Unsuccessful enforcement of joint-stock company and creditor’s recovery of claim

As provided for in Article 778(1) of the Code of Civil Procedure: “The court shall attach an enforcement clause to an enforcement order issued against a general partnership, a professional partnership, a limited partnership or a limited joint-stock partnership against a partner who is liable without limitation with all his or her assets for the partnership’s obligations, if enforcement against the partnership proves ineffective, as well as where it is obvious that such enforcement will be ineffective. This does not apply to a person who, at the time of the commencement of proceedings in the case in which the enforcement order was issued against the partnership, was no longer a partner therein.” In the event of unsuccessful enforcement against a limited liability company, the legislator has provided for the possibility of recovering debts from its board members pursuant to Article 299 of the Commercial Companies Code. How, then, can one recover a debt from a public limited company?

Admittedly, there are no provisions for a public limited company, as there are for a limited liability company, which would directly indicate the possibility of recovering the debt from members of the management board; however, this avenue is not closed. It should be borne in mind that one may rely on Article 415 of the Civil Code, which explicitly states that ‘Whoever causes damage to another through their own fault is obliged to make good such damage.’ It should be noted that the members of the management board bear liability for damage caused by the company.

One should bear in mind the provisions of Article 21(3) of the Insolvency Act, according to which members of a company’s management board are liable for damage caused by failing to file a petition for the company’s bankruptcy within 30 days of the onset of insolvency. However, specific conditions must be met, such as:

1. the occurrence of damage;
2. the fault of the management board members;
3. the existence of a causal link between the conduct of the management board members (failure to fulfil the obligation to file a petition for the declaration of bankruptcy of the joint-stock company within the prescribed time limit) and the damage incurred.

Therefore, in order to claim damages under general principles, it will be necessary to demonstrate the existence of the above-mentioned conditions. A creditor wishing to prove damage will have to demonstrate that, as a result of the board members’ failure to file a petition for the company’s bankruptcy, they were not satisfied at all or were satisfied to a lesser extent than would have been possible had the members of the management board fulfilled their obligations, i.e. that, as a result of the failure to file the aforementioned petition, the assets of the insolvency estate were reduced. Upon establishing fault, one may rely on the presumption that the members of the management board are liable for failing to file a petition for the company’s bankruptcy.

To summarise the above, where it is not possible to recover the debt from the joint-stock company, the creditor may pursue their claims against the members of its management board. Undoubtedly, proceedings initiated under Article 415 of the Civil Code, aimed at recovering debts from members of the management board of a joint-stock company, will be more complex than pursuing claims against members of the management boards of other companies. It will be necessary to demonstrate that damage has been suffered, that the members of the management board are at fault, and that there is a link between these two elements.