Aggressive debt collection activities in many cases lead to a loss of liquidity for the indebted company, making it impossible to effectively satisfy all creditors. At the same time, creditors have few tools at their disposal to motivate debtors to repay their debts. The problem therefore affects both creditors, weary of waiting for the goodwill of the debtor, but also the debtors themselves, who fear radical debt collection procedures by aggressive creditors. The solution is enforcement proceedings by receivership, which have been present in Polish law since 2005.
During the proceedings, e.g. bailiffs, the debtor may still effectively dispose of his assets, which significantly complicates or prevents the satisfaction of the creditor. Therefore, enforcement proceedings by compulsory administration of the debtor's enterprise is effective a method of preventing the debtor from "running away with property", which may be used by the creditor. The procedure is described in article 1064 ind 1 and subsequent kpc. Unlike bankruptcy proceedings - compulsory administration is relatively unformalized. It provides a very good chance of recovering the entire nominal obligation and interest from the debtor. Moreover, if initiated early enough and properly conducted, it does not cause the bankruptcy of the debtor's enterprise, protecting it from aggressive actions of creditors.
Enforcement proceedings by receivership over a debtor's business have two modes. The first is enforcement proceedings against the company's income. This consists of the assumption of authority over the debtor's business by a receiver acting on behalf of the creditor, with the aim of satisfying the creditor from the business's income. Under this procedure, the forced administrator may only be a person with a receiver's licence. The administrator may, among other things - sell part of the assets in order to generate income and satisfy the creditor.
It is important to note that once enforcement against the company's income is initiated, all other enforcement is discontinued by operation of law and other creditors join the proceedings. This allows funds to be accumulated, liquidity to be revitalised and operations to be reactivated, generating income that allows the repayment of creditors without degrading the value of the company.
The second solution is enforcement proceedings through the sale of the debtor's business.
In this procedure, the administrator, based on the enforcement application, conducts the sale of the debtor's enterprise in its entirety. The sale in this procedure concerns the entire, operating enterprise - a functioning whole with all its resources, and not the sale of individual assets. This procedure is faster and cheaper than the sale companies in bankruptcy proceedings and therefore leads to faster satisfaction of creditors.
18 September 2015:
" Compulsory administration of the debtor's company - a paragraph for dishonest debtors and a safeguard against aggressive creditors
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