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Poland

Bankruptcy

Updated 12/2012

Legal requirements

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 natural persons not conducting business activity, as well as the rehabilitation procedure for business entities facing the prospect of bankruptcy.

Insolvency procedures

A bankrupt entity is a debtor that has had a ruling declaring bankruptcy issued against it. Bankruptcy is declared in case of debtors who have become insolvent (i.e. when they do not settle their due liabilities, or - in case when a debtor is a legal person or an organisational entity which was granted legal capacity under another act - their liabilities exceed the value of their assets).

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 with the option of an arrangement with creditors, bankruptcy is declared comprising liquidation of the debtor’s assets.

The objective of the rehabilitation proceedings is recovery of the company’s capacity to compete on the market in accordance with an agreement reached by creditors.  The rehabilitation proceedings includes also restructuring of staff and assets.

In cases in which the insolvency procedures also include liquidation of a company’s assets the court announces that the insolvency procedures have been completed once the amounts obtained by way of the bankrupt estate liquidation have been divided up and distributed and the creditors’ claims have been met.

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.

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 court enforcement officer.

A bankruptcy trustee is a person that manages the estate of a commercial entity that has been declared bankrupt, and 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 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 competent 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 is competent to hear relevant cases. If the debtor does not have a business enterprise within the Republic of Poland the competent court shall be the court with jurisdiction over 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 competent court shall be 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.

Administrative procedures

Bankruptcy proceedings: a step-by-step guide

BANKRUPTCY PROCEEDINGS

A bankruptcy petition may be filed by the debtor or any creditor. The court secures the debtor’s assets ex officio if the bankruptcy petition is filed by the debtor; otherwise, the debtor’s assets are secured on request.

The court may convene the first meeting of creditors in order to determine the way the bankruptcy proceedings shall be conducted, arrange voting for members of the creditors’ committee and conclude an arrangement of creditors. An arrangement of creditors may be concluded at the first meeting of creditors if at least one half of the creditors is present and their receivables amount to 3/4 of total liabilities of the debtor.

The court issues a decision on declaring bankruptcy and summons the bankrupt entity’s creditors to notify their receivables. The decision is announced by posting it in Court and Commercial Gazette (Monitor Sądowy i Gospodarczy) and in a local daily.

When the receivable notification deadline expires, a list of receivables is drawn up which may be reviewed by any interested party in the court office. Any creditor or bankrupt entity may file an observation against the list.

In case of bankruptcy comprising liquidation of the debtor’s assets, the bankruptcy trustee makes a list of inventory, values the bankrupt estate and prepares a liquidation schedule, in which suggested ways of the asset sale are determined; then the bankrupt estate is liquidated.

The amounts obtained from the sale of the bankrupt estate create a fund from which - according to the distribution schedule - creditors’ claims are satisfied in a sequence resulting from allocation to particular categories. When the distribution schedule is fulfilled, the court decides on completion of the bankruptcy proceedings.

If the court declares bankruptcy with the option of an arrangement with creditors, its provisions stipulate the manner of company reorganisation (such as, in particular: deferral of liability settlement; debt repayment by instalments; reduction of debts; conversion of receivables into stock/shares; modification, exchange or waiver of a right securing a particular receivable).

The arrangement may also provide for satisfying creditors’ claims by liquidating the assets of the bankrupt entity. The liquidation is completed pursuant to provisions of the Act on the bankrupt estate liquidation unless it has been stipulated otherwise in the arrangement with creditors.

If the parties fail to conclude an arrangement, the court changes the proceedings with the option of an arrangement with creditors into proceedings comprising liquidation of assets of the bankrupt entity.

When the arrangement with creditors is accepted, the court issues a decision on completing the bankruptcy proceedings; if a liquidation arrangement is concluded, a decision on completion of the bankruptcy proceedings shall be issued upon actual liquidation being completed.

REHABILITATION PROCEEDINGS

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 shall also include:

  • first name and 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 partnership or legal entity and liquidators, if appointed, and also, in case of a partnership, first names and surnames and places of residence of the partners responsible for the partnership’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 a debtor is a company entered into a relevant register, a certificate or a declaration on the register entry shall be appended to the motion; the certificate or declaration shall include the debtor’s name or commercial name, legal form, seat, and number in the register; the declaration shall be made under penalty of perjury;
  • a declaration stating that it is not a business entity which already completed rehabilitation proceedings if it has been discontinued before the lapse of less than 2 years; which has already been a party to an arrangement with creditors concluded in rehabilitation or bankruptcy proceedings, if the arrangement has been completed before the lapse of less than 5 years; 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 declaration and the data 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 individual assets with information as to their estimated value; 
  • a balance sheet drawn up for the purpose of the proceedings as on a day falling no later than thirty days prior to the day the motion is filed;
  • a list of creditors stating their addresses and amounts of receivables due to each of them, and the dates the receivables 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 receivables or other debts made during the six months preceding the day the motion is filed; 
  • a list of entities that have material liabilities towards the debtor, with their addresses and descriptions of liabilities, 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 mortgages, pledges, registered pledges and treasury pledges over the debtor’s assets, as well as encumbrances of other kinds which are subject to registration in a land and mortgage register or other 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 partnership or legal entity and liquidators, if appointed.

The court decision

Within 14 days as of declaration being made, the court may forbid initiation of rehabilitation proceedings, if the declaration violates relevant regulations, or the data or statements contained therein or in the documents attached are incorrect.

Help & advice

Help & advice

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