Why should the Polish government not suspend the obligation to file for bankruptcy?

Why should the Polish government not suspend the obligation to file for bankruptcy?

In connection with the SARS-CoV-2 pandemic, various protective measures are being introduced in subsequent EU countries, resulting, among other things, in a significant reduction in the possibility of conducting trade and service activities by a significant number of entrepreneurs. There is no longer any doubt that the continuation of the pandemic may in the short term lead to an avalanche increase in insolvency, especially in sectors such as tourism, international transport, air transport, catering and the wider “event” industry.


European politicians are also aware of the threat, having presented a series of aid programmes worth hundreds of billions of euros in recent days. One of the most outstanding ideas is the German government’s suspension of the entrepreneurs’ obligation to file for bankruptcy. As the German Minister of Justice Christine Lambrecht points out, this is to prevent the entrepreneur from filing for bankruptcy before the government aid reaches him, in order to avoid the sanctions that threaten him. It is indicated that a similar solution is also to be introduced in Spain.


The indicated idea of the German government has had a wide impact on the legal environment and contributed to the discussion whether in the time of crisis a similar measure could help Polish entrepreneurs. In order for such a measure not to have counterproductive effects, it is necessary that the size of the government aid is sufficient to restore the solvency of the most affected entrepreneurs in real terms within the next few months. The voices of sceptics indicating that the most vulnerable to the negative effects of failure to file for bankruptcy by an insolvent debtor are its counterparties and that the very phenomenon of the continuation of the insolvent entity on the market is objectively unfavourable to the economy. If the envisaged aid from the German or Spanish governments is not sufficient to restore the solvency of those most affected by the crisis, those subject to a moratorium on filing for bankruptcy may bring their existing creditors with them. This solution, which is certainly controversial, is also an expression of the great confidence of those in power that the aid they envisage is capable in the medium term of ‘resuscitating’ the companies most affected by the crisis. Unfortunately, if this belief proves to be exaggerated, the negative consequences will mainly be borne by other market participants, in particular the creditors who cooperated with the debtor during the period of his insolvency.


It seems that in the light of the assumptions of the aid scheme envisaged by the Polish government, adoption of an analogous solution would not bring positive effects. After an initial presentation, it can be assumed that the size and nature of the proposed aid may only provide limited support to the companies’ current liquidity but will not lead to a recovery of solvency by an entity that has lost the ability to meet its maturing cash obligations. Switching insolvent businesses under the carpet may, in the long term, lead to a deepening of the scale of insolvencies and thus contribute to a worsening of the overall economy.

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