NEWSLETTER 08/2008
ANNOUNCEMENT OF INSOLVENCY MAY PREVENT EFFECTIVE PURSUIT OF DISPUTABLE CLAIMS, ALSO TO EMPLOYEES
Debts subject to satisfaction from the estate in bankruptcy, as well as debts towards employees, may not be claimed under civil proceedings.
This fundamental rule of procedure in bankruptcy leads to courts discontinuing the proceedings regarding the estate in bankruptcy when insolvency has been announced comprising liquidation of the sued party’s assets.
It is still, however, possible to conduct a dispute after termination of the insolvency proceedings or after valid refusal to recognize the debt. The creditor has the right to reenter the lawsuit within 3 months (art. 182 [1] § of the Code of Civil Procedure), yet he will bear the financial consequences of entering the lawsuit, and shall face difficulties in satisfying the debt from the assets of the bankrupt employer.
Effects of bearing court expenses to the employee
Financial consequences of reentering the lawsuit are related to the enforcement on 2 March 2006 of the new act on court expenses in civil actions, which changes the amount of court fees among others in cases regarding the labour law. Employees, so far exempted by law from payment of court expenses, presently pays PLN 30 of basic fee on appeal, complaint, cassation complaint and complaint on declaring invalidity of a valid verdict. If, however, the value of the cause of the dispute exceeds the amount of PLN 50,000, employee must pay a proportionate amount in the amount of 5% of the value of the subject of the dispute on all the letters under the proceedings that are subject to payment.
Therefore, an employee who has lodged a lawsuit before 2 March 2006, and whose proceedings have been discontinued due to the employer’s bankruptcy, yet whose claims have not been satisfied under insolvency proceedings due to their declaring as disputable – will be forced to reenter the lawsuit for payment, this time paying the court fee that in the case of a significant value of the cause of the dispute, may constitute a significant financial burden.
An important drawback of art. 182[1] of the Code of Civil Procedure and its introducing act of 16 November 2006 on amendment of the act – Code of Civil Procedure and some other acts (Polish Journal of Laws No. 235, item 1699), is the lack of transitional provisions regarding the aforementioned effects. It is doubtful whether in a situation where the employee demands again the payment of the amount exceeding PLN 50,000, he should pay the fee constituting 5% of the value of the dispute, or whether he should be exempted from such payment. The lawsuit originally entered by the employee was not acknowledged before the announcement of insolvency comprising the sued party’s assets for reasons not attributable to the employee, and the proceedings have been remitted as the debtor has exercised the right to file a petition in insolvency. Why, however, should the employee or any other unsatisfied debtor be charged again with the court fee on a ‘continued’ dispute is not fully understandable.
Effects in the area of actual opportunities for satisfying claims
Provisions of art. 35 and 229 of the insolvency and remedial law indicate that both in the proceedings on insolvency announcement, and in the proceedings after announcement of insolvency the provisions of the Code of Civil Procedure on proceedings renewal do not apply, which questions the satisfaction of creditor’s claims. Even after a court verdict favourable to the creditor and change of the debt total on the part of the insolvent party, the insolvency proceeding shall not be repeated.
Furthermore, when the verdict adjudging the claim to the creditor is enforced, the assets of the insolvent part after the liquidation of the estate and final division of the property may not exist any longer. It is also realistic that the bankrupt debtor may lose its legal entity. In such a situation, the court will remit the lawsuit against the insolvent employer brought upon by the employee.
It will also not be possible to pursue disputable claims against the board members of a limited liability company, as there is no executive title against the company.
Finally, the employee, whose receivables under a job contract are subject to satisfaction in the first category shall bear the negative effects, regardless of due diligence concerning his issues, if his claim cannot be considered.
Due to the above, the return to the proceedings may prove not only costly, but also risky.
The above considerations also give a reason for questioning the aforementioned regulation due to constitutional right to judgement (art. 45, section 1 of the Constitution) and the principle of decent legislation, and as a result possible pursuit of compensation claims against State Treasury for damage caused by issuing of a normative act that goes against the Constitution.
Anna Zabielska
trainee attorney-at-law
The Newsletter is published free-of-charged and is designed chiefly for clients of the law firm of Mikulski & Partners. The articles are written by lawyers at the firm, but do not constitute legal advice.