The Outbreak of the Covid – 19 Pandemic and Insolvency Law
By Dr. Robert Lewandowski, attorney at law (radca prawny) from the legal firm: DLP Dr Robert Lewandowski & Partners sp. k.
The outbreak of the covid-19 virus pandemic will likely have a negative impact on the ability of many entrepreneurs to meet their existing obligations towards their creditors. This may cause delays in payment if indeed companies will be able to pay their debts off at all in the current situation. Polish Insolvency law imposes upon company directors an obligation to file a petition with the bankruptcy court to instigate a bankruptcy case within 30 days from the day on which the inability to pay debts or indebtedness occurred. In the case of failure to do this, directors may face personal liability for these debts in accordance with Article 299 of the Polish Commercial Companies Code. In our view, this deadline of 30 days can no longer be binding as long as the Covid -19 Pandemic persists and it should officially be suspended for the time being. The Polish government (like other foreign governments) introduced an anti -crisis shield law act being a rescue package aiming at providing financial aid to entrepreneurs caught up in the coronavirus crisis and it would be contradictory if entrepreneurs receiving state relief should file a petition for bankruptcy . The purpose of the state -aid is to ease entrepreneurs from present financial pressures, to develop plans of reorganization of their enterprises and especially to secure workplaces in these challenging times.
The suspension of the involuntarily petition for opening bankruptcy cases should additionally, in our view, apply to all obligations occurred in general prior to the outbreak of the Covid-19 pandemic. In other words, any bankruptcy case should be denied as long as the inability to pay debts or indebtedness is based on the outbreak of the covid – 19 pandemic. In addition, any commencement with bankruptcy proceedings by creditors of the debtor should also be suspended during the time of the pandemic and creditors should also be prohibited from forcing any debtor into these proceedings. To sum up, we are of the opinion that any deadlines imposed upon directors and entrepreneurs to file petitions for opening bankruptcy cases under Polish should be suspended if the failure to repay their debts is based on the damage/disruption caused by the covid – 19 pandemic. These measures should be enacted by law in order to assist entrepreneurs in the current difficult financial predicament as the bankruptcy is mostly an unacceptable solution to the financial distress of businesses.
In conclusion, entrepreneurs suffering currently from financial difficulties should instigate contingency plans as soon as possible to allow them to restructure their businesses and to commence negotiations with their creditors (e.g. clients, lenders, creditors, landlords and security holders) in order to modify the contractual relationship tailoring them to the present covid -19 pandemic.
Should you seek any further questions on this matter please contact us at the following email address: [email protected].