Economic bankruptcy - news
Running a business involves a huge amount of risk, and even a temporary loss of liquidity can mean serious problems. We know this very well, because we help entrepreneurs on a daily basis in financial difficulties and we help prepare scenarios for times of crisis.
Economic bankruptcy - news
Running a business involves a huge amount of risk, and even a temporary loss of liquidity can mean serious problems. We know this very well, because we help entrepreneurs on a daily basis in financial difficulties and we help prepare scenarios for times of crisis.
We help entrepreneurs
What is insolvency proceedings?
Bankruptcy is often a last resort that is worth implementing when other methods of repairing a difficult financial situation do not work.
Entrepreneurial bankruptcy process is intended to safeguard the interests of both the debtor, i.e. a company in financial difficulties, and in particular the management of that company, and its creditors.
A primary aspect, One thing to pay attention to when considering filing for bankruptcy is to check whether the entrepreneur is insolvent and has insolvency capacity. This means checking whether bankruptcy proceedings are possible for the form in which the business is conducted.
We realise that the economic bankruptcy of a company is a professional blow, which, as an entrepreneur, is difficult to deal with on your own, so it is worth enlisting the help of experienced professionals to be able to successfully navigate through the insolvency process.
What conditions must be met,
for economic insolvency to take effect?
- Insolvency
This is in other words the loss of the ability to meet due monetary obligations.
It is presumed that this occurs when there is a 3-month arrears in the repayment of liabilities.
For legal persons and entities that are not legal persons a state of insolvency also arises when the amount of liabilities is greater than the value of the assets held, and this condition persists for at least 24 months.
- Sufficient assets
In order to be able to conduct insolvency proceedings it is necessary for the company to have assets to cover the costs of the proceedings, as well as to satisfy, albeit to a small extent, the claims of creditors.
The analysis of this issue is complex in relation to assets on which security interests have been established, e.g. in the form of mortgages or pledges.
- Multiple creditors
In accordance with the provisions of the Bankruptcy Law, It is not possible to declare business bankruptcy if a company has only one creditor.
Hence, in order for a bankruptcy petition to be granted at least two creditors must be indicated.
- Additional information
This was just a brief description of the conditions to be met.
If you have any questions or concerns, please contact us and we will be happy to clarify them for you.
When to think about it, Should the company be declared bankrupt?
The answer to this question is both simple and not simple – one thing is certain, it is not worth delaying – acting at the last minute will deprive you of many opportunities.
Therefore, a quick contact from your side will allow us to assess your situation and propose the best strategy of action for your company.
When the first signs of impending insolvency appear, you should carefully analyze the financial situation of the company. At an early stage, you still have the opportunity to take advantage of numerous restructuring solutions. At the moment of insolvency, the number of possible actions to take decreases.
Remember that as an entrepreneur, you are obliged to file for bankruptcy within 30 days of the occurrence of the condition. Ignorance or wilful disregard of this obligation can result in very severe consequences for those representing the company.
Members of the company's board of directors are jointly and severally liable for the company's liabilities and tax arrears.
For the above reasons, it is so important to diagnose the entrepreneur's insolvency and to effectively file a bankruptcy petition in due time.
What are the benefits
for filing for bankruptcy on time?
Avoidance of liability for company debts
Allows a board member to exclude liability for the debts of an insolvent company
Avoidance of liability for tax arrears
It enables a member of the management board of a capital company to be released from liability for the tax arrears of an insolvent company.
Avoidance of criminal liability
It allows members of the management board or liquidators to avoid criminal liability for failing to file a bankruptcy petition for a commercial company
Dismissal of the possibility of ruling on the ban on conducting business activity
The court may order a ban on conducting business for a period of 1 to 10 years, among others, in the event of failure to file a bankruptcy petition on time, therefore, if you want to continue your business within another company or if you want to act as a representative in the company, it is worth filing a bankruptcy petition at the right time
Satisfaction of creditors
It allows for the satisfaction of creditors from the assets of the insolvent entity and leads to the cancellation of other receivables.
We help entrepreneurs
Pre-Pack,
or bankruptcy under control
What does it consist of? A pre-prepared liquidation (pre-pack) is a procedure that allows the assets of an insolvent debtor to be sold quickly and in accordance with the will of the parties to an investor in a non-tendered insolvency procedure.
The greatest advantage of the prepared decommissioning for a failing company it is, That it allows the bankrupt's business to continue to operate. For an investor who wishes to acquire such a company, the greatest benefit is the enforcement effect of the sale, i.e. the acquisition of the bankrupt's property free of liabilities and encumbrances, which is not possible with a regular sale of the company, because then the the purchaser is jointly and severally liable with the transferor for its obligations in relation to the operation of the business.
A prepared liquidation may consist of court-approved terms of sale not only the entire enterprise of the debtor, but also a significant part of it or only a valuable asset within the framework of bankruptcy proceedings. Importantly, the insolvent entrepreneur who plans to benefit from the prepared liquidation has the possibility to consciously choose the buyer indicated in the application, at the price specified in the application and accepted by the court.
This structuring of the relationship between the insolvent company and the purchaser of the business or part of it also allows for other arrangements to be made for the continuation of the business. The speed of this procedure should also be emphasised – the sale should take place within 30 days from the date on which the court decision approving such sale becomes final, which is obviously beneficial for all participants in the proceedings and also translates into a reduction in its costs and, consequently, a higher degree of satisfaction of creditors.
The law sets out in detail who can apply for approval of the terms of sale in a prepared liquidation and how. If you are interested in this topic, please contact our advisor who will dispel any doubts you may have.
Only a properly prepared application for approval of the terms of sale as part of a pre-pack liquidation may be positively considered by the court.
Arrangement in bankruptcy
- the way to seek compromise with creditors
The commencement of bankruptcy proceedings means that the debtor's financial situation is not among the best. However, insolvency is not always a permanent phenomenon, sometimes entrepreneurs manage to find ways to improve the operation and profitability of the business even during the insolvency proceedings.
Then a new rescue scenario for the company becomes possible, i.e., the submission of proposals for arrangement to creditors. If they are accepted favourably by the creditors and the entrepreneur demonstrates the possibility of implementing the arrangement, the court may terminate the bankruptcy proceedings by issuing a decision approving the arrangement.
What are the benefits accepting an arrangement in bankruptcy?
For the Creditor:
- the possibility of recovering receivables to a greater extent than in bankruptcy proceedings
For the Insolvent Entrepreneur
- termination of insolvency proceedings
- restoration of the right to manage and dispose of property
- discontinuance of proceedings to declare an act ineffective against the bankruptcy estate
- the possibility of deleting entries relating to insolvency in land registers and registers
- preserving the company and stopping the liquidation of assets
We help entrepreneurs
Arrangement proposals in insolvency proceedings are not only entitled to be submitted by the bankrupt, but also by the creditor and the trustee. They are fully free to make arrangement proposals.The rule is simple: everything that is not prohibited is allowed.
Among the most relevant layout proposals are:
- deferred implementation;
- repayment in instalments;
- reduction in the amount of the claim;
- conversion of receivables into shares in a company;
- modification, substitution or revocation of a right securing a specific claim.
Whether it is your business that is in bankruptcy or whether it is your counterparty that is in bankruptcy, it is worth considering whether an arrangement will meet your expectations to a higher extent than liquidation bankruptcy.
Finding a compromise is also possible in bankruptcy - find it with our help. Let's talk, because it's worth it.
Explore stories
our customers
Capital company -production
The capital company was engaged in the business of producing bread for a popular retail chain, a change in the way bakery products are sourced by placing ovens in the discounters to bake pre-prepared frozen bakery products, resulted in an immediate drop in the company's revenue.
Thanks to the immediate reaction of the company's board of directors and the filing of a bankruptcy petition it became possible to declare the company bankrupt. Prompt action also helped to limit the accumulation of the company's debts, and the liquidation of the company's assets led to the satisfaction of creditors' claims to a higher degree.
Following the conclusion of the proceedings, the company was removed from the KRS. Shortly thereafter, one of the largest creditors, wishing to recover the remainder of its receivables that had not been satisfied in the course of the bankruptcy proceedings, filed a lawsuit for payment against the entire management of the company. However, the creditor did not win the case, as the lawsuit was dismissed on the grounds that the members of the company's management board had been freed from liability for the company's debts, as the bankruptcy petition had been filed in due time and by all members of the company's management board.
With the right legal steps, the entire board of directors of the company is safe and need not fear that the company's creditors will reach into their private assets.
How can we Help you?
Consumer bankruptcy is the type of legal proceeding provided for for consumers, i.e. people who are not in business. If you have found yourself in a difficult situation contact us – we will help you find a solution tailored to your situation.
Does the opening of bankruptcy proceedings against an entrepreneur affect the assets of the spouses?
Depending on the form of business activity
Can an employee file for employer bankruptcy?
The employee has the same rights as any other creditor, therefore, in the event that the employer is in arrears
Can a creditor file for bankruptcy of a debtor?
The basic tool for recovering your receivables from the debtor is a civil lawsuit. The procedure
Does the filing of a bankruptcy petition stop enforcement?
It leaves no doubt that individuals running a business or a company
How to deal with a company crisis?
We live in a world where constant change is something we have to deal with every day. The last few years have confirmed everyone's belief that nothing is
How to declare bankruptcy?
The declaration of economic bankruptcy is connected with the court procedure, therefore the conditions that must be met are described in detail in the law, and
How do you sell a business without debt?
There is a visible trend among entrepreneurs, both sole proprietors and majority owners.
Comprehensive insolvency advice
Bankruptcy proceedings have an impact on many areas concerning the activities of the bankrupt.
How can I get rid of my debts?
Running a business involves a lot of risk. As part of operational or financial activities, many liabilities are incurred, which in
What can be done to recover debts from a debtor?
The bottlenecks related to the lack of payments from completed transactions affect almost every company. In
How can I influence the course of insolvency proceedings?
In every bankruptcy proceeding it is necessary to take into account various – and often
I would like to reach an agreement with my creditors
Are you an entrepreneur who has financial problems? You have a shortage of funds and do not know how to continue
Mostly
questions asked
Entrepreneur bankruptcy proceedings are proceedings that should be initiated when an entrepreneur is in a state of insolvency, i.e. when he has lost the ability to settle his due monetary obligations and, in the case of companies, also when his monetary obligations exceed the value of his assets, and this state of affairs persists for a period exceeding twenty-four months. Bankruptcy aims to liquidate the entrepreneur's assets and satisfy its creditors. Importantly, in the event of financial problems, the timely filing of a bankruptcy petition may relieve the persons representing the limited liability company from liability for certain debts of the company.
You are concerned about declaring your form insolvent and are worried about what the consequences will be, contact us, we will carefully review your situation.
This is not the rule. Insolvency proceedings may lead to the deletion of a business entity from the register and the definitive end of its activity. Nevertheless, it may be the case that the efficient and proactive action of the trustee leads to the satisfaction of all creditors and allows the company to recover. Furthermore, in the case of bankruptcy by arrangement, it is possible to continue to operate the business without having to close it down.
If you are keen to preserve your business despite being declared bankrupt, our advisers will analyse your situation and suggest what action you can take.
In principle, yes. The main objective of bankruptcy is to satisfy creditors' claims to the greatest extent possible, and this is generally done by selling the debtor's assets. Either the entire business or its individual components are subject to disposal by the trustee. Depending on the form in which you run your business, this will affect whether your personal assets or even those of your spouse will also be disposed of in the bankruptcy proceedings. The chance to preserve your business is to have your creditors paid in full through your business or through an arrangement with your creditors.
Don't delay, find out if your personal assets are safe and the property actions you have recently made will be effective against the bankruptcy estate. We can verify this for you - let nothing surprise you during bankruptcy.
It is a good idea to seek the assistance of a restructuring adviser when filing an entrepreneur's bankruptcy petition, as the petition must be filed through the National Debt Register, which restructuring advisers navigate efficiently, unlike those unfamiliar with this system. In addition, the application requires a number of details that may be unclear to those who are not practitioners of bankruptcy and restructuring law.
Benefit from our knowledge and many years of experience. Thanks to the fact that we also perform the functions of receiver, interim court supervisor, administrator, forced administrator, supervisor for the execution of the arrangement, we are sensitive to all the nuances that are relevant in the pre-filing and also during bankruptcy.
In general, insolvency proceedings can be divided into 3 main stages: bankruptcy proceedings, insolvency proceedings and post-bankruptcy actions. The insolvency proceedings comprise all actions aimed at the court's decision to declare the entity bankrupt and are initiated by the filing of a bankruptcy petition. The actual bankruptcy proceedings, on the other hand, are a collection of all actions aimed at:
- determination of the list of claims,
- the determination and liquidation of the assets of the insolvent company,
- the implementation of the plan for the distribution of the funds obtained from the sale of the company's assets.
The activities to be carried out after insolvency proceedings are completed include, for example, the deletion of activities from the relevant registers, in the case of individuals, the cancellation of liabilities without establishing a plan for the repayment of creditors or the establishment of a plan for the repayment of creditors - and its subsequent implementation.
At each stage of the insolvency proceedings, we will assist you, not only with advice and clarification of any complexities, but also with the drafting of the necessary documents and representation before the insolvency authorities.
In order to avoid disappointment in the form of financial losses, it is worth checking your counterparty - whether its company is bankrupt. Information on the company's status can be checked in the Monitor Sądowy i Gospodarczy by its NIP or KRS number, and in the case of proceedings initiated from 01.12.2021, this information is presented in the National Debt Register. Information on bankruptcy or restructuring of registered companies is updated daily.
You have found out that your counterparty has declared bankruptcy, but you don't know what you can do next about it, use our help to pursue your claims in the course of bankruptcy proceedings.
The fixed court fee for filing a petition for commercial bankruptcy is PLN 1,000. In addition, the applicant shall pay an advance on expenses in the course of the proceedings for declaring bankruptcy in the amount of one times the average monthly remuneration in the enterprise sector without payments of rewards from profit in the third quarter of the previous year, announced by the President of the Central Statistical Office, and shall present proof of its payment with the application.
Find out how to pay the fees and whether these are the only costs you should expect to pay when filing for business bankruptcy, as well as the consequences of not filing them, during a free consultation with our specialist
Kim are we?
We are a law firm whose the overriding aim is to help in difficult situations crisis for companies and individuals. We have been conducting bankruptcy and restructuring proceedings for many years.
We have at your disposal licensed restructuring advisors, who in cooperation with experts in the field of communication, finance and law will guide you through the insolvency process.
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