Yes, but only on the conditions laid down by the Czech Insolvency Act. After a decision on insolvency, set-off is permissible if the statutory conditions for set-off arose before the decision on how the insolvency is to be resolved and if you are a creditor with a lodged claim. Set-off is also excluded where you acquired the claim by an ineffective legal act or at a time when you knew of the debtor’s insolvency, and you must pay your own debt due to the extent it exceeds your mutual claim. Without a lodged claim the insolvency administrator will recover your debt in full and your claim will go unsatisfied in the proceedings.
In a long-standing relationship companies owe one another money: the Slovak supplier has unpaid invoices against its Czech customer and at the same time owes it for services, a bonus or the return of an advance. When the customer ends up in insolvency, the difference between having a set-off and not having one is fundamental. Without set-off, the insolvency administrator recovers your debt in full into the insolvency estate and your claim is satisfied only pro rata, often at a low dividend. The Czech Insolvency Act (Act No. 182/2006 Coll.) does not prohibit set-off after a decision on insolvency, but makes it subject to strict conditions.
When set-off after a decision on insolvency is permissible
Mutual claims of the debtor and a creditor may be set off even after a decision on insolvency, provided the statutory conditions for set-off arose before the decision on how the insolvency is to be resolved, that is, before the decision on bankruptcy, reorganisation or discharge of debts (Section 140(2)). Where the claims are governed by Czech law, the statutory conditions are those of the Czech Civil Code: mutual performance of the same kind and the fact that the party may already demand satisfaction of its own claim and perform its own debt (Section 1982(1) of Act No. 89/2012 Coll.). What matters is therefore from when you could demand payment of your claim and perform your debt, not the date on which you notify the set-off.
If the Czech debtor’s claim against you is governed by Slovak law, Article 9 of Regulation (EU) 2015/848 must also be considered: the opening of insolvency proceedings does not affect a creditor’s right to demand set-off where it is permitted by the law applicable to the debtor’s claim. How far this rule extends against the restrictions of the Czech Insolvency Act is not settled, so lodge the claim covered by the set-off in any event.
Four obstacles that exclude set-off
Even where the timing conditions are met, set-off is not permissible if the creditor:
- is not a creditor with a lodged claim in respect of the claim capable of set-off, so that lodging the claim is a condition of set-off, not an alternative to it,
- acquired the claim capable of set-off by an ineffective legal act,
- knew of the debtor’s insolvency at the time it acquired the claim, for instance where it bought the claim from another creditor when it already knew of the insolvency,
- has not yet paid the debtor’s claim due to the extent it exceeds the creditor’s own claim capable of set-off (Section 140(3)).
Set-off may also be excluded by another provision of the Act or by an interim measure of the insolvency court (Section 140(4)). One such rule should be known separately: set-off is not permissible against a claim for surrender into the insolvency estate of performance received under an ineffective legal act (Section 238). If the administrator asks you to return a payment the debtor made to you before the insolvency, you cannot settle it against your own claim; we describe the context in the article on a debtor who paid and then went into bankruptcy.
Set-off during the debtor’s crisis and after proceedings commence
Caution is also needed with a set-off effected during the debtor’s crisis. Once insolvency proceedings have commenced, the debtor may perform pecuniary obligations arising before they commenced only to the extent and on the conditions laid down by the Act, and its acts contrary to that restriction are ineffective as against the creditors unless the debtor or the creditor obtained the insolvency court’s consent in advance (Section 111(1) and (3) of the Insolvency Act). A set-off agreement concluded with the debtor before the proceedings commenced may be challenged by the administrator by an avoidance action as a preferential legal act, where the creditor thereby received more than it would have received in bankruptcy and the debtor was insolvent at the time (Section 241 of the Insolvency Act). Whether a particular set-off made in the last months before the insolvency will stand is therefore assessed by reference to the dates on which both claims arose and fell due and to what you knew of the debtor’s financial position.
How to proceed
Prepare a schedule of the mutual claims with the dates on which they arose and fell due, and lodge your claim within the period set in the decision on insolvency. A Slovak company is a foreign creditor in Czech proceedings, and the standard European claim form provides for set-off as well:
whether any set-off is claimed and, if so, the amounts of the mutual claims existing on the date when insolvency proceedings were opened, the date on which they arose and the amount net of set-off claimed.
If your debt exceeds your claim, pay the difference, or the set-off will not take effect. We prepare and lodge the claim together with the set-off under lodging a claim in Czech insolvency proceedings. If you trade with the customer on a long-term basis and mutual claims arise regularly, we will set up a set-off agreement while times are still good, as part of assignment and set-off of claims. The rules on unilateral set-off under Slovak law are described in the question on a debtor setting off its own claim.
This answer provides general information on the law as at 12 September 2026. It does not constitute legal services or replace an assessment of an individual case. The details of your situation may differ. Book a consultation to discuss them.
