Pursuant to Article 586 of the Commercial Companies Code, anyone who, as a member of the management board or liquidator, fails to file a bankruptcy petition for a commercial company despite the existence of conditions justifying bankruptcy under applicable law, subject to a fine, restriction of liberty, or imprisonment for up to one year . Failure to submit a petition on time is also punishable. Only a member of the management board or liquidator will be subject to criminal liability. It is inadmissible to extend liability for this offense to a proxy or the person actually managing the company.
The period of committing this offence begins on the first day, after 30 days from the occurrence of conditions justifying the bankruptcy of the company, and ends when a member of the management board or liquidator files a motion to declare the company bankrupt, the conditions justifying bankruptcy cease to exist or the perpetrator loses the status of a member of the management board or liquidator.
A state of insolvency occurs when:
a) the debtor has lost the ability to perform his due pecuniary obligations if the delay in performing the pecuniary obligations exceeds three months ;
b) the pecuniary obligations of the debtor exceed the value of his assets and this situation persists for a period exceeding twenty-four months.
A debtor's monetary liabilities exceed the value of its assets if, according to its balance sheet, its liabilities, excluding provisions for liabilities and liabilities to related parties, exceed the value of its assets, and this situation persists for a period exceeding twenty-four months. These conditions are independent of each other, and it is sufficient for one of them to be met. The loss of capacity to meet obligations must be permanent, meaning that the debtor not only fails to pay its debts currently but also will not do so in the future due to a lack of necessary funds. A short-term inability to settle its due monetary obligations does not constitute grounds for bankruptcy. Undue liabilities are not taken into account. There is dispute in case law whether expected revenues from the company's contractors should be taken into account. Temporary, balance sheet changes in the company's assets have no impact.
A petition must be filed no later than 30 days from the date on which the grounds for declaring bankruptcy arose. The petition must be filed with the district court, bankruptcy and restructuring division, in the jurisdiction where the company's registered office is located. Filing the petition requires payment of a fixed fee of PLN 1,000. A petition for declaring bankruptcy may be filed by anyone authorized to represent the company, either individually or jointly with other persons.
A management board member will only avoid liability under Article 586 of the Commercial Companies Code if the application is properly filed and within the required deadline. Submitting an application that is rejected or contains formal deficiencies does not protect against criminal liability. A management board member will be liable for any damage caused by failure to file the application within the statutory deadline, unless they are not at fault. This offense can only be committed intentionally, with direct or eventual intent. An act with eventual intent can be attributed to the perpetrator if, being aware of the disclosure of the reasons for bankruptcy, they failed to comply with the filing obligation, hoping for an improvement in the debtor's financial condition and, in the risk of overcoming an unfavorable economic situation, they factored in the possibility of exceeding the 30-day deadline for filing bankruptcy.
For this offense to be met, there does not need to be damage or a real and concrete risk of damage to creditors . Exhaustion of the elements of this offense does not result in a presumption that creditors were harmed . However, if it is found that the offense caused damage, this will impact the assessment of the degree of social harm of the act and, subsequently, the penalty. Liability will be borne by all persons serving as a member of the management board or liquidator during that period. In the case of a multi-person management board, culpability should be assessed individually. In this respect, the division of powers introduced within the management board will be relevant . In partnerships, where there is generally no management board (the exception being a professional partnership, where a management board may be appointed), liability under Article 586 of the Commercial Companies Code will not apply, subject to the aforementioned exception. According to current case law, a management board member or liquidator taking up a position should file a bankruptcy petition within 14 days of taking up the position if there were grounds for filing a bankruptcy petition at the time he took up the position.
A prerequisite for exonerating liability will be, among other things, the management board member demonstrating that restructuring proceedings were initiated within the appropriate timeframe or that an arrangement was approved in the arrangement approval proceedings. To attribute liability to management board members under Article 586 of the Commercial Companies Code, demonstrating a condition justifying the filing of a bankruptcy petition is not sufficient; it is also necessary to demonstrate the state of mind of the perpetrator – the management board member. A situation where the grounds for declaring bankruptcy were not met, and the management board member remained convinced that they were not, may lead to exclusion of liability. The court may dismiss a bankruptcy petition if there is no threat of the debtor losing the ability to meet its due financial obligations in the near future.
Anyone who decides to serve as a management board member must be aware that missing the deadline for filing a bankruptcy petition constitutes a serious offense with potentially severe consequences. Therefore, we recommend regularly analyzing the company's financial situation. It's also worthwhile to utilize the knowledge and experience of our lawyers, who will help you determine when to file a bankruptcy petition, prepare a bankruptcy petition that meets statutory requirements, and represent the company before the bankruptcy court.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of February 8, 2023
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