In a recent judgment, the Polish Supreme Court resolved an important question concerning the rights of a creditor to bring legal proceedings after the initiation of bankruptcy proceedings by a debtor. 

Legal issue 

The Supreme Court considered whether the declaration of a debtor's bankruptcy results in the loss of a creditor's standing to bring a lawsuit to declare a debtor’s attempt to dissipate its assets ineffective (actio pauliana). 

What is actio pauliana?

Actio pauliana is a type of lawsuit, the purpose of which, is to declare the debtor’s attempt to dissipate its assets ineffective. Generally, the creditor can lodge the lawsuit when the debtor’s action has been performed to the detriment of the creditor and, as a result, a third party has obtained a pecuniary benefit.

Who may bring a claim?

Generally, after the declaration of bankruptcy, legal proceedings concerning the bankruptcy estate may be initiated and conducted only by or against the trustee.

Previous case law and legal commentators have taken the view that a creditor is not entitled to file an actio pauliana lawsuit during bankruptcy proceedings. 

Decision 

In a shift from this interpretation, the Supreme Court held that a creditor does not lose such a right. 

Key takeaways

With recent trends in bankruptcy law strengthening the position of the debtor, the Supreme Court's ruling allows for broader action by creditors during bankruptcy proceedings, helping to redress the balance.

Find out more

To discuss the issues raised in this article in more detail, please contact a member of our Restructuring & Insolvency team.