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Karolina Sieraczek

Attorney at law (Poland)
Senior Associate
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When bankruptcy involving the liquidation of assets is declared, the bankrupt loses the right to manage its assets. The bankrupt's assets become the bankruptcy estate which is administered by the official receiver. This means that the official receiver must replace the bankrupt in all relations concerning the bankruptcy estate after a bankruptcy order is made. Actions taken by the official receiver in connection to the administration of the bankruptcy estate have an effect on the bankrupt's assets. These issues are regulated in detail by the Bankruptcy Act of 28 February 2003 ("the Bankruptcy Act").

The official receiver's standing to bring proceedings

This also applies to court proceedings. After bankruptcy is declared, judicial, administrative or administrative court proceedings concerning the bankruptcy estate may be initiated and conducted only by the official receiver or against him (Article 144(1) of the Bankruptcy Act). Therefore, after bankruptcy is declared, the official receiver who conducts bankruptcy proceedings in his own name, but for the bankrupt, should become a party to such proceedings. The bankrupt loses its standing to bring proceedings and only remains a party to the proceedings in substantive terms.

Stay of proceedings

Pursuant to Article 124(1)(4) of the Proceedings Before Administrative Courts Act (hereinafter: the PBAC Act), the making of a bankruptcy order against a party is a prerequisite for the stay of proceedings ex officio, if the case concerns an item which is part of the bankruptcy estate. This is a consequence of the above-mentioned provisions of bankruptcy law, which provide for the loss of the standing to bring proceedings by the bankrupt. In such a situation, it is necessary to inform the official receiver of the pending proceedings so that the proceedings are not affected by the defect of invalidity.

Invalidity of the procedure

If, in the proceedings before administrative courts, the proceedings are still pending with the participation of the bankrupt and not with the participation of the official receiver after a bankruptcy order has already been issued, then the judgment issued in such conditions is invalid. This is because the bankrupt party had no procedural capacity and was thus also deprived of the opportunity to defend its rights. The existence of the grounds for invalidity must be examined as at the date of their occurrence. Courts take into account the premise of the invalidity of proceedings on an ex officio basis, so it is not necessary for the parties to the proceedings to prove it.

It should be stressed that this defect in the procedure cannot be cured, unless a specific provision provides otherwise. An example is the provision of Article 271(2) of the PBAC Act according to which the party may not demand resuming proceedings on the grounds of invalidity if, prior to the decision becoming final, the inability to act ceased or the argument of the lack of representation was put forward by way of a plea in law or if the party confirmed the procedural steps taken. The assessment of whether it is possible to cure this defect depends on the specific circumstances and is made individually by the court hearing the case.

Taking into account the above, the fact of declaring bankruptcy always has certain procedural consequences in cases concerning the bankruptcy estate. It is necessary to ensure the proper representation of the bankrupt and the possibility of defending its rights. After bankruptcy is declared, the bankrupt no longer has the standing to bring proceedings in cases concerning the bankruptcy estate. Therefore, only the official receiver may represent the bankrupt in the pending proceedings. The above is also confirmed by the recent judgment of the Supreme Administrative Court of 11 April 2018 (I FSK 820/16).

If you are interested in Rödl & Partner expert support in this topic, have any questions or doubts, please contact our experts in Rödl & Partner offices in Cracow, Gdansk, Gliwice, Poznan, Warsaw and Wroclaw.

06.11.2018