Company Insolvency
Corporate insolvency proceedings are a process aimed at the liquidation of assets in order to maximise recoveries for creditors and to terminate the activity of the entity (in the case of legal persons and unincorporated entities), and in the case of natural persons – to obtain debt relief.
In the case of companies, insolvency proceedings primarily involve identifying, securing and realising the debtor company’s assets in order to maximise recoveries for creditors’ claims. The process is conducted under the supervision of the insolvency court and a court-appointed bankruptcy trustee administering the insolvency estate.
What are insolvency proceedings concerning a debtor company?
Contrary to common belief, insolvency proceedings are not optional. A company that becomes insolvent is required to file a petition to open insolvency proceedings with the competent insolvency court within 30 days.
In general, corporate insolvency proceedings involve identifying the debtor company’s assets, securing them and realising them in order to maximise recoveries for creditors’ claims.
The entire process takes place under the supervision of the insolvency court and a court-appointed bankruptcy trustee, who administers the assets forming part of the insolvency estate.
After completion of the proceedings, legal persons and unincorporated entities cease their operations. In the case of natural persons, discharge of remaining liabilities may be granted upon submission of an application within 30 days from publication of the decision confirming completion of the proceedings.
What is a petition to open corporate insolvency proceedings?
A petition to open corporate insolvency proceedings must be accompanied, among others, by: a list of assets together with an estimated valuation, financial statements, a list of creditors, and other information, documents and declarations required by statutory provisions.
The petition must be submitted via the ICT system — the National Register of Debtors (KRZ).
The petition is subject to strictly defined requirements described in detail in the Bankruptcy Law.
Timely and correct submission of the petition is particularly important in the case of legal persons. Members of the management board of legal entities bear civil liability for damages as well as criminal liability for late submission of a petition to open insolvency proceedings. This means that, in specific circumstances, members of the management board may be held liable for the obligations of the company (legal person) if they fail to submit a petition to open insolvency proceedings within the statutory time limit.
A petition to open insolvency proceedings filed with the competent bankruptcy court initiates corporate insolvency proceedings.
During these proceedings, prior to the declaration of insolvency, the court may secure the debtor’s assets by appointing a court-appointed interim supervisor. Apart from exercising ongoing supervision over the debtor company’s activities, the court-appointed interim supervisor examines the company’s financial situation and determines whether the statutory grounds for opening insolvency proceedings have been met.
Only after the court has granted the insolvency petition do formal corporate insolvency proceedings commence, at which point a bankruptcy trustee is appointed and assumes administration over the assets of the bankrupt enterprise.
What are the grounds for filing a petition for a declaration of corporate insolvency proceedings?
The primary ground for filing a petition for a declaration of corporate insolvency proceedings is failure to meet obligations towards creditors.
Under the Bankruptcy Law, a company is deemed insolvent if the delay in payment of liabilities exceeds three months.
This means that if delays in the payment of lease instalments, loan instalments, taxes or contribution‑related liabilities exceed three months, the entrepreneur may be considered insolvent.
Case law concerning insolvency of enterprises is highly rigorous. It is often assumed that even persistent failure to satisfy obligations towards a single creditor may indicate that the debtor company is insolvent.
Another indication of insolvency exists where an entrepreneur being a legal person or an organisational entity without legal personality has liabilities exceeding the value of its assets and this condition persists for longer than 24 months. In the case of companies, it is therefore necessary to monitor the level of liabilities so that the value of liabilities recorded in the balance sheet does not exceed the value of assets for a period exceeding 24 months.
In general, bankruptcy is declared in relation to a debtor company that has become permanently insolvent.
How can we help you?
As experienced restructuring advisors conducting numerous corporate insolvency proceedings, we are familiar — both from a formal and practical perspective — with all aspects enabling the proper initiation, conduct and completion of corporate insolvency proceedings.
Our support includes:
- Economic and legal analysis of the enterprise
RBBC conducts a detailed analysis of the legal and economic situation of the enterprise, which allows for a better understanding of the scale of financial difficulties and the preparation of an individually tailored course of action.We also examine whether there is a risk of personal liability of members of the management board and whether there is a risk that certain actions may be declared ineffective with respect to the insolvency estate. - Preparation of a petition to open insolvency proceedings
We prepare complete petitions for the opening of insolvency proceedings together with all required documentation. Where preparation of financial documentation is necessary, we provide guidance and support to the company’s accounting department.Apart from fulfilling formal requirements, it is necessary to provide a detailed description of the enterprise’s situation in the petition, which facilitates further cooperation with the bankruptcy trustee, the bankruptcy court, and the judge‑commissioner.It is also necessary to describe the causes of insolvency. This makes it possible to reduce the risk of creditors initiating claims for payment against members of management boards of companies. - Representation in proceedings concerning the opening of insolvency proceedings
We conduct ongoing correspondence with the insolvency court and the court-appointed interim supervisor.
We provide necessary explanations, participate in inspections and prepare documentation at the request of the insolvency court or the interim supervisor.RBBC has repeatedly been appointed as a court-appointed interim supervisor and has extensive experience in proceedings concerning the protection of debtor companies’ assets.We provide support from the very beginning of insolvency proceedings until their completion, ensuring that our clients maintain full knowledge and control over the course of the proceedings. - Representation during insolvency proceedings
We represent the debtor company in contacts with: the bankruptcy trustee, the judge‑commissioner, and the insolvency court.We prepare required submissions, monitor the progress of proceedings on an ongoing basis and provide necessary information to our clients.We provide practical and commercially focused guidance throughout the proceedings. - Preparation of an application for allocation of funds to satisfy housing needs
Natural persons involved in corporate insolvency proceedings are entitled to apply for allocation of funds to satisfy housing needs from the proceeds obtained from the sale of their single‑family house or residential premises.This amount corresponds to the average rent for residential premises adequate to satisfy housing needs and is granted for a period of up to 24 months.RBBC’s activities include verification of the deadline for submitting such an application, preparation of a complete application together with documentation, and representation before the judge‑commissioner and the bankruptcy trustee. - Preparation of an application for establishment of a creditors’ repayment plan and discharge of remaining liabilities or discharge of liabilities without establishing a creditors’ repayment plan
An individual debtor is entitled, after completion of bankruptcy proceedings, to submit an application for the establishment of a creditors’ repayment plan and discharge of the remaining part of their liabilities, or for discharge of liabilities without establishing a creditors’ repayment plan.The application should include a description of the causes of insolvency, the current financial situation (income obtained and living expenses), and a proposed duration and scope of repayment of liabilities.In specific circumstances, the individual debtor may apply for discharge of liabilities without establishing a creditors’ repayment plan.
RBBC’s support includes preparation of an application for establishment of a creditors’ repayment plan or discharge of liabilities without establishing a creditors’ repayment plan, completion of documentation and preparation for the hearing.
Such an application is currently obligatorily examined by the court during a hearing.
Our support also includes representation and assistance during the hearing concerning the establishment of a creditors’ repayment plan or discharge of liabilities.
Thanks to extensive experience in representing debtor companies, as well as acting in the capacity of a bankruptcy trustee and a court-appointed interim supervisor in proceedings, RBBC specialists effectively and precisely support enterprises that are insolvent and intend to file a petition to open insolvency proceedings.
Our specialists are responsible not only for the formal preparation of documentation required for a bankruptcy petition, but also for conducting a thorough economic and financial analysis of the enterprise’s situation.
Professional representation and advisory services provide debtor companies with the opportunity to make a timely and properly informed decision regarding the submission of a bankruptcy petition initiating insolvency proceedings. This is particularly important in situations where there is still a possibility to conduct restructuring proceedings. In such cases, RBBC specialists present alternative solutions that may enable the continuation of business operations and the repayment of liabilities. A bankruptcy petition initiating insolvency proceedings should therefore not be filed prematurely.
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What documents should be prepared when filing a petition to open insolvency proceedings in respect of a debtor company?
When preparing a petition to open insolvency proceedings, it is necessary to collect and attach the following documents:
- a current list of asset components,
- the company’s balance sheet,
- a list of creditors together with their contact details and the amount of liabilities,
- statements concerning repayments made towards claims and other liabilities,
- a list of entities towards which the debtor has financial obligations,
- a list of enforcement titles and writs of execution issued against the debtor,
- information on pending proceedings concerning the establishment of security over the debtor’s assets (e.g. pledges, mortgages).
Collecting the above documentation is essential for the proper examination of the petition by the insolvency court.
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Where can information concerning submission of offers be found?
All current announcements together with regulations concerning the submission of offers are available on the dedicated webpage: Trustee’s Sale Announcements
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Where can the status of a case or information about proceedings be checked?
Information regarding the status of a case and the course of restructuring and insolvency proceedings can be verified in the National Register of Debtors (KRZ), available at: https://prs.ms.gov.pl/krz.