Adam Studziński
Which court should hear a fraudulent transfer case against a third party or a case seeking to protect real performance of a contract?
30.06.2022
Actio pauliana, protection of contracts, creditor protection
To challenge a transaction by a debtor with a third party injurious to a creditor (fraudulent transfer action) or a contract by the debtor with a third party (action under Civil Code Art. 59), it is essential to file the properly drafted statement of claim with the court with proper venue geographically and for the subject matter. How to determine which court is proper to hear the case?
When the other party seeks to prevent performance of a contract
30.06.2022
protection of contracts, creditor protection
After conclusion of a preliminary agreement for sale or long-term tenancy of real estate, the owner refuses to conclude the final agreement, instead selling the property to another buyer or delivering the property to another tenant. Or imagine a contract for future delivery of rare, hard-to-find components essential for manufacturing, where the seller then enters into another contract promising to supply a direct competitor, preventing the supply to the original buyer. In such situations, does the original buyer have a claim other than for monetary damages for breach of contract, or can it enforce performance of the original contract?
Fraudulent transfer claim against a third party: A basic instrument for protecting creditors against debtors’ insolvency
30.06.2022
Actio pauliana, creditor protection
The deepening crisis of debtor honesty means that today, more than ever, creditors face the risk that debtors will not only fail to pay their debts voluntarily, but will hinder enforcement by transferring assets to third parties. In such situations, a fraudulent transfer claim against the third party (sometimes called a “Pauline action”), known and applied in legal systems of many countries around the world, comes to the creditor’s rescue.
Persons handling a dishonest debtor’s affairs may be liable to creditors
02.06.2022
damages for creditors, criminal law in creditor protection, creditor protection
The Supreme Court of Poland regards protection of the creditor’s financial interests as the main purpose of punishing the debtor (and his supporters, if any) for behaviour preventing or diminishing the satisfaction of creditors. Therefore, persons handling the debtor’s affairs can be jointly and severally liable to the creditor.
Seizure of debtor’s shares in a company: Is it enough?
19.05.2022
interim relief and execution, creditor protection
Often, debtors’ shares in companies are subject to seizure in security or enforcement proceedings. But the debtor does not lose its status as a shareholder in the company after the shares are seized, and the creditor still remains a third party with respect to the company. Thus the debtor may continue to exercise the corporate rights attached to the seized shares, making it difficult for the creditor to satisfy its rights. So it is worth remembering the possibility of challenging corporate resolutions, and appointing a receiver for shares seized in enforcement or security proceedings.
Abuse of legal personality to the detriment of creditors
21.04.2022
criminal law in creditor protection, damages for creditors, creditor protection
Dishonest debtors display great ingenuity in evading their obligations. They may also turn to advisers who, for a hefty fee, provide “sophisticated” ideas to lead creditors astray. Often such ideas involve the creation of legal entities (sometimes a whole group or “chain”) to hide components of the debtor’s business from creditors. Such actions constitute abuse of legal personality for the purpose of harming creditors. Can dishonest debtors and their supporters (including advisers) who knowingly use such methods really rest easy?
Spouse’s consent to incur debt
21.04.2022
interim relief and execution, creditor protection
How should a spouse consent to incurring a debt encumbering the marital community property so that the creditor can obtain security against marital property or execute against marital property? And what should a creditor do if there is no written consent?
A fraudulent transfer claim does not always enjoy priority of satisfaction
07.04.2022
Actio pauliana, creditor protection
In a recent resolution, the Supreme Court of Poland addressed the legal situation of a creditor bringing a fraudulent transfer claim against a third party, compared to other creditors of the third party.
A chain of transactions designed to harm a creditor: Impossible to unwind?
07.04.2022
Actio pauliana, creditor protection
Often, both debtors and creditors believe that if a debtor has initiated a whole chain of transactions to evade paying debts, the case cannot be “unwound” and the creditor is defenceless. But in reality, in such situations dishonest debtors (and their allies) cannot rest easy. Both the legal provisions and the court practice give the creditor a chance to successfully challenge even a whole chain of fraudulent transactions.
Liability for damages of a person who assists a perpetrator
24.03.2022
creditor protection, damages for creditors
The effectiveness of pursuing claims for damages for a tort (a wrongful act) often depends on whether the injured party brings an action against a sufficiently wide range of defendants who can be held jointly and severally liable for damages. This range includes those who can be found to have knowingly assisted in causing injury.
Pursuing claims for the tort of selective payment of creditors as an alternative method of securing the interests of creditors overlooked by the debtor
24.03.2022
Actio pauliana, damages for creditors, criminal law in creditor protection, creditor protection, Supreme Court
In its judgment of 10 February 2021 (case no. I CSKP 33/21), the Supreme Court of Poland considered a cassation appeal by a claimant seeking to prove that it was wronged as a creditor in a fraudulent transfer claim against a third party (governed by Art. 527 and following of the Civil Code). The Supreme Court raised important issues in this debatable decision from the point of view of the safety of participants in commerce, including creditors. Among other things, the court pointed out that the assessment of whether a creditor was harmed within the meaning of Art. 527 §2 is affected by whether the consideration obtained by the debtor was used to satisfy other creditors.
How to properly formulate a fraudulent transfer claim against a third party: Conclusions from Supreme Court of Poland rulings
24.02.2022
Actio pauliana, creditor protection, Supreme Court
A claim to set aside fraudulent transfers to a third party (Art. 527 et seq. of the Civil Code) must precisely identify both the parties and the subject matter in the demand for relief set forth in the statement of claim. It is a mistake to assume that the trial court will seek out the missing elements in the justification for the statement of claim.