Apparent bankruptcy – how to protect yourself from a dishonest debtor

Each creditor entering into a bilateral obligation relationship hopes that not only will he perform the performance, but that it will also be fulfilled for his benefit. However, it often happens that the other party to the contractual relationship does not intend to perform its obligation, such as repayment of the loan, and thus takes all measures to effectively avoid it. Such actions, which are taken to the detriment of the creditor, have been penalized in the Polish Penal Code and are indicated in Art. 300-302 k.k. One of these actions is the apparent bankruptcy (Article 301 of the Penal Code).

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What exactly is sham bankruptcy?

The term of apparent bankruptcy is derived from the Penal Code and means a deliberate transfer of one’s assets or recklessly leading to insolvency in order to harm several creditors. This means that the provision of art. 301 k.k. it can be used only in a situation where there is one debtor, but several creditors have a claim against him, not necessarily from the same legal relationship. The provision itself divides the appearance of bankruptcy into three groups:

  • Transfer of its assets to a new business unit;
  • Bringing about your insolvency or bankruptcy
  • Bringing about one’s insolvency or bankruptcy through reckless action

As can be seen from the above, individual paragraphs of Art. 301 k.k. include leading to apparent bankruptcy not only intentionally (§ 1 and 2), but also unintentionally (§ 3). Most of the actions taken by the debtor, which are unfavorable for the creditor, are included in the provisions.

What are the consequences of apparent bankruptcy?

A significant part of the consequences result from the provisions of civil law and include, for example, the annulment of legal acts that were intended to circumvent the law (pursuant to Article 58 of the Civil Code). In addition, the debtor will be obliged to repay creditors, and an obligation that is fulfilled periodically (even in installments) may be made payable. Another aspect, which in turn results from the Penal Code, is criminal liability for taking such actions. This is punishable by restriction of liberty or imprisonment, even up to 5 years. Such severe consequences of actions result from the protective function of criminal law and the need to maintain legal certainty and economic transactions. Actions to the detriment of creditors are not permitted by law, and the measures indicated in civil law do not fully fulfill the basic functions of the law.

If you have doubts about the honesty of the debtor and the legality of the actions he is taking, contact the Firm.

Author:

Grzegorz Streckbein

Advocate

Advocate. He completed his legal studies at the Faculty of Law and Administration of the University of Silesia in Katowice. In his daily practice, he deals primarily with issues related to the day-to-day service of business entities, with particular emphasis on corporate service. His interests also include reorganization and mergers and acquisitions (M&A) matters. He advises management boards and supervisory boards of capital companies.

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