A bankruptcy petition is a document that must be filed with the court to start bankruptcy proceedings. Who can submit it? What are the alternatives to declaring bankruptcy? Read our guide for a detailed discussion of the most important issues related to declaring bankruptcy.
What is a Bankruptcy Proceeding?
Bankruptcy proceedings function as a coordinated judicial action aimed at collectively settling debts. With the participation of a bankruptcy trustee, the bankruptcy court consolidates creditors. It determines claims and sells the debtor’s assets to evenly satisfy creditors. This procedure can only be initiated by a request from authorized entities. The court will not initiate it without such a petition.
Who Can File a Bankruptcy Petition?
The Bankruptcy Law mentions that the following entities can file bankruptcy petition:
- The debtor,
- Any of the debtor’s creditors.
The regulations also outline who can request a bankruptcy declaration for certain entities only.
| Who Can File Bankruptcy Petition? | For Which Entities? |
| Any partner liable without limitation for the company’s obligations. | For general partnerships, limited liability partnerships, limited partnerships, and limited joint-stock partnerships. |
| Anyone with the right to manage the debtor’s affairs and represent them, independently or jointly with others. The right must result from law, company agreement, or statute. | For legal persons and organisational units without legal personality whose legal capacity results from separate acts. |
| The founding body. | For state enterprises. |
| The government plenipotentiary, state legal person, entity, or another unit authorised to exercise rights from shares or stocks belonging to the State Treasury | For one-person companies wholly owned by the State Treasury. |
| Any liquidator. | For legal entities, general partnerships, LLPs, and limited partnerships in liquidation. |
| A curator appointed under Article 42 § 1 of the Civil Code of 23 April 1964. | For legal entities registered in the National Court Register. |
| The authority granting aid. | For debtors who have received public aid exceeding 100,000 EUR |
| A trustee appointed in a given proceeding. | For a debtor undergoing execution by compulsory administration or enterprise sale based on the Civil Procedure Code. |
| The parent company. | For a subsidiary participating in a group of companies/ |
Additionally:
- In the event of the debtor’s death, the bankruptcy petition can be filed by a creditor or a succession manager. The heir, spouse or any of the children, or parents of the deceased are also authorised to do it. Even if they did not inherit from the deceased.
- Only the Financial Supervision Authority or the Bank Guarantee Fund can file a petition for a bank’s bankruptcy.
- Only the debtor or the Financial Supervision Authority can file a bankruptcy petition for an insurance or reinsurance company.
What are the Criteria for Filing a Bankruptcy Petition?
To file a bankruptcy petition, specific criteria must be met:
- Insolvency of the debtor. The debtor is insolvent if he fails to fulfil due financial obligations for 3 months or more.
- The debt exceeds the value of assets. The debtor is insolvent if his liabilities exceed the value of his assets. This applies even if the payment deadlines have not yet passed.
Deadlines Related to the Bankruptcy Petition
- Deadline for the declaration of insolvency. The debtor must file the bankruptcy petition within 30 days of becoming insolvent.
- Judicial proceedings. The court should consider the application as quickly as possible. Yet, the procedures may take from several weeks to several months.
Filing the Bankruptcy Petition
The petition should include:
- Debtor’s identification details – name, surname, company name, PESEL number, KRS number, TIN.
- Indication of the location of the main centre of the debtor’s primary activities.
- Circumstances justifying the application and their substantiation.
- Information on the debtor’s participation in a payment system or securities settlement system.
- Information on whether the debtor is a public company under separate regulations.
Consequences of Declaring Bankruptcy
- Administration of assets. After declaring bankruptcy, the debtor’s assets are administered by a court-appointed trustee.
- Satisfaction of creditors. The debtor’s assets are liquidated. The obtained funds are used to repay creditors. The process follows the approved distribution plan.
- Business termination. For enterprises, this often means the end of the business.
Protection of the Debtor and Creditors
Bankruptcy proceedings aim not only to satisfy creditors. They also protect the debtor from excessive debt and attempts to restart business operations.
Alternatives to Bankruptcy
- Arrangement with creditors – allows for reaching settlement and debt restructuring.
- Restructuring proceedings – allow for corrective actions without declaring bankruptcy.
Bankruptcy Petition – Summary
Filing a bankruptcy petition is a serious decision with many legal and financial consequences. It requires careful preparation of documents and an understanding of the entire bankruptcy procedure. For many entrepreneurs, however, it may be the only way to organize their financial situation. It may bring a fresh start and a new phase of business activity.
Do you want to know more about declaring bankruptcy? Contact us! Our experts are ready to help you.
FAQ – Questions and Answers about the Bankruptcy Petition
Who can file a bankruptcy petition?
The petition can be filed by the debtor and creditors with unsatisfied claims.
What are the main criteria for filing a bankruptcy petition?
Insolvency of the debtor and debt exceeding the value of assets.
What are the deadlines for filing a bankruptcy petition?
The debtor has 30 days to report insolvency from the moment it occurs.
What should the bankruptcy petition include?
Debtor’s identification details, asset description, creditors’ list, and financial documents.
What are the consequences of declaring bankruptcy?
Assets are managed by a bankruptcy trustee. Assets are liquidated, and funds are used to repay creditors. Often, this means the termination of business operations.
How long do bankruptcy proceedings last?
Proceedings can last from several weeks to several months.
Are there alternatives to bankruptcy?
Yes, they include a settlement with creditors and restructuring proceedings.
What documents are needed to file a bankruptcy petition?
Financial documents, balance sheet, profit and loss account, and financial statement.
Who manages assets after declaring bankruptcy?
Assets are managed by a court-appointed trustee.
Can one avoid bankruptcy?
Yes, by reaching a settlement with creditors or conducting restructuring proceedings.