Tax treatment in the hands of the creditor
Polish tax regulations provide three major methods for obtaining a tax deduction for irrecoverable debt: waiver or forgiveness of debt, debt write-off and revaluation write-off.
Poland’s Supreme Court in a recent ruling found a grant of security for parallel debt to be invalid.
On 9 October 2009, a three-judge panel of the Supreme Court issued a judgment (file no. IV CSK 145/09), in which it ruled that the Polish legal system provides for the possibility to secure claims under a parallel debt (created under foreign law).
Facts of the case
According to article 11 of Poland’s Bankruptcy and reorganisation law as of 28 Feb-ruary 2003 (Journal of laws 2009, No. 175, position 1361, as amended), a debtor who is a legal person (including, in particular, a limited liability company) is considered to be insolvent when the value of its liabilities exceeds the value of its assets, even if the debtor continues to pay its liabilities (balance sheet insolvency).
A syndicated loan involving several lenders requires a plain and transparent security structure that will be easy to enforce if an event of default occurs. For this purpose a security agent is often appointed, who holds all of the established security interests. In these cases a parallel debt is typically created according to which any amounts owed from time to time by any of the borrowers and/or guarantors to the lenders are also owed to the security agent (abstract acknowledgement of debt).
The European Commission has published a new proposal for a Directive that would harmonise certain aspects of insolvency law across the EU. This proposal, following the enactment of Directive (EU) 2019/1023, illustrates a strong desire to facilitate the free movement of capital within Europe. A significant part of the proposed Directive is designed to make laws governing avoidance actions uniform across the EU.
In Poland, pre-pack insolvency sales have been available since 1 January 2016. The legal framework regulating pre-pack insolvency sales was introduced into Polish insolvency law as part of a major reform of insolvency legislation that was aimed at preserving the value carried by the assets of insolvent entities and to ensure higher satisfaction for creditors.
It has been just over a year since the introduction of Poland's new electronic insolvency procedure. The new procedure, introduced on 1 December 2021, is generally conducted via an online platform, the National Debtors’ Register, and has brought about a revolutionary change to Polish insolvency procedure.
Positive developments
Faster access to the court - Documents filed on the online platform are instantly disclosed to the judge and to the other parties involved. The court’s decisions are also delivered quickly to the parties.
It has been just over a year since the introduction of Poland's new electronic insolvency procedure. The new procedure, introduced on 1 December 2021, is generally conducted via an online platform, the National Debtors’ Register, and has brought about a revolutionary change to Polish insolvency procedure.
Positive developments
Faster access to the court - Documents filed on the online platform are instantly disclosed to the judge and to the other parties involved. The court’s decisions are also delivered quickly to the parties.
It has been just over a year since the introduction of Poland's new electronic insolvency procedure. The new procedure, introduced on 1 December 2021, is generally conducted via an online platform, the National Debtors’ Register, and has brought about a revolutionary change to Polish insolvency procedure.
Positive developments
Faster access to the court - Documents filed on the online platform are instantly disclosed to the judge and to the other parties involved. The court’s decisions are also delivered quickly to the parties.