Bankruptcy is the process of satisfying creditors’ claims by means of liquidation of a debtor’s assets by a court-appointed official receiver. This is where, as a rule, business activity is wound up and any assets remaining are used to pay off the creditors. This is the final stage of the life cycle of an enterprise, emerging when any previous attempts to rescue it have failed.
Enforcement of receivables is an essential part of trade. Most frequently, it is initiated after a successful court case, but the largest problems may arise at the stage of claim satisfaction. As disputes with debtors are often inevitable, it is crucial to duly secure one’s claims, so that the debtor has no time or opportunity to conceal or dispose of their assets. Claims against third parties that have been involved in such disposal of assets are not uncommon (e.g. fraudulent conveyance claim). This branch of law requires vast expertise, ingenuity and patience.
Operation of a commercial company requires compliance with a number of legal, accounting and tax requirements. Assistance of experts minimises the risk of making a mistake or committing an error that could put a company at risk as well as facilitates day-to-day management of an enterprise. Even a small sum allocated in legal counselling may contribute to greater security or claim satisfaction rate in future.
A new notion in Polish law (in force since 1 January 2016), restructuring is a chance to save an undertaking and carry on one’s business activity. It grants the debtor a significant level of protection for their undertaking throughout the proceedings. It includes four procedures that help creditors and debtor reach an agreement and reduce the debt of the of the latter’s enterprise, saving it at the same time. These are: composition approval proceedings, accelerated composition proceedings, composition proceedings and remedial proceedings. The choice of the type of proceedings depends on the scale of enforcement risk and creditors’ attitude towards he idea of restructuring.
The objective of developer’s bankruptcy is to combine promotion of creditors’ interests with protection of a real estate developer’s customers – buyers of apartments. Developer’s bankruptcy used to mean a disaster for those of its customers who had not signed purchase deeds by the time of its bankruptcy. Now it is possible for a developer to complete a construction project and satisfy its creditors, and for the official receiver to transfer new properties to the buyers.
If the owner sees no possibility of saving their business on their own and is not capable of reaching an agreement with creditors, but knows an investor who is willing to help, they have an option of entering a pre-packaged bankruptcy. The aim is to satisfy one’s creditors in the course of the bankruptcy process and, at the same time, to rescue debtor’s business, which will pass into the investor’s hands.
The fastest growing branch of bankruptcy, it offers a second chance to all who have been overwhelmed by debts. Its objective is to give consumers an opportunity to reduce their debts and open a new chapter in their lives. Courts and official receivers help debtors start afresh, taking care so that this new beginning is not to the detriment of creditors, should bankruptcy result from wilful misconduct or gross negligence of the debtor. No situation is a complete dead-end, and consumer bankruptcy is supposed to provide a solution to problems with debts.
According to both Polish and EU provisions, an entrepreneur from one EU country may be declared bankrupt in another Member State if that is where their centre of main interests is. A debtor that has assets in many countries may go bankrupt in any one of them; nevertheless, their creditors may apply for the institution of secondary bankruptcy proceedings in other countries. It all comes down to a very subtle art of reconciling different legal frameworks and protecting creditors in many countries at the same time.
The market is much more than bankruptcy and restructuring. The world thrives on transactions. Proper preparation before conclude an agreement or consultations prior to a decision important for the company may protect it from adverse effects of such a decision if the transaction entails any problems. Any actions planned need to be properly reviewed, as consulting day-to-day activities with a lawyer guarantees greater security.
The function of company representative (most often exercised by members of the management board) entails liability for any debts that the company itself fails to repay. Prudent governance consulted with specialists may serve as protection against liability not only for commercial debts, but also for public receivables. Your conduct when faced with financial problems of your companies may lead to board members or representatives being either held liable by creditors, or protected against them.
Much of our legal practice focuses on court disputes. Our vast expertise allows us to pursue claims, e.g. fraudulent conveyance claims or claims for damages, with greater efficiency. Support from competent lawyers is the key to success for those who seek satisfaction of their claims, or on the contrary: protection against claims of other parties.