WHAT TO DO WHEN YOUR POLISH BUSINESS PARTNER IS INSOLVENT?
HERE YOU’LL FIND SOME TIPS AND INFORMATION WHAT TO DO, AND WHEN TO DO IT.
INSOLVENCY IN POLAND – PRACTICAL TUTORIAL
If:
➢ the Polish company is your debtor
➢ you have become aware of or have a reasonable suspicion that the company is in financial difficulties and there is a risk that it is insolvent or even at risk of insolvency
You should do it immediately:
➢ Check whether the debtor has taken any action in relation to the situation, e.g. initiated restructuring or bankruptcy proceedings
➢ Find out whether he recognises the claim or disputes it (e.g. the debtor will recognise it as being time-barred or offset against the debtor’s claim)
Remember! – the most important thing is to react quickly !
I. RESTRUCTURING:
What can you do when you find out about the restructuring of your debtor?
➢ Ask your debtor to confirm their accounting balances
➢ Ask the court supervisor/manager who has been appointed in the restructuring proceedings in question for this matter
➢ Read the list of creditors drawn up by the debtor attached to the application to open restructuring proceedings – and make sure that your claim is on the list.
Remember! The restructuring application and attachments are available to creditors in the court that opened the restructuring proceedings.
INVENTORY
In restructuring proceedings – unlike in bankruptcy proceedings – creditors do not report their claims. The receivables of individual creditors are determined on the basis of the debtor’s books or other documents, or entries in the land and mortgage registers, and then placed in the so-called inventory of receivables. So – what next: If your claim is included in the debtor’s financial documents, it should automatically be included in the list of claims – but you should check it! If your claim is not included on the list of claims, you have the right to object.
Remember! Information regarding preparation of a list of receivables is published in Monitor Sądowy i Gospodarczy (MSiG). The list of receivables can be examined in court by reviewing the files of restructuring proceedings.
The inventory – why is this so important? Including your claims in the debt list gives you the right to take part in and exercise your rights in the restructuring procedure, e.g. to vote ‘for’ or ‘against’ the arrangement with the debtor, and even, in some cases, to make ‘own’ arrangement proposals or appoint a representative of the creditors’ council to represent your interests in the procedure.If your claim is not on the list and you object: The court may take it into account and the omitted claim will be included in the list of claimsThe objection must be submitted within the prescribed period, otherwise the Court will reject it.
Remember! The list of claims may also be supplemented if the creditor has a final judgment against the debtor (e.g. a final judgment of the Court planting money from the debtor in favour of the creditor).
THE ARRANGEMENT OF THE DEBTOR WITH CREDITORS
The restructuring procedure should lead to an agreement between the debtor and its creditors, which should lead to satisfaction of the creditors Arrangement proposals are prepared in advance and regulate the way in which the debtor’s liabilities are to be restructured, such as postponing the deadlines for the performance of those liabilities, spreading their repayment in instalments or their redemption, and sometimes even liquidation of the debtor’s assets The creditors decide whether to accept or reject the arrangement proposals, but the arrangement has yet to be approved by the Court If the arrangement is not accepted, the procedure will be terminated.
Remember! Information about the creditors’ meeting is published in the MSiG, and the creditors included in the list of claims will also receive a letter with information about convening a creditors’ meeting to vote on the arrangement, which is accompanied by a voting card and proposals for the arrangement.
II. BANKRUPTCY PROCEDURE
The filing of an application by one of the following is necessary to initiate proceedings:
➢ the debtor
➢ a creditor, so you can also make such a request.
Bankruptcy proceedings may be conducted against a company or a person who is no longer able to pay its debts and has therefore become insolvent – has lost the ability to meet its maturing pecuniary obligations.It is conducted in order to allow the creditors of the insolvent debtor to collectively pursue claims. As a result of bankruptcy, a debtor loses the right to manage, use and dispose of his assets. Debtors`s assets are sold off in these proceedings. Such assets constitute a bankruptcy estate which, after liquidation, will enable the creditors to satisfy their claims.
Remember! A filing to the court is necessary to initiate bankruptcy proceedings.
LIST OF RECEIVABLES
What you have to do:
➢ For a claim to be on the list of claims, you must report it to the judge commissioner.
➢ The notification of the claim should meet certain legal requirements. At this stage, you must also provide any evidence that indicates the existence of the claim and its amount. If the authority considers the declaration of the claim to be insufficiently substantiated, it will not include the claim in the list of claims.
➢ If your claim is not included in the list, you have the right to object to the refusal to recognise the claim.
Remember! In the course of bankruptcy proceedings, claims due from the debtor are satisfied in accordance with a list of claims drawn up and approved by the court.
TERMINATION OF PROCEEDINGS
The proceedings are concluded by satisfying from the so-called creditors’ bankruptcy estate fund (in whole or in part – depending on the amount of funds obtained in the course of the proceedings), taking into account the order of satisfaction arising from regulations. Termination of insolvency proceedings does not always mean the dissolution of the debtor’s enterprise and striking from the register. In certain cases it is possible to enter into an arrangement with creditors. In such a case, the debtor, having satisfied the creditors, may continue the business.
Remember! The real advantage of bankruptcy is that the list of claims drawn up by the trustee and then approved by the judge- commissioner is an enforcement title against the bankrupt. It is a simplified form for creditors to pursue their claims, as they no longer have to direct the case personally to the commercial proceeding.
Would you like to learn more? have you additional queries regarding this procedure or your particular case?
Please do not hesitate to contact us.
Hubert Czapiński – CEO
Robert Mikulski – Managing partner
