This publication applies only to debtors who are entrepreneurs and entities that are not entrepreneurs to whom the provisions on bankruptcy of entrepreneurs in the event of their insolvency apply.

  1. Multiple creditors. The primary purpose of bankruptcy law is to satisfy the claims of creditors of an insolvent debtor as much as possible. In view of the above, it is assumed that the declaration of bankruptcy of the entrepreneur may take place only if there are at least several creditors.
  2. Debtor’s bankruptcy capacity. As a rule, the bankruptcy capacity in the scope covered by the publication is possessed by debtors who are entrepreneurs within the meaning of the Civil Code and entities listed in art. 5 sec. 2 BRL:
  3. limited liability companies and joint-stock companies that do not conduct business activity;
  4. partners in personal commercial companies, who are liable for the company’s obligations without limitation with all their assets;
  5. partners of a partner company.

There is a catalog of entities that cannot be declared bankrupt (Article 6 (2) of the BRL). It includes the State Treasury, local government units, public independent health care institutions and others.

  1. The debtor’s insolvency. Bankruptcy is declared against a debtor that has become insolvent. The first prerequisite for the recognition that the debtor is insolvent is the loss of the ability to meet its outstanding pecuniary obligations. The Act presumes that the debtor has lost this ability if the delay in performance of pecuniary obligations exceeds three months (Article 11 (1a) of the BRL).

The second, independent from the previous, condition for the recognition of a debtor who is a legal person or an organizational unit without legal personality, which a separate law recognizes as insolvent, is a situation where his pecuniary obligations exceed the value of his property, and this state continues for a period exceeding twenty-four months. It is presumed that the debtor’s pecuniary liabilities exceed the value of his property if, according to the balance sheet, his liabilities, excluding provisions for liabilities and liabilities to related entities, exceed the value of his assets, and this condition persists for a period exceeding twenty-four months.

The jurisprudence indicates that “if the debtor fails to fulfill his liabilities, he is insolvent, which gives rise to his declaration as bankrupt. It is irrelevant whether he does not fulfill all obligations, or only some of them. The size of the obligations not performed by the debtor is also irrelevant. Even failure to fulfill obligations of a small value means his insolvency within the meaning of Art. 11 of the Act of February 28, 2003, Bankruptcy and Rehabilitation Law. For the determination of the state of insolvency, the cause of non-performance is also irrelevant. Insolvency exists not only when the debtor has no funds, but also when the debtor fails to fulfill his obligations for other reasons “(judgment of the Court of Appeal in Lublin of 11/02/2020, file reference number: III AUa 436/19).

In certain cases, the bankruptcy law excludes the debtor’s bankruptcy.

  1. For example, an entrepreneur cannot be declared bankrupt in the period from the opening of the restructuring procedure to its completion or final discontinuation, which is a manifestation of striving to maintain the business (Art. 9a of the BRL).
  2. The bankruptcy petition shall be dismissed if the claim is entirely disputable and the dispute arose between the parties prior to the filing of the petition (Art. 12a of the BRL).
  3. The court will also dismiss a bankruptcy petition when the assets of the insolvent debtor are insufficient to cover the costs of the proceedings or are sufficient to cover only these costs (Art. 13 (1) of the BRL).
  4. In turn, the court may dismiss a petition for bankruptcy if it is found that the debtor’s property is encumbered with a mortgage, pledge, registered pledge, fiscal pledge or sea mortgage to such an extent that his remaining property is not sufficient to cover the costs of the proceedings (Art. 13 (2) of the BRL).