And the risk does not only apply to the company. Members of the management board may be liable with all their assets, face criminal charges, and even be excluded from economic life for many years. In this article, we explain when the obligation to file for bankruptcy arises, what the consequences of ignoring it are, and when personal liability can be limited.

When and who is required to file for bankruptcy?

The obligation to file for bankruptcy arises when the debtor becomes insolvent – and must be fulfilled within 30 days from the date on which the grounds for bankruptcy arose. In the case of commercial companies, this responsibility does not lie with the company itself as an entity, but with the persons who represent it – most often the members of the management board. Regardless of the number of members of this body or the extent of their actual involvement in the company’s affairs, they have a statutory obligation to assess the financial situation and take appropriate legal steps. This applies to both the management boards of limited liability companies and joint-stock companies.

In some cases, this obligation may also apply to liquidators, partners managing the affairs of a partnership or attorneys acting on behalf of the debtor, provided that their role is managerial in nature. The legislator does not provide for exceptions based on subjective knowledge or internal division of competences – what counts is the actual performance of the functions of the body obliged to act. In practice, this means that formal responsibility also extends to persons who ‘formally’ sit on the management board but do not actually participate in decision-making. This is why legal awareness and ongoing supervision of the company’s financial situation is not only a matter of diligence – it is an obligation that must be accounted for.

Consequences of failing to file a petition on time

Failure to file for bankruptcy within the statutory time limit has multi-level legal consequences that may directly affect members of the management board. This is not only a formal risk, but also very real consequences – civil, criminal and public law. The most common form of liability is liability for damages to the company’s creditors. For example, if enforcement against the company proves ineffective, the members of the management board of a limited liability company are jointly and severally liable with all their personal assets for its liabilities, pursuant to Article 299 § 1 of the Commercial Companies Code. This means that a private home, salary or funds in a bank account may be subject to enforcement proceedings against a member of the management board, even if they were not the sole decision-maker.

At the same time, there is a risk of criminal liability. Pursuant to Article 586 of the Commercial Companies Code, anyone who, being a member of the management board of a commercial company, fails to file for bankruptcy within the prescribed time limit, is subject to a fine, restriction of liberty or imprisonment for up to one year. In practice, criminal proceedings are initiated in particular when creditors or the trustee in bankruptcy proceedings report a possible offence.

In addition, the court may prohibit a member of the management board from conducting business activity and performing functions in company bodies for a period of 1 to 10 years. This measure, provided for in Article 373 of the Bankruptcy Law, is applied when the debtor – or a person representing the debtor – has grossly neglected their obligations to file for bankruptcy, exposing creditors to loss.

Exceptions to the liability of management board members

Although the provisions of the Bankruptcy Law and commercial law impose a clear obligation on management board members to act when the company becomes insolvent, liability for failure to fulfil this obligation is not always automatic. The law provides circumstances in which it is possible to effectively avoid negative consequences.

It is essential to demonstrate that the person performing a managerial function was not at fault for failing to comply with the obligation or that the statutory deadline was observed—for example, by filing a bankruptcy petition or initiating restructuring proceedings within the required time.

Exemption from liability may also apply where a management board member was effectively excluded from the decision‑making process—did not have access to financial information, was in practice removed from the company’s affairs, or did not participate in its management despite formally holding a mandate. In such cases, courts assess the circumstances individually, determining whether the person exercised due diligence. Remedial actions undertaken are also of significant importance: documented attempts at restructuring, negotiations with creditors, or efforts to conclude an arrangement may support the position of the management board member and limit the scope of their liability.

Practical tips for board members

Serving on a management board involves not only responsibility for the company’s strategy and development. It also entails an obligation to maintain ongoing supervision over its financial condition. One of the most important preventive measures is the systematic monitoring of liquidity. This includes both the current settlement of liabilities and the assessment of whether the company’s assets are sufficient to cover its indebtedness.

It is advisable to ensure efficient internal reporting procedures. Regular cooperation with the accounting department and legal advisers is equally important, especially when the first signs of financial difficulties appear.

Every decision taken during a period of deteriorating financial condition should be properly documented. Minutes of management board meetings, financial analyses, expert opinions, and evidence of attempts to reach agreements with creditors should be collected. Such documentation may be of crucial importance in potential court proceedings. It allows the management board to demonstrate that it acted with due diligence. A prompt response is equally important. When a real risk of insolvency arises, action should not be delayed. Postponing action increases the risk of personal consequences.

In many cases, restructuring proceedings may constitute an alternative to bankruptcy. They are less severe in their effects and may help not only to protect the company but also to limit the liability of management board members. For this reason, action should be taken when the company still has room to manoeuvre—not when all options have already been exhausted.

How can RBBC Law Firm help?

As a law firm specialising in bankruptcy proceedings and restructuring proceedings, we assist company management boards in making decisions that not only comply with legal requirements but also effectively protect them from personal liability.

We begin with an analysis of the company’s situation—determining whether and when insolvency occurred, identifying available courses of action, and assessing the legal consequences associated with each scenario.

We prepare a complete set of documentation for submission to the court, represent clients throughout proceedings, and support them in their contacts with creditors, the trustee (syndyk), or the court supervisor. We also work individually with management board members—helping them limit their liability, ensure the proper course of proceedings, and minimise the risk of personal consequences.

The law provides the instruments. RBBC helps you use them before they become an obligation.