As a general rule, once the debtor has filed an application to open composition proceedings, the court examines it in closed session, which should take place within two weeks of the date of filing. In such cases, the court examines the case on the basis of the information and documents attached to the application. However, where circumstances arise that require further examination, for example by hearing the applicant, the court should schedule a hearing. Where a hearing must be scheduled, the Court should hear the application within six weeks – though this is merely an indicative timeframe (not binding on the Court, and exceeding it does not entail any consequences in relation to the pending proceedings).
In proceedings to open composition proceedings, the court may secure the debtor’s assets by appointing a provisional court supervisor. The appointment of a provisional supervisor is not mandatory, and the court decides on the need for such an appointment. It appears that a provisional court supervisor will be appointed precisely when the court is unable to issue a decision to open composition proceedings within two weeks. This will therefore occur when the court decides that a hearing must be scheduled, or when, for other reasons, it is impossible to meet the procedural deadline specified by the regulations.
Once a provisional court supervisor has been appointed, the debtor’s position regarding management changes significantly. The debtor may therefore carry out acts of ordinary management, whereas acts exceeding the scope of ordinary management require the consent of the provisional court-appointed administrator. Any act exceeding the scope of ordinary management carried out without the required consent is void. It follows from the above that the court-appointed supervisor does not so much take over the power to manage the debtor’s assets as gain broad control over how the debtor manages those assets, whilst retaining the ability to block actions that go beyond the scope of ordinary management. The provisional court-appointed administrator should therefore safeguard the debtor’s assets until a decision is issued to open composition proceedings.
At the same time, whether an act exceeds the scope of ordinary management must be determined on a case-by-case basis. When considering such acts, it is necessary to take into account the nature and scale of the business activity being conducted. What in one instance may fall within the scope of ordinary management, due to the size and nature of the business, is a typical act; in another instance, it may require the consent of the court-appointed supervisor, given that such an act may significantly affect the debtor’s assets or business.
The role of the provisional court supervisor is therefore to ensure that, in the period leading up to the decision to open composition proceedings, the debtor’s situation does not deteriorate to such an extent that opening composition proceedings would no longer be appropriate. Additionally, the supervisor may serve as a source of information for the court regarding the debtor’s actual situation, their assets, and the merits of opening composition proceedings.
Other ways of securing the debtor’s assets in proceedings to open composition proceedings include:
- suspending enforcement proceedings conducted to recover claims covered by the arrangement by operation of law – at the request of the debtor or the provisional court supervisor,
- lifting the attachment of a bank account, if this is necessary to achieve the objectives of the arrangement proceedings. When lifting the attachment of a bank account, the court appoints a provisional court supervisor, if one has not already been appointed.
Frequently asked questions
Must the court always appoint a temporary judicial supervisor when filing a petition for composition proceedings?
No, the appointment of a temporary supervisor is not mandatory, and the court decides on its necessity. This usually occurs when the court is unable to issue a ruling within two weeks, for example due to the need to schedule a hearing.
What limitations on asset management does the appointment of a temporary supervisor impose on the debtor?
The debtor may still perform ordinary management activities, but requires the supervisor’s consent for actions exceeding this scope. An act performed without the required consent is invalid, which means that the supervisor exercises control over asset management.
How is it determined whether a given act constitutes ordinary management?
This must be determined on a case-by-case basis, taking into account the type and scale of the business activity conducted. What is typical in one situation may require the supervisor’s consent in another if it significantly affects the debtor’s assets.
What is the main role of the temporary judicial supervisor in these proceedings?
The supervisor is to ensure that the debtor’s situation does not deteriorate in a way that would make opening composition proceedings pointless. The supervisor also acts as a source of information for the court regarding the debtor’s actual financial situation.
What are other ways to secure the debtor’s assets besides appointing a supervisor?
Other methods include suspending enforcement proceedings with respect to claims covered by the composition. It is also possible to obtain the lifting of a bank account seizure, which is necessary to achieve the objectives of the proceedings.
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She specializes in commercial and civil law. She has gained experience in Warsaw law firms providing comprehensive services to companies and a law firm specializing in labor law. She has extensive experience in corporate consulting. She has participated in mergers and acquisitions at every stage of the process, from pre-transaction legal examination to fulfillment of regulatory requirements related to the transformation process. She prepares and reviews contracts entered into by clients and advises in cases of…
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