Changes in the Bankruptcy and Composition Law 2016

On January 1., 2016, the new act of May 15., 2015 - Restructuring Law, came into force. It contains changes to the currently effective Bankruptcy and Composition Law. Thereby, on one hand regulations governing resolution (repair) procedures and arrangements with creditors have been excluded from Bankruptcy and Composition Law and transferred into a separate legal act, and on the other hand – the trimmed-down version of the Bankruptcy and Composition Law, which from now on will bear the title “Bankruptcy Law”, has changed substantially.

One of the more substantial changes is the extension of the time limit to file for bankruptcy from two weeks to one month. The extension of the time limit is aimed to make the debtor’s obligation to file for bankruptcy more viable, taken into account that filing a complete bankruptcy petition requires not only preparing its substantial content, but also properly arranging and organizing attachments to the petition, i.e. relevant documents and financial statements that justify filing for bankruptcy, but above all – making the decision on whether to file for bankruptcy or – from January 1., 2016 – for one of the restructuring proceedings. Judgments of the Polish Supreme Court regarding the matter clearly indicate that a bankruptcy petition remitted due to deficiencies observed by the Court does not have legal effect; in particular  - it does not constitute a condition under which a debtor would be released from liability in case creditors would pursue claims against his board members. 

In case a person who is responsible for filing for bankruptcy has been appointed to their post after the creditor has become insolvent, the bankruptcy petition shall be filed within 30 days from the date on which they take up their duties. 

In the light of the explanatory memorandum to the act of May 15, 2015 (Parliamentary Print No. 2824, the Sejm [Parliament] of the VII term), another change to the Bankruptcy and Composition Law, made pursuant to art 20 section 2 point 2 and article 21 section 21 point 2, is aimed to eliminate any ambiguity regarding the right of company proxies to file for bankruptcy. As it stems from the literal wording of the legal provisions mentioned above, persons entitled (and obliged) to file for bankruptcy of a company entered into the National Court Register are – apart from the Management Board – liquidators and curators appointed pursuant to the provisions of the Act on  the National Court Register. After the amendments, as with the previous regulations, company proxies are not among persons obliged to file for bankruptcy. 

The new Restructuring Law gives a debtor the possibility to choose one of four ways in which an agreement with creditors can be reached, depending on the severity of risk of bankruptcy (i.e. agreement procedure, accelerated arrangement procedure, arrangement procedure, recovery procedure).

It shall be taken into account that, in principle, the provisions of the amended legal act will be applicable to bankruptcy petitions filed after the legal act enters into force.

Should you be interested in our support regarding procedures resulting from the legal provisions that will soon enter into force, we would be pleased to be of help.