what we wanted to tell you, and we have thus exhausted, or rather exceeded, the time, so if there were or will be any questions, we will certainly be glad if you contact us directly. Me or any of my colleagues, or even all of us. That is also why you have our email addresses here, and you can certainly also use the contact directly to our law firm, and we will certainly be happy to discuss further or even those aspects of receivable enforcement that we have talked about, and perhaps even more deeply. I thank you for this, thank you very much for your attention. I hope you enjoyed listening, both in terms of content and in terms of the quality of the connection.