Composition resolution 7 Judges dated 16 December 2019, on the signature of the file III CZP 7/19 The Supreme Court ruled that “on the date of the bankruptcy of the non-business spouse (Article 491[1] and next. Act dated 28 February 2003 – Bankruptcy law, one text: Journal of Laws of 2019, item 498 as amended), Whereas, in the system of property union, a separation between spouses arises and a common property whose division is not admissible falls into bankruptcy."
This resolution was adopted in response to the legal question as follows: ‘Is the proper application of the rules Article 124(1) in conjunction with Article 491[2] section 1 Act dated 28 February 2003 – Insolvency law in respect of insolvency proceedings against natural persons who do not engage in economic activities means that on the date of publication of bankruptcy one of spouses, if the spouses remained in the property union system, all the property of the joint spouses falls into bankruptcy and its division is unacceptable?’
If the spouses have remained in the property union system, the property of the spouses enters the bankruptcy and its division is unacceptable. However, a fallen spouse may incur claims in insolvency proceedings on a share of the common assets, reporting that claim to the judge-commissioner
The legal question was referred to the Supreme Court by a district court which raised serious doubts as to whether the proper application of the rules Article 124(1) in conjunction with Article 491[2] section 1 Act dated 28 February 2003 – Insolvency law, in respect of insolvency proceedings against natural persons not engaged in economic activities, means that on the date of the bankruptcy one of spouses, if the spouses have remained in the property union system, all common property shall fall into bankruptcy and its division shall be inadmissible, or the proper application of that provision shall mean the exclusion of the prohibition on the division of the common assets and the recognition that the bankruptcy should include only an adequate share of the common property of the fallen spouse.
According to Article 124(1) bankruptcy laws on the date of publication of bankruptcy one of spouses, the property separation in question arises between spouses under Article 53(1) Act dated 25 February 1964 – Family and protective code.
Thus, if the spouses remained in the property union system, the property of the spouses falls into bankruptcy and its division is unacceptable. However, a fallen spouse may claim in insolvency proceedings for a share of the common assets by filing that claim to the judge-commissioner.
The protection of a fallen entrepreneur’s spouse is thus manifest in the fact that he can declare bankruptcy due to his participation in the common estate. In principle, these shares are equal (Article 43(1) (k.r.o.), therefore the claim submitted by the spouse should correspond to half of the value of the common assets.
However, the spouse must not demand the exclusion from the bankruptcy of the share in the common assets (cf. judgment of the Supreme Court of Justice of the European Union of 19 February 2009, II CSK 469/08, LEX No. 503240). Its situation is therefore aligned with that of other creditors of the fallen spouse.
In the absence of specific arrangements for the categories of claims to be met for participation in the common assets, it should be assumed that claims to be met in the category second (Article 342(1)(4) p.u.).
Act dated 5 December 2008 amending the Act – Bankruptcy and Resolution Law and Civil Costs Act (Journal of Laws of 2008, item 234.1572) which entered into force 31 March 2009, the scope of the insolvency proceedings has been extended to non-business individuals (Article 1(1)) and in part third the amended law, dedicated to separate insolvency proceedings, adds Title V, in which the insolvency proceedings against those persons were separately regulated. According to Article 491[2] section 1 Act — Insolvency Law, in cases not governed by the title relating to insolvency proceedings against natural persons not engaged in economic activity, the rules on insolvency proceedings shall apply mutatis mutandis, except that the indicated under Article 491[1] section 1 provisions not listed Article 124 This bill.
The Supreme Court pointed out that in science and the theory of law it is correctly noted that the concept of "adequacy" to apply a specific provision means that some of its provisions can be applied without any modification, others will need to be modified accordingly and others will not be applied at all.
Reference under Article 491[1] section 1 Act – Bankruptcy law can therefore be considered after first non-use Article 124, rod second the application of this Article with modifications taking into account the specificity of consumer bankruptcy and third Application Article 124 Straight ahead.
However, there is also another view against consumer bankruptcy Article 124(1) dd. 2 Act – Insolvency Law, which would result in the creation of a property separation between spouses as soon as the bankruptcy of a non-business spouse was declared, but only the debtor's share of the property would enter into the bankruptcy.
With such an interpretation of the reference made under Article 491[2] section 1 there are significant systemic and practical considerations.
Application Article 124(1) dd.
2 Act – The bankruptcy law of a natural person who does not pursue an economic activity may lead to an unacceptable situation of harming a fallen spouse, who, in fact, would be liable for the obligations of a spouse, even if he was not a co-debtor, as well as if such spouse did not agree to enter into certain obligations under a specific procedure under Article 41(1) K.r.o., even opposed it.
Such an approach raises particularly significant problems for the spouses of fallen natural persons, for example in the context of shared properties.
The entry of such property components (which were previously included in the marital union) into the bankruptcy and their disposal as part of the liquidation of the mass may permanently deprive the spouse of the opportunity to meet housing needs.
This issue is linked to a collision two value – protection of the interests of the fallen and protection of the interests of the creditor
The Supreme Court pointed out that the specificity, nature and purpose of this procedure must be taken into account in assessing the matter. Given this, it should be noted that this issue is linked to a collision two values – protection of the interests of the fallen and protection of the interests of creditors.
The protection of the interests of creditors derives from the overriding objective of insolvency proceedings formulated under Article 2(1) p.u. (optimisation principle). This provision, as a general provision, applies to all insolvency proceedings governed by bankruptcy law.
However, according to Article 2(2) Act – Insolvency Law, proceedings governed by the Act against natural persons not engaged in economic activities should be conducted so as to allow for the remission of liabilities which have not been committed in insolvency proceedings (delongation function of consumer bankruptcy), and, if possible, to satisfy creditors' claims as far as possible.
This means that the principle of optimisation should be applied in consumer insolvency proceedings, but it should not be implemented with a negative impact on the debt function of consumer bankruptcy.
The doctrine emphasizes that the principle expressed under Article 2(2) Act – Bankruptcy law is an indication for correct interpretation of the provisions contained under Article 491 [1] and n. Insolvency law in the event of a conflict of interests between an insolvent debtor and its creditors.
However, significant impact on the scope Article 124(1) Insolvency rights to consumer bankruptcy should be governed by family law by the principle of liability of spouses for commitments entered into without their consent.
In conclusion, although the resolution adopted by the Supreme Court seems to be as logical as possible, it should be pointed out that the position expressed in it may be regarded as hurting spouses of fallen natural persons who are not entrepreneurs.
This is due to the fact that, where the spouse does not have any personal property, the entire assets of such spouse the property of the spouse) are part of the bankruptcy and the spouse is entitled only to claim. Of course, this declared claim does not have to be fully satisfied in insolvency proceedings.
On the other hand, acceptance of another view, giving primacy to the protection of a spouse who did not agree to a commitment, would be contrary to the principles of the Bankruptcy Law and would create the possibility of illegally interacting with spouses to the detriment of creditors as a result of the liquidation of assets.
Surely the resolution adopted is of paramount importance in the face of the ever-increasing number of consumer bankruptcy.
Author: Michał Wasilenko
Lawyer, Senior Associate in the Legal Department, member of the Bar Association in Lublin, graduate of the Faculty of Law and Administration at Maria Curie-Skłodowska University in Lublin. He specializes in commercial and civil law law.