The declaration of insolvency of a limited liability company as a responsibility of the management board
The management board is required to file for bankruptcy in a situation where the company has become insolvent. Insolvency means that the company is no longer able to pay its debts or that its liabilities exceed the value of the company’s assets, even if they are discharged by the company on a regular basis.
The Polish Bankruptcy and Restructuring Law requires any person entitled to represent the company (in practice, this usually applies to board members) to file for bankruptcy in the registration court no later than within two weeks from the date on which the bankruptcy preconditions were met.
At this point, it should be noted that failure to meet the above obligation may result in severe legal consequences. This is due to the fact that the board members (or any other person entitled to represent the company) are held personally liable for any damage caused by failure to file for bankruptcy. Moreover, if the petition is not filed within the time limit stipulated by law, the Bankruptcy and Restructuring Law provides for the possibility of depriving the relevant person of the right to conduct business by a court order and to act as a representative of the commercial company for a period from 3 to 10 years.
However, filing for bankruptcy is not a simple task. Even if the management board is able to determine the date on which the grounds for filing bankruptcy were met, the compliance of the bankruptcy petition with stringent procedural requirements must also be ensured. Obtaining the relevant documentation required by law within 14 days is not a simple task, either. It should be emphasized that any failure to meet procedural requirements may result in the rejection of the petition by the court, which, in fact, means that the petition has never been filed.
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