Temporary court supervisor and criminal liability of a board member

There is a lack of case law on temporary court supervisor. Who is such a supervisor and what is he responsible for?

When a company decides to initiate bankruptcy proceedings due to its poor financial condition, or its bankruptcy is requested by one of its creditors, the need to secure its assets may arise. Then the court, either ex officio or at the request of authorized entities, may appoint a temporary court supervisor.

Who is a temporary court supervisor and what are his tasks?

Securing the debtor’s assets takes place at the stage of collateral proceedings. A temporary court supervisor is one of the persons whose tasks include precisely securing the debtor’s assets in the context of future bankruptcy proceedings. To be appointed to this position, one must meet the relevant criteria. They are the same as the requirements for becoming a receiver. So, you need to have legal capacity and a license as a restructuring advisor.

The most important task of a temporary court supervisor is to secure the debtor’s assets. The idea is that in the event of bankruptcy, each of the creditors will be paid in the most adequate way. The temporary court supervisor is therefore the guardian of the St. Gralla, i.e. the assets of the bankrupt company. The scope of his duties derives, among other things, from the law, which indicates that his consent is required for actions exceeding ordinary management.

A question may be raised as to whether the law obliges the interim court supervisor to file financial statements. The provisions of the Accounting Law do not explicitly impose such an obligation on him. This is because he is not the head of the entity within the meaning of that law.

However, the temporary court supervisor certainly has the authority to oblige the debtor to submit financial documents that will illustrate his financial condition and assets. According to the bankruptcy law, the bankruptcy court may oblige the debtor to submit a report that includes, in particular, information on its financial condition, the type and value of its assets and the anticipated costs of the bankruptcy proceedings (Article 38(3) of the Bankruptcy Code). This document is one of the most important bases for the court’s decision to declare bankruptcy.

Management vs. interim court supervisor

Under bankruptcy law, the interim court supervisor has a supervisory role over the company’s board of directors. However, unlike the trustee, it does not deprive the debtor of its own management. This is because without the consent of the interim court supervisor, the company’s executive body cannot perform any act that exceeds ordinary management. Such consent should be given before the company performs the action. On the other hand, in the absence of such consent, such an action may be convalidated by the consent of the temporary court supervisor within 30 days of its execution. As you know, actions exceeding ordinary management for different companies will be shaped differently. They depend on the activities that the company is engaged in or the capital at its disposal.

For this reason, the cooperation of the board of directors with the temporary court supervisor is very important. Performing actions that exceed ordinary management without the approval of the temporary court supervisor may result in their invalidity. The consequence may even be the establishment of a forced administrator and depriving the company’s bodies of the authority to perform acts of ordinary management.

In view of the functions performed by the interim court supervisor, cooperation between him and the members of the board of directors should also take place with regard to the performance of ordinary management activities. At the very least, this involves activities that affect the report he prepares and his duty to safeguard assets.

Criminal liability of interim supervisor and board members.

Board members are criminally liable in two situations.  The first is when a board member commits a crime in connection with his or her position. The second, on the other hand, is when the crime is committed using the person’s position in the company. The emergence of a temporary court supervisor, introduces a kind of “fuse” for board members.

As mentioned above, actions exceeding ordinary management are subject to the approval of the interim supervisor. For this reason, the criminal liability of board members is reduced to some extent. There is a transfer of the decision-making burden from the company’s body to the interim supervisor. If the supervisor’s cooperation with the board of directors goes too far and he approves an act that exceeds ordinary management, which will have the purpose of harming creditors, for example, law enforcement authorities may treat this as a co-conspiracy.

Meanwhile, the liability of the interim supervisor is not defined in such an obvious way as that of members of the board of directors. Despite the many references to trustee regulations, the supervisor cannot be considered a public official. This means that the scope of his criminal liability is narrower. According to the decision of the Supreme Court in the case ref. no. IV KK 126/04, the interpretation of the criteria determining the recognition of a person as a public official should be subject to the rigors of strict interpretation. This makes the catalog of persons listed in Article 115 § 13 of the Criminal Code to be considered closed.

An interesting aspect is the possibility of a temporary supervisor committing a crime under Article 296 of the CC. The disposition of §1 of this provision stipulates that “Whoever, being obliged under a provision of the law, a decision of a competent authority or an agreement to deal with the property affairs or business activities of a natural or legal person or an organizational unit without legal personality, by abusing the powers granted to him or by failing to fulfill the obligation incumbent on him, causes significant property damage to him, shall be subject to a penalty of deprivation of liberty from 3 months to 5 years.” Looking at the powers that the interim supervisor has, there is a possibility that he could commit a crime. After all, being responsible for securing the debtor’s property, he may fail to fulfill his duties. This, in turn, may lead to damage to the assets of the supervised company.

Summary

The case law on interim court supervisor is poor. On the other hand, by the multitude of intra-system references to the provisions relating to the person of the receiver, his situation is not obvious. Much about the criminal liability of the interim overseer may change if he is recognized as a public official. In the current state of the law, the interim overseer does not have a clearly defined situation in this regard. Therefore, it is necessary to think about concretizing the provisions on the temporary overseer and recognizing him as a public official.