A development of insolvency proposals in the Czech Republic in SMEs

This paper deals with the development of insolvency proposals in the Czech Republic in the period 2008-2011 with regard to the issue of solvency representatives of small and medium business. The aim of this paper is to analyze the number of insolvency proposals and to carry out a survey among of leading representatives of the business environment. Based on the stated objectives, a critical literature review of relevant foreign sources was done; following part was a quantitative research through a questionnaire survey among representatives of small and medium enterprises in the Czech Republic. Logical methods of analysis and synthesis, induction and deduction were used when we implemented our own research. The questionnaire survey was evaluated using statistical methods, namely the statistical correlation was performed by using the test of independence chi-square, and the degree of statistical dependence was determined by using the Kendall tau b. The aim of study was a negative trend in the number of insolvency proposals and the status of representatives of small and medium enterprises in insolvency proceedings and also whether the position of creditors in insolvency proceedings affecting the ability to pay its obligations. The analysis showed the increase in the number of insolvency proposals in the period. The largest increase was recorded immediately after the outbreak of the global economic crisis in 2008 and 2009, in the next periods; the number of other insolvency proposals for business has been still growing, but not so significantly. In some quarters in 2010-2011 there was even a decline in number of insolvency proposals. Another result of the research was the finding, that there is a statistically significant relationship between the entity acts in insolvency proceedings in the position of the creditor and the person who caused the insolvency proceedings. On the contrary, no statistically significant relationship between the position of representatives of small and medium enterprises in the position of creditors in insolvency proceedings and their disability pay its obligations.

When asked how the respondent, a representative from the small and medium enterprises, solved the problem, where he would not be able to pay its obligations in long time period, more than half of the respondents agreed on the fact, that such a situation did not occur, a quarter would solve the situation itself, and only about 2% would wait for solutions from the side of the business partner. In the Czech Republic there are more than 50% of respondents who believe, that if their business insolvency petition has been filed, it would mean going out of business for them. Insolvency petition as a chance to save (e.g. in the form of a possible restructuring) and the continuation of business, can be considered as a solution for only about 30 % of respondents.

Paper is one of the research outputs of the project TD010093 registered at Technology Agency Czech Republic (TACR).