The Cabinet approved a proposal Aug. 31 that politicians, economic experts and academics say will not only improve the country's bankruptcy law but strengthen the business environment by giving creditors, not judges, the majority of power in insolvency proceedings.

"The new [proposed] law enforces the creditor's position, which is good," said Viktorie Plívová, spokeswoman for the Economic Chamber. "We hope the [Chamber of Deputies] will show enough political will to pass the motion. This is one law that is badly needed."

The measure would allow, for example, secured creditors (usually banks) to recoup up to 100 percent of their investment in insolvent companies instead of 70 percent, the amount set by current legislation.

Experts have long criticized the current law for putting too much control in the hands of the judiciary, which they say leads to excessively lengthy and costly bankruptcy proceedings that too often lead to liquidation and discourage investment.

The bill is scheduled to go to the Chamber of Deputies, the lower house of Parliament, for first reading this month. If Parliament gives it the go ahead, which looks likely, the measure could be signed into law by President Václav Klaus next year.

Submitted jointly by the Justice Ministry and the office of Deputy Prime Minister for the Economy Martin Jahn, the proposal follows a year of intense debate between the two sides and several years of failed attempts at reform. Jahn's office hopes the bill will win the support from the senior opposition Civic Democrats (ODS) that it needs to pass through Parliament without suffering serious redrafting.

The ODS holds 57 seats in the 200-seat Parliament. Party leaders haven't reviewed the bill but Jahn's office is optimistic.

Business environment and legislation department head Petr Hájek says his office's draft is founded on the same principle — creditor rights — a provision the ODS emphasized in a separate bill the party presented to the Cabinet earlier this summer that is also awaiting first reading in Parliament. Hájek said the two sides are not that far apart.

"I believe we will be able to find a compromise in Parliament without [having to make] substantial changes [to the proposal]," he said.

Jíří Pospíšil, shadow justice minister for the ODS, said "The fundamentals of the proposed bill are very close to the ODS proposal. The ideal thing would be to discuss both drafts in the chamber ... [which] would result in one compromise document based on both drafts."