A creditor has forgiven part of a debtor's debt on the condition that the debtor will make every effort to avoid insolvency and repay at least the remaining, unforgiven part. However, the creditor also set a resolutive condition: if the debtor were to become insolvent (i.e. the court declared it bankrupt), the debt forgiveness agreement was to be void from the outset and the debtor would be obliged to repay the debt in full.

The inevitable happened – the debtor could not withstand the situation and the court declared it bankrupt. The creditor therefore filed its claims in full, as though the debt forgiveness had never occurred. However, this was contested by another creditor of the same debtor, who argued that, in principle, a debt once validly forgiven cannot be "revived".

The dispute reached the Supreme Court, which, in agreement with the lower courts, did not find the resolutive condition unlawful. The Supreme Court literally stated, "If it was the true intention of the parties to forgive the debt with the understanding that the effects consisting in the extinction of the creditor's right to demand payment of the debt would go away upon the fulfilment of the agreed resolutive condition (the extinguished right would be "revived"), the Supreme Court finds no reason why such an arrangement is not possible (and valid)." It also added that the debt "revives", so to speak, ex nunc (i.e. only from the fulfilment of the resolutive condition), which implies that no interest on late payment accrues during the period when the debt forgiveness was in effect.

(Czech Supreme Court judgment of 30 July 2024,Case No. 29 ICdo 59/2023, available here)

Authors: Tomáš Král, Alina Starodubová