Shield 2.0 – Hold the run for bankruptcy petition
To the Senate has already received another governmental bill under the so-called Anti-crisis shield. It takes account of the entrepreneurs requests to settle issues related to the application for bankruptcy by suspending that period for the duration of an epidemic emergency or an epidemic declared due to COVID-19.
As a reminder, the deadline for filing a bankruptcy petition is 30 days from the date of the state of insolvency. A debtor is deemed to be insolvent if it has become unable to meet its obligations (at least 2 obligations remain unpaid for more than 3 months) and, in the case of a legal person or an entity without legal personality to which a separate act grants legal capacity, also if its monetary obligations exceed the value of its assets for more than 24 months.
Failure to submit the application in time is associated with negative sanctions, especially for members of the company’s management board, who in such a case may be liable to the company’s creditors for its civil law liabilities, bear responsibility for the company’s tax liabilities, and even be penalised.
When does the deadline for filing for bankruptcy stop?
Two cumulative conditions will have to be met in order for the deadline for declaring bankruptcy to be suspended:
- the basis for declaring bankruptcy must arise during an epidemic emergency or a state of epidemics declared due to COVID-19, i.e. before March 13, 2020, when an epidemic emergency was introduced in Poland,
- the state of bankruptcy must arise due to COVID-19.
In order to facilitate the use of the possibility of interrupting the period for declaring insolvency, a presumption is to be introduced that, if the state of insolvency has arisen during an emergency or epidemic declared due to COVID-19, it is due to COVID-19.
Entities that do not meet the above conditions will not be able to take advantage of the suspension of the deadline for filing an application for bankruptcy.
What does the limitation period stop?
The 30-day period for filing a bankruptcy petition will not start and will be interrupted. From the announcement of the end of the epidemic, the person obliged to report bankruptcy will have 30 days to file the application again – the deadline will run again.
In addition, the proposed amendments provide for a specific way of calculating the bankruptcy law deadlines for which the date of filing an application for bankruptcy is relevant – if an application for bankruptcy is filed within 30 days from the cessation of an epidemic or an epidemic declared due to COVID-19, these deadlines will be extended by as many days as elapsed between the actual filing of the application and the date on which the application would normally have been filed under the bankruptcy law at the latest possible date.
Recognition as a matter of urgency of the restructuring request
The draft law also provides for the extension of the catalogue of urgent cases pending before the court during a period of emergency or epidemic declared due to COVID to include cases for the processing of a restructuring application. In such cases there shall be no suspension of the commencement and suspension of limitation periods, and the courts may prescribe hearings and public hearings.
Persons obliged to file an application for bankruptcy may be released from liability for damage if the application is not filed on time, if restructuring proceedings have been opened during the deadline for filing the application (note – it is therefore not sufficient to file the application on time).
The solution is intended to encourage the use of the possibility of restructuring the company before deciding to file for bankruptcy. Since, despite the fact that the cases for the restructuring application are considered urgent, there is no guarantee that the decision in this respect will be issued by the court on time, it is worthwhile to prepare for the filing of the bankruptcy petition at the same time in the case of a state of insolvency.
The planned changes are to enter into force the day after the announcement in the Journal of Laws.