Bankruptcies – for creditors
The petition in bankruptcy
The creditor is entitled to file a petition for bankruptcy with regard to the debtor. Bankruptcy proceedings are a route for the recovery of debts alternative to enforcement proceedings. The “cost-effectiveness” of filing the petition requires an in-depth analysis.
The requirement for declaring bankruptcy is the debtor’s insolvency. The debtor is insolvent if he or she has lost the ability to perform his or her due monetary obligations. It is assumed that the debtor has lost their ability to perform due monetary obligations if the delay in the performance of these obligations exceeds 3 months.
Filing a proof of claim
Filing a proof of claim functions in bankruptcy proceedings as a court action. As a rule, filing a proof of claim is necessary to satisfy one’s claims against the bankrupt in bankruptcy proceedings. Creditors who have failed to file a proof of claim, or whose claims have been dismissed by the trustee in bankruptcy, do not take part in the division plan.
Filing a proof of claim is a formalized pleading, i.e. it must satisfy the formal requirements specified in bankruptcy law. It should be performed within 30 days of the notice of a decision to declare bankruptcy.
Appeal against the list of claims
The trustee in bankruptcy has the right to refuse to recognize a claim filed by a creditor in whole or in part. The creditor’s means of defence is their appeal against the refusal to recognize the claim. Appealing against a list of claims should be made within two weeks of the date of notice. In the event of dismissal of the appeal by the court commissioner, the creditor is entitled to file a complaint.
The creditor has the right to appeal also against the recognition of a claim. As a rule, in this case the creditor challenges the fact that another creditor included in the list of claims is not entitled, or is entitled to a claim in a lower amount.
Board of creditors
The creditors’ chances of satisfying his or her claims depend on the efficiency of the conducting of the proceedings by the trustee in bankruptcy. The lower the costs of the bankruptcy proceedings, the bigger the chances of a satisfactory conclusion to the proceedings for the creditors. If components of the bankruptcy estate are sold at higher prices, the sum to be distributed among the creditors will be bigger.
The board of creditors is an insolvency proceedings body the composition of which generally consists of five members and two deputies. Members of the board of creditors perform their duties in person or by proxy.
The board of creditors has wide powers to control the trustee in bankruptcy. It takes strategic decisions, and among other functions, it determines the selling price of the assets in the case of single-source sale, and it may also adopt a resolution to change the trustee in bankruptcy.
Objections to the company’s description and estimation
The main part of the description and estimation of the company is the valuation of the bankrupt’s assets. It is important for the creditors, since an undervalued valuation reduces the creditors’ chances of obtaining the settlement of their claims. By way of raising objections to the company’s description and estimation, the valuation of the bankrupt’s assets can be undermined. Objections to the company’s description and estimation must be lodged within one week of the date of notice of their submission to the judge-commissioner. The objections are adjudicated upon by the judge-commissioner. In the case of doubt as to the reliability or correctness of a description and estimation, the judge-commissioner appoints an expert to draw up a new description and estimation.
Creditors in bankruptcy
Creditors in bankruptcy are generally persons whose claims arose after the declaration of bankruptcy, e.g. as a result of concluding a settlement with the trustee in bankruptcy. Those claims should be satisfied by the trustee in bankruptcy in the first place, after paying the costs of proceedings. If the trustee in bankruptcy refuses to pay, the creditor has hampered possibilities of asserting his or her claims. Following the declaration of bankruptcy, it is unacceptable to submit the assets forming part of the bankruptcy estate to enforcement.
Secured creditors are a group of preferential creditors in bankruptcy proceedings. They have the right to satisfy their claims from the sum obtained from the sale of the subject of a mortgage or lien, with priority over other creditors. Their rights and interests may be infringed in the bankruptcy proceedings, e.g. by selling an asset at a reduced price or by incorrectly reducing the sum from the sale of the asset by the costs of bankruptcy proceedings.
Asserting claims from management board members
Failure to obtain satisfaction in bankruptcy proceedings does not rule out the chances of the recovery of debts. Persons required to file a petition in bankruptcy shall be liable for damage caused as a result of failure to file a petition in bankruptcy pursuant to Article 21 of the bankruptcy law. In the case of limited liability companies, the basis of liability of management board members may be the provision of Article 299 of the Commercial Companies Code. Should execution against the company prove ineffective, management board members are jointly and severally liable for its obligations.