Bankruptcy - Poland
Entrepreneurs may be able to avoid bankruptcy by anticipating difficulties – if they keep a close eye on the financial situation of their business.
The Act on Bankruptcy and Rehabilitation lays down the rules for procedure with respect to debtors who are business entities and the rehabilitation procedure for business entities facing the prospect of bankruptcy.
A bankrupt entity is a debtor that has had a ruling declaring bankruptcy issued against it.
As of the day of declaration of bankruptcy the assets of the bankrupt entity are classed as the bankrupt estate, and this is used to satisfy the claims of the bankrupt entity’s creditors. The bankrupt estate comprises the assets belonging to the bankrupt entity on the day bankruptcy is declared and also assets acquired by the bankrupt entity during the bankruptcy proceedings, except property that is excluded from the bankrupt estate.
If there is substantial evidence that by arrangement with creditors, creditors’ claims will be satisfied to a greater extent than would be the case in bankruptcy proceedings comprising liquidation of the debtor’s assets, a declaration of bankruptcy is made with the option of an arrangement with creditors.
If there are no grounds for declaring bankruptcy and an understanding of a different kind is reached, the bankruptcy proceedings comprise liquidation of the debtor’s assets.
The objective of the rehabilitation proceedings is for the firm to recover its capacity to compete on the market in accordance with an agreement reached with creditors. The rehabilitation proceedings also include restructuring of staff, as well as of assets.
Cases relating to declaration of bankruptcy and relating to proceedings to secure claims are heard by a bankruptcy court. A bankruptcy court is a district court – a commercial court.
In cases in which the insolvency procedures also include liquidation of a firm’s assets the court announces that the insolvency procedures have been completed once the assets have been divided up and distributed and all creditors’ claims have been met.
The responsible authorities
With regard to his/her duties the Official Receiver has the powers and obligations of a court and of a presiding judge:
- it is responsible for managing the proceedings,
- it supervises the activities of the bankruptcy trustee, the court-appointed curator and the administrator,
- it designates the activities that the bankruptcy trustee, curator or administrator are not permitted to perform without permission of the official receiver or the consent of the creditors’ committee,
- it points out any oversights or omissions they make,
- it reviews complaints regarding the activities of the bailiff
A bankruptcy trustee is a person that manages the estate of a commercial entity that has been declared bankrupt, and this person distributes funds among creditors in accordance with rules laid down in the Act on Bankruptcy and Rehabilitation. A bankruptcy trustee is appointed when the declaration of bankruptcy comprises liquidation of the bankrupt entity’s assets. A court-appointed curator is a person that holds a bankruptcy trustee license and is appointed by a court to supervise the activities of a debtor that has been declared bankrupt with an option of an arrangement with creditors.
A bankruptcy court – this hears cases relating to declaration of bankruptcy and relating to proceedings to secure claims. A bankruptcy court is a district court – a commercial court. The court with the jurisdiction to hear cases relating to declaration of bankruptcy is the bankruptcy court with jurisdiction over the main establishment in which the debtor has its business enterprise.
If the debtor has establishments falling under the geographical jurisdictions of various courts and it is difficult to determine which is the main establishment, each of those courts has jurisdiction. If the debtor does not have a business enterprise within the Republic of Poland the court with jurisdiction is the court for the place of residence or seat of the debtor, and if the debtor does not have its place of residence or seat within the Republic of Poland, the court with jurisdiction is the court within whose area of jurisdiction the debtor's assets are located.
Entrepreneurs having experienced bankruptcy should not lose confidence in their ability to embark on a new business.
Bankruptcy proceedings: a step-by-step guide
A business entity facing the prospect of insolvency files a declaration of initiation of rehabilitation proceedings with the court.
A rehabilitation plan and declaration (certified by a notary public) have to be submitted, affirming that all data given in connection with the initiation of rehabilitation proceedings is true.
The declaration of initiation of rehabilitation proceedings also has to state:
- The first name and the surname of the debtor, the debtor’s name or commercial name, place of residence or seat, and if the debtor is a partnership or legal entity;
- the representatives of the company or legal entity and liquidators, if appointed, and also, in the case of a company, the first names and surnames and places of residence of the shareholders (partners in the company) responsible for the company's liabilities without limitation;
- the place in which the business enterprise or other assets of the debtor are located;
- the facts and circumstances being the legitimate grounds for the motion and evidence substantiating it. If the debtor is a business entity registered in the relevant register, an excerpt from that register should be attached to the motion.
- a declaration stating that it is not a business entity against which bankruptcy proceedings comprising liquidation of assets or in the course of which a liquidation arrangement has been adopted are being conducted, if less than 5 years have passed since the legally binding and valid conclusion of the proceedings;
- a declaration with a signature certified by a notary public, affirming that the data and the declaration contained in the declaration of initiation of rehabilitation proceedings and documentation attached to it are true.
The following documents also have to be attached to the motion:
- an up-to-date list of the individual assets with information as to their estimated value;
- a balance sheet drawn up for the purpose of the proceedings as at a day no more than thirty days prior to the day the motion is filed;
- a list of creditors stating their addresses and amounts of the claims of each of them, and the dates the claims become due, as well as a list of the forms of security established by the creditors on the assets, and dates on which they were established;
- a declaration of repayments of claims or other debts during the six months preceding the day the motion is filed;
- a list of entities that have material liabilities towards the debtor, with addresses and descriptions of the claims, the dates on which they arose, and the dates on which they become due ;
- a list of the types of enforcement title and executory title against the debtor;
- information regarding the proceedings to establish over the debtor’s assets mortgages, pledges, registered pledges and treasury pledges and burdens of other kinds which are subject to registration in a land and mortgage register or registers, and regarding other court or administrative proceedings pending with regard to the debtor's assets;
- information as to the place of residence of representatives of the company or legal entity and liquidators, if appointed.
The court decision
The court may either allow the rehabilitation proceedings or dismiss the motion if it finds that the data provided is not true or that the rehabilitation plan does not guarantee the future capacity of the debtor to meet its debts.
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