Vol 4 (2007) - Issue 2

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Sale of the Whole or an Organisational Part of an Enterprise of a Debtor and a Bankrupt Debtor under the Polish Civil Procedures Act and under the Polish Bankruptcy and Rehabilitation Procedures Law Act

Introduction
The Bankruptcy and Rehabilitation Procedures Law Act (‘BRPLA’) is the current Polish legislation on bankruptcy of entrepreneurs and debt arrangements. It was enacted by the Polish Parliament in 2003. The new legislation superseded two former decrees of the President of the Republic of Poland dating back to 1934, which were similar in scope to the BRPLA, but which had become obsolete. The BRPLA was been drafted to incorporate the majority of modern concepts on corporate rescue and was harmonised – to a significant extent – to European Union legislation.
The Civil Procedure Code (‘CPC’), which dates back to 1964, has – in comparison to the BRPLA – proven to be sufficiently flexible that it has not been repealed as result of new acts. It has, however, in recent years been gradually reformed. The major reforms were: (1) disputes between entrepreneurs (in 1989, 1996, 2000 and 2005); (2) means of appealing court judgments and decisions (in 1996, 2000, 2004 and 2005); (3) summary judgments and summary procedures (in 1990, 2000 and 2005); (4) arbitration tribunals (2005); and (5) enforcement procedures (2005). The reforms added to the Polish legal system the institution of debt enforcement through the sale of the whole or an organisational part of an enterprise of a debtor as a going concern (2005).
The enactment of the BRPLA and the latest reforms to the CPC coincided with other changes to Polish commercial law. The most fundamental of those changes are: (1) enactment of the Commercial Partnerships’ and Companies’ Code (2000) which regulates formation and functioning of partnerships and companies; (2) reform
of the Civil Code (‘CC’) which focused on civil law type regulation of the activity of entrepreneurs (2001); (3) enactment of the Freedom of Business Activity Act (2004) which is the prime source of administrative law type regulation of entrepreneurs; and, (4) the enactment of Public Trading in Financial Instruments Act, which repealed the former applicable regulations.
This article deals with the sale of the whole or an organisational part of an enterprise of a debtor (or a bankrupt debtor) as a going concern, which is one of the key instruments under Polish law to restructuring the business of an entrepreneur.
An analysis of the relevant provisions of the BRPLA and CPC, as provided herein, is justified by the fact that only as of 2005 were creditors in Poland able to acquire the whole or an organisational part of an enterprise of a debtor that is in default by way of both petitioning the bankruptcy of the debtor and by applying for debt enforcement through the sale of the enterprise of the debtor or a part of it.
This article, therefore, indicates the mechanisms currently available under Polish legislation, and also the shortcomings they have.
Instances where the enterprise of a debtor can be sold within bankruptcy procedures and debt enforcement procedures
Under Polish law, if a debtor defaults as result of its insolvency,
2 the BRPLA will be applicable and the debtor can be declared bankrupt and its assets sold by an official receiver appointed by a bankruptcy court