{"id":6067,"date":"2024-08-20T08:00:00","date_gmt":"2024-08-20T06:00:00","guid":{"rendered":"https:\/\/pmrsa.pl\/?p=2646"},"modified":"2025-05-31T06:06:46","modified_gmt":"2025-05-31T06:06:46","slug":"effects-of-concealment-of-information-having-a-significant-impact-on-pending-insolvency-proceedings-of-a-consumer-part-2","status":"publish","type":"post","link":"https:\/\/pmrsa.pl\/en\/effects-of-concealment-of-information-having-a-significant-impact-on-pending-insolvency-proceedings-of-a-consumer-part-2\/","title":{"rendered":"Consequences of withholding information materially affecting pending consumer insolvency proceedings - Part 2"},"content":{"rendered":"<p class=\"wp-block-paragraph\"><em>This article continues the thread of misinformation in consumer insolvency proceedings and the effects this can have.<\/em><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Most acts contain a catalogue of entities to which their provisions may be applied.<\/strong> The Bankruptcy Law is no exception to this, as it contains provisions that regulate the range of entities entitled to use the bankruptcy procedure. The main division of the bankruptcy institution includes bankruptcy proceedings conducted against entrepreneurs and bankruptcy proceedings conducted against individuals who do not conduct business activity.<\/p>\n\n\n\n<h4 class=\"wp-block-heading has-text-align-center\">A few words about the article - Listen<\/h4>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<figure class=\"wp-block-audio\"><audio controls src=\"https:\/\/pmrsa.pl\/wp-content\/uploads\/2024\/08\/Skutki-zatajenia-informacji-majacych.mp3\"><\/audio><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>By their very nature, the two types of proceedings are conducted differently and the rationale is also different,<\/strong> which must be met in order to benefit from these procedures. An important difference consists, inter alia, in the necessity to have assets to cover the costs of the bankruptcy proceedings and partial satisfaction of creditors, in the case of proceedings conducted against business entities. In contrast, in the case of consumer proceedings, this prerequisite does not exist at all, hence such proceedings may be conducted even if the debtor does not have any assets.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>This is a great advantage and may lead those interested in declaring bankruptcy to prefer this type of procedure,<\/strong> and additionally create an incentive to dare to get rid of or hide assets from others <a href=\"https:\/\/pmrsa.pl\/en\/does-filing-a-bankruptcy-petition-suspend-enforcement\/\" data-wpil-monitor-id=\"1081\">filing a bankruptcy petition<\/a>. But what happens when an entrepreneur submits an application for an announcement? <a href=\"https:\/\/pmrsa.pl\/en\/important-information-about-consumer-bankruptcy-in-poland\/\" title=\"\">consumer bankruptcy?<\/a> Well, such an application should be dismissed, as it was submitted by an unauthorised person. However, what will be the consequences if the trader conceals information that he conducts <a href=\"https:\/\/pmrsa.pl\/en\/restructuring-of-a-sole-proprietorship\/\" title=\"\">business activity?<\/a><\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>From PMR Restructuring practice<\/strong><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Such an event occurred in an insolvency proceeding in which one of our colleagues was appointed to act as trustee.<\/strong> At the stage of hearing the consumer bankruptcy application, the Court did not find that the applicant was engaged in business activity. The order declaring <a href=\"https:\/\/pmrsa.pl\/en\/economic-bankruptcy\/\" title=\"\">bankruptcy was issued as against a non-business person.<\/a> The trustee's verification activities revealed the active status of the business <a href=\"https:\/\/pmrsa.pl\/en\/business-bankruptcy-information\/\" title=\"\">business on the date of the bankruptcy<\/a> debtor, making it impossible to conduct consumer insolvency proceedings. For these reasons, the proceedings were discontinued.<br><br><strong>Let us not forget that the trustee has extensive powers and duties in which he examines the debtor's situation and verifies the veracity of the information provided by the debtor.<\/strong> Also, the public administrative authorities are obliged to provide the trustee with the information necessary to fulfil the purpose of the insolvency proceedings. The statement of the Greek poet Menander, 'Sometimes the truth comes out, although no one was looking for it', is also not infrequently very apt, and much can be gleaned from the documents that come to the insolvency practitioner.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>In our proceedings<\/strong> We most frequently encounter situations in which debtors conceal information about the disposal of their assets shortly before declaring bankruptcy. Such actions aim to conceal or dispose of valuable assets in order to prevent their sale to the trustee.<br><\/p>\n\n\n\n<h4 class=\"wp-block-heading\">From PMR Restructuring practice<\/h4>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>In one of the proceedings, the debtor declared in her bankruptcy petition that she had no assets.<\/strong> Also at the stage of the relevant bankruptcy proceedings, she duplicated this declaration and, in addition, declared that she had not made any legal acts involving the disposal of her property in the last 12 months before the date of the bankruptcy petition. As part of the obligation of the Polish Postal Service in these proceedings to send to the trustee all correspondence addressed to the bankrupt, the trustee came into possession of a summons from the Tax Office to complete the Information on Premises.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Further activities revealed,<\/strong> that, not long before the filing of the bankruptcy petition, the debtor had gifted a valuable asset to a close relative. This would have had far-reaching consequences aiming, among other things, at the disposal of this asset in the course of the insolvency proceedings, but the bankrupt nevertheless filed for the discontinuation of the insolvency proceedings, thus nullifying her chance of becoming indebted.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>At this point it is worth noting,<\/strong> that the question of performing legal acts affecting the shape of the assets of a person intending to file for bankruptcy is an extremely interesting issue which, in its breadth, is an excellent topic for a separate article.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>The bankrupt's obligations to provide truthful and accurate information do not end when the bankruptcy petition is filed,<\/strong> nor during the course of the insolvency proceedings, and even if a plan order is issued <a href=\"https:\/\/pmrsa.pl\/en\/the-franc-borrower-goes-bankrupt-the-problem-with-the-repayment-terms-remains\/\" title=\"\">repayment or a conditional order<\/a> decommitment. During the implementation period of the plan <a href=\"https:\/\/pmrsa.pl\/en\/problems-with-the-repayment-conditions-of-swiss-franc-loans-despite-bankruptcy\/\" title=\"\">repayments<\/a> The insolvency practitioner is then under an additional obligation to submit a report to the Court, in which the insolvency practitioner is obliged to inform the Court, among other things, of the current financial situation by indicating the income generated and the assets acquired of a certain value.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Providing false information in the report, <\/strong>or making a legal act that could worsen the bankrupt's financial situation without the court's approval or the lack of the court's approval of such an act, concealing assets or making a legal act by the bankrupt that has been validly declared as made to the detriment of the creditors may lead to the annulment of the decision on the repayment plan or the decision on conditional discontinuance of liabilities. This is tantamount to the bankrupt failing to obtain debt relief and continuing to be obliged to pay its debts.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><em>The consequences of concealing or falsifying facts can therefore be very severe, but their catalogue is not yet exhausted. I will cite more below, this time from the field of compensatory and criminal liability.<\/em><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>The debtor submitting <a href=\"https:\/\/pmrsa.pl\/en\/whether-an-employee-can-file-for-bankruptcy-of-the-employer\/\" data-wpil-monitor-id=\"1080\">bankruptcy petition<\/a> is obliged to submit a declaration that the data provided in the application is true.<\/strong> At the same time, the debtor is liable for the damage caused as a result of providing false data in the bankruptcy petition. This damage may, for example, consist in charging the debtor with the costs of suspended and discontinued enforcement proceedings. The basis for calculating the amount of the damage may be, in particular, the losses and lost profits related thereto. However, the fundamental problem is to demonstrate that the court - knowing the falsity of certain information from the debtor - would not have declared bankruptcy. Indeed, the only condition for dismissing a bankruptcy petition is the solvency of the debtor. Therefore, the actual holding of the bankrupt to this liability appears to be unlikely.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>However, a more significant sanction is provided for in Article 522 of the Insolvency Law.<\/strong> According to paragraph 1, anyone who, being a debtor, provides false data in an application for declaring bankruptcy - shall be subject to the penalty of imprisonment from 3 months to 5 years. It is further stated that the same penalty shall apply to anyone who, being a debtor, in the proceedings concerning the declaring bankruptcy <a href=\"https:\/\/pmrsa.pl\/en\/consumer-bankruptcy-information\/\" data-wpil-monitor-id=\"1513\">bankruptcy gives the court false information<\/a> regarding the state of the debtor&#039;s assets. And the same sanction applies if the bankrupt does not deliver to the trustee all the assets included in the bankruptcy estate, accounting books or other documents concerning his assets, or does not provide the trustee or judge-commissioner with information concerning this assets. The crimes described above are intentional and are prosecuted ex officio.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>It is also worth being aware that there are many more regulations, <\/strong>which relate to the making of e.g. false statements, falsification of documents, etc., which may lead to criminal liability, the application of which is in no way excluded by the insolvency proceedings. Also the trustee is under the responsibility and compulsion to act in accordance with the law, and thus under the obligation to signal to the relevant authorities that the bankrupt has committed an offence prosecuted ex officio, on pain of being charged with exceeding or failing to fulfil his duties as a public official.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Taking into account the considerations made above, it should be clearly stated,<\/strong> that a debtor who conceals important information in the context of insolvency proceedings risks not only the discontinuation of insolvency proceedings, but also the denial of debt relief and even imprisonment. Anyone contemplating a misrepresentation in insolvency proceedings should make an internal calculation between the hypothetical gain from the untruth and the real risk of its detection and the related consequences. I hope, however, that the arguments cited will tip the scales in favour of truth and social justice.<\/p>","protected":false},"excerpt":{"rendered":"<p>This article continues the discussion of misinformation in consumer bankruptcy proceedings and the consequences it can have. Most legal acts contain a list of entities to which their provisions may apply. The Bankruptcy Law is no exception, as it contains provisions regulating the scope of entities eligible to use bankruptcy procedures. The basic division of bankruptcy institutions includes bankruptcy proceedings conducted against entrepreneurs and bankruptcy proceedings conducted against individuals who do not conduct business activity. A few words about the article - Listen. By their very nature, both types of proceedings are conducted differently, and the conditions that must be met to use these procedures are also different. A significant difference lies in the requirement to have assets to cover the costs of bankruptcy proceedings and partially satisfy creditors in the case of proceedings conducted against businesses. However, in the case of consumer proceedings, this condition does not exist at all, therefore such proceedings can be conducted even if the debtor has no assets. This is a significant advantage and may encourage those interested in declaring bankruptcy to prefer this type of procedure, and additionally create an incentive to presumptively dispose of or conceal assets before filing for bankruptcy. But what happens if an entrepreneur files for personal bankruptcy? Such a petition should be dismissed because it was filed by an unauthorized person. But what are the consequences if an entrepreneur conceals the fact that they are running a business? From the experience of PMR Restrukturyzacje Law Firm, such an event occurred in bankruptcy proceedings in which one of our colleagues was appointed as the bankruptcy trustee. During the review of the consumer bankruptcy petition, the court failed to find that the applicant was running a business. The bankruptcy order was issued against a person not conducting business activity. The trustee&#039;s verification activities revealed the active business status on the date the debtor&#039;s bankruptcy was declared, which prevents the conduct of consumer bankruptcy proceedings. For these reasons, the proceedings were discontinued. Let&#039;s not forget that the bankruptcy trustee has extensive powers and responsibilities, which include examining the debtor&#039;s situation and verifying the accuracy of the information provided by the debtor. Public administration bodies are also obligated to provide the bankruptcy trustee with the information necessary to achieve the purpose of bankruptcy proceedings. The words of the Greek poet Menander often prove to be very accurate: &quot;Sometimes the truth comes to light, even though no one sought it,&quot; and the documents submitted to the bankruptcy trustee can reveal much. In our proceedings, we most often encounter situations in which debtors conceal information about the disposition of their assets shortly before the bankruptcy is declared. Such actions are intended to conceal or dispose of valuable assets to prevent their sale to the bankruptcy trustee. From the experience of PMR Restrukturyzacje Law Firm: In one of the proceedings, the debtor declared in her bankruptcy petition that she had no assets. During the bankruptcy proceedings, she also repeated this statement and further declared that she had not performed any legal acts involving the disposal of her assets in the 12 months prior to filing the bankruptcy petition. As part of the Polish Post&#039;s obligation in these proceedings to forward all correspondence addressed to the bankrupt to the trustee, the trustee obtained a summons from the Tax Office to complete the Information on the Premises. Further investigation revealed that shortly before filing the bankruptcy petition, the debtor had given a valuable asset to a loved one. This would have had far-reaching consequences, including the disposal of the asset during the bankruptcy proceedings. Nevertheless, the bankrupt requested the bankruptcy proceedings to be discontinued, thus thwarting her chances of debt relief. It&#039;s worth noting that the issue of performing legal acts that affect the assets of a person intending to file for bankruptcy is an extremely interesting topic, one that, in its depth, would be an excellent subject for a separate article. The bankrupt&#039;s obligation to provide truthful and accurate information does not end with the filing of a bankruptcy petition, nor during bankruptcy proceedings, and even if a decision on a repayment plan or conditional debt relief is issued. During the repayment plan or conditional debt relief period, the bankrupt is then subject to the additional obligation to submit reports to the court, in which they must provide information, among other things, on their current financial situation, indicating their income and acquired assets with a value specified by law. Providing false information in the report, or performing a legal act that could worsen the bankrupt&#039;s financial situation without court consent or without court approval of such an act, concealing assets, or undertaking a legal act by the bankrupt that has been legally recognized as detrimental to creditors, may lead to the revocation of the decision on the repayment plan or conditional debt relief. This is equivalent to failure to obtain debt relief and the bankrupt&#039;s continued obligation to settle their liabilities. The consequences of concealing or falsifying facts can be very severe, but their list has not yet been exhausted. Below, I will cite further ones, this time in the area of compensatory and criminal liability. When filing a bankruptcy petition, a debtor is required to submit a declaration confirming that the information provided in the petition is true. At the same time, the debtor is liable for any damage caused by providing false information in the bankruptcy petition. This damage may, for example, involve charging the debtor with the costs of suspended and discontinued enforcement proceedings. The basis for calculating the amount of damages may be, in particular, the losses and lost profits associated with such proceedings. The fundamental problem, however, is demonstrating that the court \u2013 had it known that certain information provided by the debtor was false \u2013 would not have declared bankruptcy. The only basis for dismissing a bankruptcy petition is the debtor&#039;s solvency. Therefore, the actual imposition of this liability on the bankrupt party appears unlikely. However, a more significant sanction is provided for in Article 522 of the Bankruptcy Law. Pursuant to paragraph 1. 1, anyone who, being a debtor, provides false information in a bankruptcy petition is subject to a prison sentence of three months to five years. The same penalty applies to anyone who, being a debtor, provides the court with false information regarding the debtor&#039;s assets during bankruptcy proceedings. The same penalty applies if the bankrupt fails to hand over all assets included in the bankruptcy estate, accounting records, or other documents concerning their assets to the trustee, or fails to provide the trustee or judge-commissioner with information concerning such assets. The offenses described above are intentional and are prosecuted ex officio. It is worth considering<\/p>","protected":false},"author":16,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[19],"tags":[],"ppma_author":[35],"class_list":["post-6067","post","type-post","status-publish","format-standard","hentry","category-blog"],"authors":[{"term_id":35,"user_id":16,"is_guest":0,"slug":"m-zabinskapmr-restructuring-pl","display_name":"Magdalena \u017babi\u0144ska","avatar_url":{"url":"https:\/\/pmrsa.pl\/wp-content\/uploads\/2024\/09\/user07-1.jpg","url2x":"https:\/\/pmrsa.pl\/wp-content\/uploads\/2024\/09\/user07-1.jpg"},"0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":"","8":""}],"_links":{"self":[{"href":"https:\/\/pmrsa.pl\/en\/wp-json\/wp\/v2\/posts\/6067","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/pmrsa.pl\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/pmrsa.pl\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/pmrsa.pl\/en\/wp-json\/wp\/v2\/users\/16"}],"replies":[{"embeddable":true,"href":"https:\/\/pmrsa.pl\/en\/wp-json\/wp\/v2\/comments?post=6067"}],"version-history":[{"count":0,"href":"https:\/\/pmrsa.pl\/en\/wp-json\/wp\/v2\/posts\/6067\/revisions"}],"wp:attachment":[{"href":"https:\/\/pmrsa.pl\/en\/wp-json\/wp\/v2\/media?parent=6067"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/pmrsa.pl\/en\/wp-json\/wp\/v2\/categories?post=6067"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/pmrsa.pl\/en\/wp-json\/wp\/v2\/tags?post=6067"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/pmrsa.pl\/en\/wp-json\/wp\/v2\/ppma_author?post=6067"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}