Actio pauliana - protection against the removal of property by the debtor
Often, while the court proceedings are still pending, debtors take steps to hide their assets before enforcement. Most often, they sell at a reduced price or make donations to family and relatives, becoming insolvent themselves. However, there is an institution that protects creditors against such treatments - actio pauliana.
What is actio pauliana?
The essence of actio pauliana is to protect creditors against sudden insolvency of the debtor. This is stated in Art. 527 of the Civil Code:
Art. 527 of the Civil Code
§ 1. When, as a result of a legal act of the debtor detrimental to creditors, a third party has obtained a pecuniary benefit, each of the creditors may request that this action be considered ineffective in relation to him, if the debtor acted with the awareness of the detriment of the creditors, and the third party knew about it, or due diligence she could find out.
It follows directly from the act that any action of the debtor, which resulted in the improvement of the financial situation of a third party at the expense of his and, consequently, his creditors, may be considered ineffective. To find out what is considered to be a detriment to creditors, please refer to the next section of this article, which says:
Art. 527 of the Civil Code
§ 2. The legal action of the debtor is made to the detriment of the creditors, if as a result of this action the debtor has become insolvent or has become insolvent to a greater degree than he was before the act.
Moreover, there is a presumption that a third party (family member, friend, entrepreneur) is aware that the debtor is acting to the detriment of creditors. This means that the creditor is not required to provide evidence to substantiate this as the presumption itself replaces the evidence.
Actio pauliana - premises
Accordingly, the premises of the actio pauliana are therefore:
performance by the debtor with a third party in a legal transaction in which the third party obtained a financial advantage while detrimental to creditors,
actions of the debtor with the awareness of the harm to the creditors,
knowledge or the possibility (with due diligence) of becoming known by a third party.
For an actio pauliana to be effective, all these conditions must be met together.
How to file a Pauline complaint
An actio pauliana is filed in court. In the petitum (part of a written application in the case), it is necessary to demand that the activity be considered ineffective in relation to the creditor. You cannot demand that the contract be declared invalid or that a legal act is ineffective, moreover, it is obligatory to indicate in relation to whom the ineffectiveness is to be declared. Of course, it is also necessary to indicate which activity the request concerns.
Usually the first part of a written application on. It is the first part of lawsuits, appeals or other similar letters, especially legal ones. The applicant briefly presents the content of his request, describes what he / she is demanding in the letter, and in the next part may justify his claim.
It may happen that a third party will dispose of the obtained benefit for the benefit of another person, etc. In this case, the action should be brought directly against that person, but only if the regulation was free of charge or the fourth person knew about the circumstances justifying declaring the legal act ineffective (Art.531 § 2 of the Civil Code).
In the lawsuit, it is also worth applying for security, e.g. in the form of a prohibition on selling or encumbering items. If it concerns real estate, then an application should be submitted for the entry of a warning in the land and mortgage register regarding the prohibition of selling and encumbering the real estate.
The judgment allowing the claim is constitutive in nature, and therefore cannot be given an enforcement clause. The creditor should submit two applications: an application for a declaration of the validity of the judgment to the extent that the debtor's legal act is ineffective, and an application for an enforcement clause in the scope of the costs of proceedings awarded to him. After obtaining the writ of execution, it is possible to conduct the enforcement proceedings.