The bankruptcy of a Polish business partner may raise several questions for a foreign creditor. Can a company with its registered office outside Poland file a proof of claim? Are foreign creditors treated in the same way as Polish creditors? Is it necessary to appoint a representative in Poland? What happens if the creditor fails to designate a person authorised to receive correspondence?
The answers to the most important of these questions can be found in Article 380 of the Polish Bankruptcy Law Act (the “Bankruptcy Law”). Its fundamental principle is the equal treatment of domestic and foreign creditors. At the same time, the provision imposes additional requirements on certain foreign creditors in relation to the service of documents.
Foreign creditors have the same rights as Polish creditors
Under Article 380(1) of the Bankruptcy Law, a creditor whose place of residence, habitual residence or registered office is located abroad enjoys the same rights in Polish bankruptcy proceedings as a creditor whose place of residence or registered office is located in Poland.
This means that the mere fact that a company has its registered office abroad cannot constitute grounds for restricting its participation in the proceedings. In particular, a foreign creditor may:
- file a proof of claim against the bankrupt debtor and submit documents evidencing the existence and amount of the claim;
- rely on any security interests securing the claim;
- challenge decisions that adversely affect its interests in accordance with Polish law;
- participate in the distribution of funds obtained from the liquidation of the bankrupt debtor’s assets.
The principle of equal treatment has significant practical importance. A foreign creditor cannot be disregarded merely because the relevant agreement was concluded outside Poland, invoices were issued in a foreign currency, or the commercial documentation was prepared in another language.
This does not mean, however, that the creditor may conduct the case in accordance with the rules applicable in its own jurisdiction. The filing of a proof of claim and any further participation in the proceedings are governed by Polish procedural law.
Place of residence, habitual residence or registered office matters – not nationality
When determining the obligations of a foreign creditor, the decisive factor is the creditor’s place of residence, habitual residence or registered office.
The nationality of the company’s representative or the country in which the agreement with the debtor was concluded is irrelevant for this purpose.
When must an agent for service be appointed in Poland?
A creditor who has no place of residence, habitual residence or registered office:
- in Poland; or
- in another Member State of the European Union,
should appoint an agent for service in Poland, unless the creditor has already appointed a representative in Poland authorised to conduct the case.
This requirement therefore applies primarily to creditors whose registered office or place of residence is located outside the European Union, for example in the United States or the United Kingdom.
A creditor with its registered office in another EU Member State is not required to appoint an agent for service in Poland. It may, however, voluntarily instruct a professional legal representative to conduct the case. In practice, this may make it easier to monitor deadlines and correspondence, as well as actions taken by the trustee and the court.
Agent for service or legal representative – what is the difference?
Polish law distinguishes between two separate functions:
- A representative authorised to conduct the case acts on behalf of the creditor in the bankruptcy proceedings. Within the scope of the authority granted, the representative may prepare and file submissions, present the creditor’s position, take procedural steps and respond to decisions made by the trustee or the court.
- An agent for service has a significantly narrower role. The agent’s task is to receive correspondence in Poland on behalf of the foreign creditor. Appointing such a person does not authorise that person to conduct the case or make decisions on the creditor’s behalf.
An individual may act as an agent for service. In practice, however, merely appointing a person to receive correspondence may not always provide sufficient protection for the creditor’s interests. The authority of an agent for service is generally limited to receiving documents and does not include analysing their legal significance, preparing responses or taking procedural steps within the applicable deadlines.
For this reason, appointing a professional legal representative to conduct the case throughout the bankruptcy proceedings may be a more advantageous solution.
Failure to appoint an agent and the risk of missing deadlines
The consequences of failing to appoint an agent for service may be serious.
Where a foreign creditor subject to this requirement fails to appoint an appropriate person in Poland, court documents addressed to that creditor may be placed in the case file and deemed to have been validly served. In practice, this means that the document is treated as if it had actually been received by the creditor, and any related deadline may begin to run.
The creditor should be informed of this consequence when the first document is served. The creditor should also be advised as to who may be appointed as an agent for service.
Failure to put appropriate arrangements in place for receiving correspondence may result in the creditor not becoming aware in sufficient time of:
- a challenge to its claim;
- a request to submit additional documents;
- the preparation of, or amendments to, the list of claims;
- the deadline for filing an appeal or another legal remedy;
- other procedural steps requiring an immediate response.
Placing a document in the case file does not suspend the proceedings. As a result, the creditor may lose the opportunity to challenge an adverse decision effectively, even though it has not actually reviewed the correspondence.
What should a foreign creditor prepare?
Before filing a proof of claim, it is advisable to collect the documents and information necessary to establish the existence, amount and due date of the claim. These may include, in particular:
- agreements, purchase orders and confirmations of their acceptance;
- invoices and other accounting documents;
- evidence of contractual performance, including documents confirming the delivery or acceptance of goods or services;
- correspondence with the debtor concerning the order, performance of the agreement, complaints or payment;
- payment demands and evidence of their delivery;
- confirmation of any partial payments made by the debtor;
- a calculation of the principal amount and interest, including the relevant interest period and applicable interest rate;
- documents concerning any security interests securing the claim;
- information and documents relating to any pending or completed court, administrative, arbitration or enforcement proceedings;
- information concerning any counterclaims held by the debtor against the creditor that may be relevant for the purposes of set-off;
- a current extract from the creditor’s relevant company register and documents confirming the rules of representation;
- the details of the bank account to which funds obtained from the liquidation of the debtor’s assets should be transferred.
Documents prepared in a foreign language may need to be translated into Polish. The scope of the translations required should be assessed considering the specific proceedings, the nature of the documents and the position taken by the trustee or the court.
Key takeaways for foreign creditors
A foreign creditor may pursue its rights in Polish bankruptcy proceedings on the same basis as a domestic creditor. Having a registered office abroad does not reduce the ranking of the claim or justify different treatment.
It should nevertheless be remembered that:
- the proceedings are conducted in accordance with Polish law;
- a creditor whose place of residence, habitual residence or registered office is located outside the European Union should appoint an agent for service in Poland, unless it has appointed a representative in Poland authorised to conduct the case;
- an agent for service is not the same as a representative authorised to conduct the case;
- failure to appoint an agent may result in documents being placed in the case file and deemed to have been validly served;
- it is important to monitor deadlines on an ongoing basis and properly prepare the evidence supporting the claim.
A thorough analysis of the debtor’s legal situation and the proper preparation of the proof of claim may reduce the risk of the claim being overlooked, its amount being challenged or the creditor losing the opportunity to take the necessary action within the applicable deadline.
I assist foreign creditors at all stages of Polish bankruptcy proceedings, from assessing their legal position and preparing the proof of claim to representing them throughout the proceedings. Foreign creditors seeking professional legal support are welcome to contact me.
Attorney-at-law / Partner
