1. When are you declared bankrupt?
In Poland, the matter of bankruptcy of debtors is specified in the Bankruptcy Law (the Act of 28 February 2003 with amendments). According to this Act, the bankruptcy is declared against a debtor who has become insolvent. A debtor shall be insolvent if he has lost the ability to fulfill his matured pecuniary liabilities. Debtor shall be presumed to have lost the ability to fulfill his matured pecuniary liabilities when the delay in fulfilling the pecuniary liabilities is in excess of three months. Moreover, a debtor which is a legal person, or an organizational unit without legal personality upon which a separate Act confers legal capacity, shall be insolvent also where its pecuniary obligations are in excess of the value of its assets, and this state of facts persists throughout a period exceeding twenty four months. A bankruptcy petition may be filed by the debtor or any of his personal creditors and other entities listed in the Act.
2. How long does it take to process a petition for bankruptcy?
The debtor shall, no later than within thirty days from the day on which grounds for the declaration of bankruptcy arose, file a bankruptcy petition with the court. There is no fixed date for the court to process the application. The duration of this process depends on the court proceedings, for example, if the petition does not contain any formal mistakes, the handling of the bankruptcy petition may be shortened.
3.What can you do if you disagree with the bankruptcy order by the court?
After proceedings, the court issues a ruling on the declaration of bankruptcy. This ruling is effective immediately upon its issuance, and not from the moment of legalization. But pursuant to the Act, the ruling on the declaration of bankruptcy, may be complaint against to the court of second instance. The time limit for submitting a complaint is weekly and counts from the date of delivery of the decision issued at a closed session. In the case when it was issued at the hearing – from the date of delivery of the order together with the justification, on the request submitted within 7 days from the announcement of the decision at the hearing. The court of second instance has the power to change the decision on bankruptcy and: dismiss or reject the petition, as well as discontinue the proceedings in the matter. A second-instance court can not adjudicate on the declaration of bankruptcy. Filing a complaint against a decision on bankruptcy does not affect the rights of the trustee and the judge-commissioner.
4. What happens if you are declared bankrupt?
The bankrupt shall disclose and surrender to the trustee all his assets and deliver up documents relating to his activities, assets and settlements, including without limitation books of account, other records maintained for tax purposes, and correspondence. Then, the bankrupt is obliged to confirm the discharge of this duty in the form of a written statement submitted to the judge-commissioner. As of the issuing date of the declaration of bankruptcy, the bankrupt’s assets shall become the bankruptcy estate from which to satisfy creditors of the bankrupt and the bankrupt shall forfeit the right of administration and the freedom of enjoyment and control of the property included in the bankruptcy estate. The trustee will then sell all the assets and distribute the proceeds in accordance with the legal rules.
5. What duties and powers does the trustee have?
When the court issues a ruling on the declaration of bankruptcy, he designates a trustee and a judge-commissioner in it and then notify them about the declaration of bankruptcy. The role of the trustee is to sell all the assets of the bankrupt at the highest possible price and to distribute the obtained amount correctly to the creditors in the manner prescribed by law. To secure the assets, the trustee may enter into a contract with an enterprise that deals with professional protection. He also draws up an inventory and estimates the bankruptcy estate, draws up a liquidation plan in which he proposes ways to sell assets, an estimate of expenses and a sales plan. He also makes a list of claims. He divides sums obtained from the sale. In matters relating to the bankruptcy estate, he always performs acts on behalf of the bankrupt. The trustee takes the necessary steps to disclose the decision on bankruptcy in the land and mortgage register and in other registers to which the property is entered. He is also responsible for publication of the declaration of bankruptcy and simultaneous notification of the creditors. He additionally reports on the value of the commitment that the bankrupt must bear. The trustee is obliged to submit to the judge-commissioner, at times fixed by him but at least every three months, his work report and a substantiated statement of accounts. The remuneration of the trustee shall be set as the sum of five component parts and also depends on the value of the assets. The trustee shall act with due diligence, in a manner enabling optimum utilization of the debtor’s assets in order to satisfy creditors to the greatest possible extent, in particular by minimizing the costs of proceedings.
6. What kind of obligations do I have as a bankrupt?
The bankrupt has several statutory obligations. The bankrupt is obliged to disclose and surrender to the trustee all his assets and deliver up documents relating to his activities, assets and settlements, including without limitation books of account, other records maintained for tax purposes, and correspondence. The bankrupt shall confirm the discharge of this duty in the form of a written statement submitted to the judge-commissioner. He shall also furnish the judge-commissioner and trustee with all required explanations concerning his assets. The judge-commissioner may rule that the bankrupt who is a natural person not leave the territory of the Republic of Poland without his permission.
7. How can I monitor the progress of the bankruptcy?
The bankruptcy order is announced in the official gazette Monitor Sądowy i Gospodarczy, that everybody can find one the website: https://ems.ms.gov.pl/msig/przegladaniemonitorow . Also, in connection with the implementation of the EU directive, Central Restructuring and Bankruptcy Register should be created, but for this moment, the Register has not been created yet. Also, a ruling on the appointment of trustee is always announced, thus, the information about this person is given to the public. So that both, the debtor and the creditors, have the possibility of direct contact with the trustee.
8. How long does a bankruptcy last?
Pursuant to the Act, the court shall issue a ruling in the matter of the declaration of bankruptcy within two months of the day of filing the application. But this term is only instructional, not binding, which means that this procedure usually lasts longer. However the bankruptcy does not have a fixed term of duration and usually ends after selling all the assets or due to insufficient finances to pay off all the creditors.
9. Can I make arrangements with my creditors?
In bankruptcy proceedings it is possible to conclude an arrangement. Arrangement proposals may be submitted by the bankrupt, a creditor, and the trustee. After agreeing the conditions of the arrangement, the judge-commissioner convenes the meeting of creditors in order to vote on an arrangement (if it has been credibly established that the arrangement will be adopted by the creditors and performed). The meeting of creditors shall be convened after approval of the list of receivable debts. After valid approval of the arrangement, the court shall issue a ruling on completion of the proceedings.
10. How can an employee collect outstanding salary from his bankrupt employer?
After the bankruptcy of the employer is announced, the employee has limited possibilities to receive unpaid benefits. Issues related to the protection of employee claims in the event of insolvency of the employer are regulated by the Act of 13 July 2006 on the protection of employee claims in the event of the employer’s insolvency. It introduces a special mechanism for satisfying employee claims in the event of employer’s insolvency from the funds of a specially created fund – the Guaranteed Employee Benefits Fund. Also the trustee discharges duties set forth in the aforementioned Act. Resources transmitted from the Employees’ Guaranteed Benefits Fund shall not be included in the bankruptcy estate and they shall not serve to satisfy creditors other than those entitled to collect the same (article 177 of the Act). After receiving resources from the Fund, the trustee should immediately pay the outstanding benefits to the employees, at the same time discharging social insurance contributions and advance payments for income tax.
11. What important advice can be given to a company director in the event of imminent bankruptcy?
It is necessary to maintain an order in documentation and all administration. The company’s directors or owners must keep up to date with all the financial matters. It is also important to file a petition of bankruptcy in the time limit, set forth in the Act. The debtor is obliged, no later than within thirty days from the day on which grounds for the declaration of bankruptcy arose, file a bankruptcy petition with the court. In case the debtor fails this obligation, the company’s represents may be liable for any damage that may arise through the failure to file the petition within the time limit. For example, in Polish Companies Code, when it comes to limited liability company, where execution against the company proves ineffective, the members of the management board shall be liable jointly and severally for the obligations of the company.
12. Is there a special arrangement for a private person who is in danger of going bankrupt?
Consumer bankruptcy is nothing more than court proceedings for individuals who do not run a business and become insolvent. A bankruptcy petition may be filed by the debtor. This is a separate procedure, also regulated in the Bankruptcy Law. The court dismisses a bankruptcy petition if the debtor led to its insolvency or has substantially increased its degree intentionally or as a result of gross negligence. When granting a bankruptcy petition, the court issues a ruling on the declaration of bankruptcy. The judge also designates a judge-commissioner and trustee. Following the declaration of bankruptcy, the whole of the consumer’s property becomes the bankruptcy estate managed by a court-appointed trustee – this means that the consumer can not freely dispose of his property. The trustee draws up an inventory of the assets of the bankrupt estate, and then proceeds to sell the assets of the bankrupt consumer – but this does not apply to the first-aid items needed for everyday life. Natural persons who do not run a business also have the option of entering into an arrangement with creditors, if it becomes probable that the objectives of the proceeding will be achieved by way of an arrangement