BANKRUPTCY OF THE ENTREPRENEUR

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 pay 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 his creditors. Importantly, in the event of financial problems, the timely filing of a bankruptcy petition may relieve the persons representing the capital company from liability for some of the company’s debts.

In fact, the earlier the better. When the first symptoms of impending insolvency appear, the company’s financial situation should be carefully diagnosed. This is because once a state of insolvency has occurred, the entrepreneur’s bankruptcy petition should be filed within 30 days of the occurrence of this state. Submission of the application after this deadline will not exempt the representatives of the capital company from liability for the company’s debts.

The bankruptcy of an entrepreneur who is a natural person allows for the cancellation of unsatisfied liabilities from the bankruptcy estate. In the case of capital companies, a timely filed bankruptcy petition allows to avoid liability for the company’s debts. From the point of view of creditors, the bankruptcy of a company aims to fairly satisfy creditors from the remaining assets of the entrepreneur.

Bankruptcy proceedings begin with the filing of a petition. In order to prepare a complete bankruptcy petition, it is necessary to gather information and documents about the company, such as a current list of assets with their estimated valuation, a balance sheet prepared 30 days before the filing of the petition, a list of creditors, a statement of payments of claims and debts for the last 6 months, a list of entities obligated to the applicant, a list of enforcement and execution titles and others. The application must be paid with a court fee of PLN 1,000, and must be accompanied by proof of payment of an advance for expenses in the amount of one times the average monthly salary in the enterprise sector without profit rewards in the third quarter of the previous year.

The duration of bankruptcy proceedings varies greatly. The examination of the application itself should take place within 2 months from the date of filing, but in practice it takes a little longer. The actual bankruptcy proceedings, on the other hand, take from several to even dozens of months. The duration of the proceedings mainly depends on the size of the bankruptcy estate to be liquidated and the number of creditors.

It is a good idea to use a restructuring advisor to file a business bankruptcy petition. This is because the filing of the application is done through the National Debt Register, which restructuring advisors navigate efficiently, unlike those unfamiliar with the 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. However, restructuring advisors should have no problem drafting it correctly.