Insolvency and profit from the lease of pledged thing

Insolvency and profit from the lease of pledged thing

In April 2015 the Supreme Court of the Czech Republic issued a decision which has been published recently under ref. No. 29 NSCR 31/2013. The decision dealt with the question, who shall be entitled to collect rent paid in the course of insolvency proceeding for the lease of pledged property.

The Supreme Court concluded that in case there is no other agreement between the pledgee and the pledgor, the rent received from lease of a thing pledged pursuant to Sec. 152 et seq. Civil Code shall not belong to pledgee from the moment of the creation of the pledge until the sale of the pledged thing. Such rent is not even considered a part of proceeds gained from the sale of a pledged thing during insolvency proceeding and will not be paid to pledgee.