Use of an extract from the inventory of receivables as an enforceable title

A statement of creditors and their claims can be used to initiate enforcement against the debtor in certain situations.

Restructuring proceedings, in addition to their essential functions, in certain situations also make it easier for creditors to enforce the debtor’s obligations. The aggregate listing of persons and amounts owed to them makes it possible to ascertain the debtor’s specific obligations in a precise manner and, if necessary, direct them to enforcement. This is made possible by an extract from the inventory of debts, which, when provided with an enforcement clause, constitutes an enforceable title.

General rules

According to Article 102 (1) and (2) of the P.R., an extract from an approved inventory of receivables may, in certain situations, be an enforcement title. This means that only those creditors who are included in the approved part of the inventory may apply for an enforcement clause.

The law stipulates that an arrangement may be concluded despite the failure to address some of the objections to the inventory of claims (Article 98(2) p.r.). In such a case, the judge-commissioner approves the inventory to the extent not covered by the pending objections. On the other hand, its remaining part remains unapproved until the end of the proceedings. In addition, an enforcement title will not arise in proceedings for approval of an arrangement or in simplified restructuring proceedings, in which the court does not issue an order approving the inventory of claims.

Enforcement title for failure of restructuring

There are times when an arrangement is not approved, concluded, or the restructuring fails for other reasons. In such a situation, creditors can use the inventory of claims as an aggregate list of enforcement titles against the debtor. To this end, after the proceedings have been validly terminated, each of them may apply to the restructuring court for an enforceability clause to be placed on the extract from the inventory. Such an extract shall include the designation of the creditor and the claim to which he is entitled. The possibility of obtaining such an enforcement order also arises if the arrangement is revoked.

The creditor does not have to prove that the proceedings ended unfavorably for the debtor. He sends the letter to the restructuring court, which has the case file (Article 781 § 1 of the Code of Civil Procedure). The application is subject to a fee of PLN 50. When requesting an enforceability clause, the creditor demands that it be granted on a title other than a court decision (Article 71(1) of the Code of Civil Procedure).

After the Supreme Court (SN) issued its resolution of January 18, 2019, III CZP 55/18, it is unclear in what relation the new enforcement title (extract from the inventory) remains to court judgments obtained before and during restructuring proceedings. In this resolution, the Supreme Court pointed out that obtaining a new enforcement title – an extract from the list of claims in bankruptcy proceedings – makes a pending civil proceeding over the same claim unnecessary. This can lead to the conclusion, expressed explicitly in the doctrine, that the existing title loses its enforceability with the final discontinuance or final refusal to approve the arrangement. The condition is that the creditor is included in the approved inventory.

The situation in which a previously obtained judgment loses enforceability is undoubtedly unfavorable to creditors. As a result, suspended executions (Articles 259(1) p.r., 312(1) p.r.) cannot be taken up after the proceedings are completed. Any such proceedings must be discontinued by the court (Article 824 § 1(5) of the Code of Civil Procedure). It is worth noting that an enforcement title in the form of an extract from the inventory is often much poorer than a judgment or order for payment. It covers only interest up to the date prior to the opening of the proceedings (Article 79(2) p.r.). In contrast, unmatured claims are discounted (Article 79(1) p.r.).

Enforcing the arrangement

An extract from the inventory of receivables can help a creditor enforce his receivables after final approval of the arrangement. Enforcement of the obligation – regardless of the rulings obtained earlier is, in addition to the request for revocation of the arrangement provided for in Article 176(1) p.r., an additional guarantor for the creditor. In such a case, not only an extract from the inventory, but also an extract from the order approving the arrangement, which contains the contents of the arrangement, is used to grant an enforceability clause.

In the case of an installment arrangement, the extent of the enforced obligation depends on whether the individual payment deadlines have already passed. The court or registrar, when examining the application for a clause, must determine whether the debt is due and to what extent. Since it is not possible to grant an enforceability clause for future installments, the creditor, in order to compel the debtor to perform the arrangement, should renew the application for an enforceability clause each time. This entails paying a fee each time, treated as a necessary cost of enforcement and returned from the enforced debtor in execution. For this reason, a more effective means of forcing the debtor to enforce the installment agreement is the aforementioned request for revocation. However, obtaining an enforcement clause on several occasions may be an argument for the court to consider that the debtor is not executing the arrangement.

Extended effectiveness of the inventory

An extract from the inventory can also be used as an enforceable title against the person who provided security for the execution of the arrangement. This is possible as long as he has filed with the court a document stating that he has given it. The statement in question is the one attached to the arrangement proposals (Article 158(1) p.r.). Before applying for an enforceability clause, the creditor should verify that such a document is on file. The mere final approval of the arrangement, or even the effective establishment of collateral in the form prescribed by law (e.g., the establishment of a mortgage), will not relieve the court of its duty to examine, as part of the clause proceedings, whether the document – originating from the grantor of the collateral – has been filed with the court.

The inventory can also be used by the Social Security Administration against the acquirer of all the debtor’s assets. It can do so in the event of the assumption of contribution liabilities in a liquidation arrangement. An extract from the inventory with an enforcement clause against such an entity can be referred to administrative enforcement.

Summary

In restructuring proceedings, the debtor seeks an agreement with his creditors in the form of an arrangement made under the control of the court. One of the steps that is necessary for this purpose is an aggregate listing of all creditors and their claims in the form of an inventory of claims. The provision of Article 102 p.r. allows this document to be used to initiate enforcement against the debtor in certain situations.