Vol 3 (2006) - Issue 1

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EU Regulation No. 1346/2000 Revisited – The Polish Experience

Introduction
EU Regulation No. 1346/2000 (the ‘Regulation’) was first applied in Poland as described in Edward Klempka’s article in International Corporate Rescue (2005) Vol. 2, Issue 4.1 The present article looks at some of the legal and practical aspects of implementing the Regulation from a Polish perspective.
Insolvency – definitions under English and Polish Laws and the Regulation For a background to this discussion we need to look broadly at the definitions of insolvency under the UK Insolvency Act of 1986 (the ‘UK Act’), as well as the Polish Bankruptcy and Reconstruction Act of 2003 (the ‘Polish Act’). The UK Act was the lex concursus for the primary insolvency proceedings conducted under the Regulation, while the Polish law, in accordance with Art. 8,9,10,11, regulated issues relating to the sale of the business during insolvency proceedings.
The UK Act’s provisions state the following:
‘Art. 122. Circumstances in which a company may be wound up by the court:
(1) A company may be wound up by the court if –
(f) the company is unable to pay its debts.’
Inability to pay debts is defined in Art. 123:
‘(1) A company is deemed unable to pay its debts –
(b) if, in England and Wales, execution or other process issued on a judgment, decree or order of any court in favour of a creditor of the company is returned unsatisfied in whole or in part, or
(e) if it is proved to the satisfaction of the court that the company is unable to pay its debts as they fall due.
(2) A company is also deemed unable to pay its debts if it is proved to the satisfaction of the court that the value of the company’s assets is less than the amount of its liabilities, taking into account its contingent and prospective liabilities.’
The Polish Act in Art. 11 states:
‘1. A debtor is insolvent if in default of his enforceable
obligations.
2. A debtor, which is either a legal person or an organisational unit without legal personality upon which a separate Act confers legal personality, shall also be deemed insolvent if its obligations exceed the value of its assets, even if it should be up to date in satisfying the discharge of these obligations.’