The sale of movable property in consumer bankruptcy

upadłość konsumencka

What is the bankruptcy estate in consumer bankruptcy?

As mentioned in one of the earlier posts, upon the declaration of consumer bankruptcy, the assets of the bankrupt consumer become the bankruptcy estate, which serves to satisfy their creditors. The bankruptcy estate includes the assets owned by the consumer on the day of declaring bankruptcy and those acquired by the consumer during the bankruptcy proceedings.

Of course, the law provides exceptions to the above by specifying assets that do not become part of the bankruptcy estate, but this is not the subject of this post.

What is the purpose of liquidating the bankruptcy estate?

As the definition of the bankruptcy estate indicates, it serves to satisfy the creditors of a bankrupt debtor. This satisfaction from the bankruptcy estate is accomplished with the funds obtained from the sale of the assets that constitute the bankruptcy estate, a process known as liquidation of the bankruptcy estate.

In the consumer bankruptcy proceedings, the liquidation of the bankruptcy estate is carried out by the bankruptcy trustee. The general rule is that the bankruptcy trustee independently chooses the method of liquidating the bankruptcy estate in a way that allows for the greatest satisfaction of the creditors while taking into account the liquidation costs.

When it comes to the choice of liquidation method for real estate or those assets of the bankruptcy estate whose estimated value, as indicated in the inventory list, exceeds five times the average monthly earnings in the business sector without profit sharing in the third quarter of the preceding year, published by the President of the Central Statistical Office, the bankruptcy trustee informs the creditors and the court through the teleinformatics system used for court proceedings, using the forms available in the system. In the notification, the bankruptcy trustee specifies the liquidation method and the minimum price.

Can only the bankruptcy trustee liquidate the assets of the bankruptcy estate?

The Bankruptcy Law allows the bankruptcy trustee to authorize the consumer debtor to sell movable property belonging to the bankruptcy estate. The authorization granted by the bankruptcy trustee should be in writing, although the failure to comply with this form does not render any subsequent sale invalid.

The purpose of this solution is to relieve the bankruptcy trustee from the liquidation of less significant assets of the bankruptcy estate or those that require specialized knowledge held by the consumer debtor. The use of this solution should be justified by the possibility of conducting the bankruptcy proceedings more efficiently.

The scope of the authorization from the bankruptcy trustee to the consumer debtor to liquidate assets should be defined in the authorization. If the authorization covers certain movable property that is part of the bankruptcy estate, it should be clearly specified. The bankruptcy trustee can also stipulate a minimum price and other conditions.

Interestingly, some argue that entrusting the liquidation of the bankruptcy estate to the consumer debtor should affect the amount of the bankruptcy trustee’s remuneration, reducing it accordingly.

In summary, it is possible for the consumer debtor, rather than the bankruptcy trustee, to conduct the liquidation of the bankruptcy estate. When faced with such a situation, it is advisable to verify the scope of the authorization granted by the bankruptcy trustee to the consumer debtor for the liquidation of assets to avoid potential complications regarding the validity of any subsequent sale agreement.