Following the outbreak of the COVID-19 pandemic, many businesses faced financial difficulties. As a result of the restrictions put in place to slow down the development of the pandemic, some sectors of the economy came to a complete halt. Initially, experts indicated that the most serious economic consequences would affect the tourism industry. However, there is no doubt that other industries have also felt or will feel the effects of the pandemic outbreak. The financial problems of some businesses may be so severe that they may result in the insolvency of individual operators. The development of the pandemic and a ‘second wave’ of illnesses may create a risk of bankruptcy for those operating in the market.
What circumstances must therefore exist for the filing of a corporate bankruptcy petition to be justified and by what deadline must this be done? What happens if the obliged entities do not file for bankruptcy in time? And finally, have the rules regarding the obligation to file for bankruptcy changed due to the COVID-19 pandemic? The answers to these questions can be found in the article below.
When is there an obligation to file for bankruptcy
According to Article 10 of the Bankruptcy Law – bankruptcy is declared in relation to a debtor who has become insolvent. The legislator has specified that the state of insolvency of the debtor arises when the debtor loses the ability to perform its due monetary obligations. There is a statutory presumption that a debtor loses the ability to perform its due monetary obligations if the delay in their performance exceeds three months.
On the other hand, with regard to a debtor who is a legal person or an organisational unit without legal personality, to which a separate act grants legal capacity, a state of insolvency also arises when its monetary liabilities exceed the value of its assets and such state of insolvency persists for a period exceeding 24 months. The legislator has also provided for a presumption that a debtor’s monetary liabilities exceed the value of his assets if, according to the balance sheet, his liabilities exceed the value of his assets and such state of affairs persists for a period exceeding 24 months. However, provisions for liabilities as well as liabilities to related parties are excluded from this presumption.
The doctrine also points out that the insolvency of the debtor must be of a permanent nature, so that the economic situation of the debtor should in this case justify the conclusion that the debtor does not have and will not have in the future the ability to fulfil its obligations towards its creditors[1].
Whose responsibility is it to file for the insolvency of a commercial company and by what deadline must this be done
The obligation to file a bankruptcy petition with respect to legal persons and organisational units without legal personality, to which a separate act grants legal capacity, has been imposed by the legislator on any entity which, pursuant to the act, the articles of association or the articles of association, has the right to manage the debtor’s affairs and represent it, independently or jointly with other persons (cf. Article 21(2) of the Bankruptcy Law). The debtor is obliged to file such a motion no later than within 30 days from the date on which the grounds for declaring bankruptcy occurred.
In Article 586 of the Code of Commercial Partnerships and Companies, the legislator established a criminal offence consisting in the failure to file a bankruptcy petition for a commercial company by a member of the company’s management board or liquidator, despite the conditions justifying the company’s bankruptcy. Importantly, criminal liability under this provision is generally incurred by persons who are members of the management board, including the president of the management board. It should be added, however, that the offence of failing to file a bankruptcy petition against a commercial company despite the existence of grounds justifying the filing of such a petition may only be committed intentionally. At the same time, practice shows that the group of persons notifying the law enforcement authorities of the crime in question most often includes the aggrieved parties – creditors of the bankrupt, who can also enforce their rights through criminal proceedings.
As a side note, it should be noted that the Penal Code also contains a crime of so-called sham bankruptcy, whereby an entity which is a debtor to several creditors recklessly causes its bankruptcy or insolvency, in particular by squandering parts of its assets, contracting liabilities or entering into transactions that are obviously contrary to the principles of economy. The commission of these offences is often linked to each other.
Jaka kara grozi za niezłożenie wniosku o upadłość spółki handlowej pomimo wystąpienia przesłanek upadłości przewidzianych przepisami prawa?
In the event of failure to comply with the obligation to file an application for bankruptcy of a commercial company, management board members and liquidators expose themselves to criminal liability in the form of a fine, restriction of liberty or even imprisonment. Pursuant to the provisions of the Penal Code, a fine in the case of this type of criminal offence may in practice amount from several to even several hundred thousand zlotys, and the court adjudicating the case is also authorised to impose imp risonment .
Czy stan pandemii ma wpływ na uregulowania odnoszące się do obowiązku złożenia wniosku o ogłoszenie upadłości?
The solutions for filing a bankruptcy petition have been covered by the provisions of the Anti-Crisis Shield 2.0. According to the wording of Article 15zzra(1) – if the basis for declaring the debtor’s bankruptcy arose during the period in which the state of epidemic emergency or state of epidemic declared due to COVID-19 is in force, and the state of insolvency arose due to COVID-19, the period for filing a bankruptcy petition referred to in Article 21 of the Act of 28 February 2003. – Insolvency Law shall not commence and the period commenced shall be interrupted. Thereafter, the period shall run anew. If a state of insolvency has arisen during a state of epidemic emergency or a state of epidemic declared due to COVID-19, it shall be presumed to have arisen due to COVID-19.
In order to determine the obligation to file a bankruptcy petition, it is therefore crucial to determine whether the circumstances justifying its filing occurred during the period of the epidemic emergency or the state of epidemics declared due to COVID-19, and whether the insolvency of the entity in question is related to COVID-19. If the reasons for bankruptcy occurred during the state of epidemic emergency or the state of epidemics, and the insolvency is related to the effects of the pandemic, the 30-day period for filing a bankruptcy petition does not start, and the one that has started is interrupted. In such a case, the members of the board of directors and liquidators will not be criminally liable. However, these circumstances are only established in the course of ongoing criminal proceedings
[1] Art. 586 KSH ed. Jara 2020, 3rd ed./Czura-Kalinowska, Legalis.
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