Register of insolvent debtors and the pandemic

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What is the register of insolvent debtors, how are changes in the register made, and whether and how does the pandemic affect the number in the register of insolvent debtors? We will look at the list of entities that have been indicated as unreliable in the course of trade.

The register of insolvent debtors is part of the National Court Register. The register contains information on entries in this register of persons who have been deprived by the bankruptcy court of the right to run a business on their own account and to act as a supervisory board member, representative or attorney in a commercial company, state enterprise, cooperative, foundation or association, in relation to to persons entered or subject to entry in the case of commercial companies, state-owned enterprises, cooperatives, foundations or associations, the register of entrepreneurs and the register of associations, other social and professional organizations, foundations and independent public health care institutions.

The pandemic meant that many entities had to not only suspend their operations, but also close them, and some even file for bankruptcy. The register of insolvent debtors is associated with entities that have problems with meeting their obligations, but in order to be entered into it, other conditions must be met.

The fact that the entity had to close its business or filed for bankruptcy does not constitute a condition for making the entry.

Catalog of entities entered in the register of insolvent debtors

The following entries are entered into the register of insolvent debtors ex officio:

1) natural persons engaged in economic activity, if their bankruptcy has been announced or if the petition for their bankruptcy has been legally dismissed pursuant to art. 13 of the Act of February 28, 2003 - Bankruptcy Law, or the court or administrative enforcement against them has been discontinued due to the fact that the enforcement will not yield an amount higher than the enforcement costs;

1A) natural persons who do not conduct economic activity, if their bankruptcy has been announced;

2) partners bearing responsibility with all their assets for the obligations of the partnership, with the exception of limited partners in a limited partnership, if its bankruptcy has been announced or if the petition for bankruptcy has been legally dismissed pursuant to art. 13 of the Act of February 28, 2003 - Bankruptcy Law, or the court or administrative enforcement against them has been discontinued due to the fact that the enforcement will not yield an amount higher than the enforcement costs;

3) debtors who have been obliged to disclose their assets pursuant to the provisions of the Code of Civil Procedure on enforcement proceedings;

4) persons who have been deprived of the right to conduct business activity on their own account by the bankruptcy court and act as a supervisory board member, representative or attorney in a commercial company, state enterprise, cooperative, foundation or association;

5) the debtors referred to in art. 1086 § 4 of the Code of Civil Procedure, the arrears of which have arisen for a period longer than 6 months.

The judicature gave rise to the view that the register of insolvent debtors was established in the interest of creditors. This is because making an entry in the register reveals unreliable debtors who do not deserve to be trusted in business transactions, which leads to their elimination from this turnover. This view also expresses the belief that entry into such a characteristic register is beneficial to the market situation, although it may in some way make it difficult for people "marked" with entry in the register of insolvent debtors to reopen a business1.

Registry changes

Entry in the register is made ex officio. Similarly, if the provision on the basis of which the entries were made is revoked or amended, then the decision is deleted ex officio. Entries from the register may also be made upon request, when a court decision or administrative decision has been issued following the entry, which indicates that the amount entered in the register does not exist or the obligation under which it results has expired.

In addition, the registration court ex officio deletes entries when the decision on declaration of bankruptcy has been revoked, or at the request of a person entered in the register of insolvent debtors, when the enforceable title that was the basis for the entry has been deprived of enforceability by a final court judgment.

In the case of a natural person, the registration court ex officio deletes the entry, which has been declared bankrupt, if that person's liabilities have been canceled by a final court decision.

Automatic deletion of an entry takes place after 7 years from the date of entry. Entries of persons who have been deprived by the bankruptcy court of the right to conduct business activity on their own account and act as a supervisory board member, representative or attorney in a commercial company, state enterprise, cooperative, foundation or association are automatically deleted after 10 years from their performance, and if in the decision of the bankruptcy court a shorter period of the prohibition has been set, the deletion may be made at the request of the debtor after this period has expired.

Register of insolvent debtors vs. COVID-19

The currently appearing CSO reports show a slight increase in bankruptcy proceedings. It can be seen that in Q2 2020 there were a greater number of proceedings than in 2019. Nevertheless, this increase may be more associated with the change in bankruptcy law that took place in March 2020 than with the omnipresent pandemic. The essence of the difficulties related to Covid-19, as well as government assistance (Anti-Crisis Shields), affect the postponement of the decision to file for bankruptcy.

It is estimated that insolvencies are not expected to increase until mid-2021.

The bankruptcy petition itself does not immediately entail an entry from the register of insolvent debtors, as it is necessary to declare bankruptcy. In the event of an execution being conducted, a decision must also be made to discontinue the execution due to the fact that the execution will not result in an amount higher than the execution costs.

Legal basis:

  1. Decision of the Supreme Court of February 19, 2003 (V CK 7/2003, LexisNexis No. 362955, OSNC 2004, No. 4, item 67).

  2. Act of August 20, 1997 on the National Court Register, Journal of Laws 2019.1500.

  3. Regulation of the Minister of Justice of 17 November 2014 on the detailed manner of keeping registers included in the National Court Register and the detailed content of entries in these registers, Journal of Laws 2014.1667.

Material prepared by the team of "Tak Prawnik".

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