On 6 September 2019 The president signed Act dated 30 August 2019 on the amendment of the Bankruptcy Law (the Act) and certain other laws.
The Act contains significant changes that are intended to improve proceedings and relieve bankruptcy courts in the founding of project promoters. Today we will look at the changes concerning individuals.
Notice of bankruptcy under simplified procedure
To the physical persons, the legislator in the Act gives the possibility to declare the bankruptcy of a non-business person in a simplified procedure without appointing a judge – a commissioner.
This solution is designed primarily for the purposes of those cases where there is a lack of significant assets in the bankruptcy burden to satisfy creditors by selling and implementing a distribution plan, or where no disputes are envisaged regarding the composition of the bankruptcy, the amount of debt, its structure or the difficulty of liquidating the bankruptcy.
Other changes, such as submission of claims to the receiver or changes in the acquisition of a failed company, will be discussed In the next article. We invite you to view news on our website
No obligation for the court to examine the grounds for the debtor’s insolvency or insolvency
The legislator also decided to harmonise the objectives and principles of insolvency proceedings for both individuals and other entities. For this purpose, in the area of natural persons, the court has waived the obligation to examine the debtor’s fault in bringing him into bankruptcy or worsening insolvency.
So far, this condition has been taken into account in the examination of the application of individuals.
At present, any inappropriate behaviour of the debtor will be examined only at the stage of the establishment of the repayment plan, and therefore, if creditors can also comment on the behaviour of the debtor and if a refusal to extend is possible.
The above solution is controversial, as the possibility of prolongation will also be possible for people who may have deliberately led to insolvency or deepening it.
However, given that the examination of the condition that the debtor was brought to insolvency or deepened was very different in different courts in the country, this change should ultimately be considered positive. This conclusion is supported by the fact that individuals are able to exercise their rights independently to varying degrees and effectiveness, sometimes without the help of professional legal assistance, so it was not entirely right or fair to determine whether or not the debtor had already led to an insolvent situation at the outset of the proceedings.
„Pre-pack’ also for individuals
Another change in relation to the insolvency of individuals is the possibility of using the so-called "pre-pack" option, i.e. the rapid sale of all the assets to be executed in the form of a prepared liquidation (Article 56a-56h Act).
Providing housing for the fallen and dependants
The legislator took care in the Act of individuals subject to debt and dependants in such a way that, similarly as consumers, they will not be deprived of housing/possibility to provide it. Namely, according to the new recipe Article 342a If a natural person's bankruptcy is a mixed-house or a single-family house in which they have fallen, and the housing needs of the fallen and dependants must be met, the sum obtained from the sale shall be allocated the amount corresponding to the average rental rent of the dwelling in the same or adjacent locality for a period from twelve to twenty four months.
Exclusion from bankruptcy of the amounts necessary for the fallen and dependants
In the recipe Article 63 added new section 1a-1d, according to which the bankruptcy does not include part of the income of a natural person corresponding to the amount constituting 150% amount specified under Article 8(1)(1) Act dated 12 March 2004 on social assistance (Journal of Laws of 2019, items 1507, 1622) either Article 8(1)(2) Act dated 12 March 2004 of social assistance, where other persons are dependent on the fallen.
In addition, the judge-commissioner may otherwise determine the part of income not entering the mass, due to the particular needs of the fallen and dependants, including the health condition.
This means that in exceptional situations, such as the maintenance of a disabled family member requiring special care, rehabilitation, treatment, the court may determine amounts higher than those resulting from the abovementioned Social Assistance Act.
Protection of the rights of the former spouse
Attention should also be paid to the new provision Article 125(3) Act that provides that provision section 1 recipe Article 125 shall apply mutatis mutandis when the property separation was created by law within one year before the date on which the application for bankruptcy was filed as a result of divorce, separation or incapacitation one of spouses, unless the application has been lodged at least two years before the date of submission of the bankruptcy application.
A divorced spouse of a fallen spouse or of a fallen spouse may, by way of action or charge, demand that a property separation be regarded as effective in relation to the bankruptcy if, at the time of the establishment of the property separation, he did not know there was a grounds for bankruptcy and the formation of the property separation did not lead to the injury of creditors.
The action shall be brought before the insolvency court. The Court of First Instance may secure the action by establishing a prohibition on the disposal or charge of property which was the property of the spouses.
This amendment under Article 125(3) The law enables the defence of a former spouse or a fallen spouse from the bankruptcy of assets which, within a year before the date of filing for bankruptcy, ceased to be common property as a result of divorce, separation or incapacitation one married.
Prevention of abuse of maintenance contracts
Change under Article 144 Act by adding a new section 4 with a view to introducing the possibility for the administrator to request a change to the maintenance decision or contract should counter potential abuses by the fallen party and its privileged creditors in relation to the other creditors. In this way, the syndication will be able to make effective efforts to correct the decisions setting maintenance obligations that may not have taken into account the complexity of the fallen situation and its overall debt.
Other changes, e.g. submission of claims to the syndicate or changes in the acquisition of a failed company have been discussed In the next The article HERE We invite you to view the news on our website.
Author: Aleksandra Księżyk – Legal advisor, Director of the Legal Department in Warsaw Chancellery Russell Bedford Dmowski and Partners Law Firm sp. k.