Bankruptcy is a court proceeding against a debtor who has stopped paying their debts. For an entrepreneur and a company it is an obligation — the petition must be filed within 30 days of becoming insolvent — and its purpose is to satisfy creditors from the assets as fully as possible. For a private person, consumer bankruptcy is voluntary and serves above all to clear debts. Both paths are governed by the Bankruptcy Law Act, and the whole procedure runs electronically in the National Register of Debtors.
Insolvency — when the basis for bankruptcy arises
The Act links bankruptcy to one condition: the insolvency of the debtor (Article 10 of the Bankruptcy Law). Article 11 describes it in two ways:
- liquidity criterion — the debtor is unable to meet due monetary obligations; the Act adopts the presumption that this state exists where the delay in payments exceeds three months,
- balance-sheet criterion — concerns only legal persons (e.g. a sp. z o.o. — limited liability company) and certain organisational units; it is met where monetary obligations exceed the value of assets for a period longer than 24 months.
The three-month presumption can be rebutted, but in practice it should be treated as an alarm signal. If an entrepreneur has not been paying key suppliers, ZUS or the tax office for a quarter, they should assume that the deadline for filing a petition is already running.
Obligation to file and consequences of delay
Under Article 21 of the Bankruptcy Law, the debtor has 30 days from the day on which the basis for declaring bankruptcy arose to file a petition with the court. In a company the obligation rests on every person entitled to manage its affairs and represent it, i.e. usually on each board member separately — not only on the chair.
| Consequence | Who it concerns | Basis |
|---|---|---|
| Personal, joint and several liability for the company's debts where enforcement against its assets is ineffective | management board members of a sp. z o.o. | Article 299 of the Code of Commercial Companies |
| Fine, restriction of liberty or imprisonment up to one year | management board members and liquidators of commercial companies | Article 586 of the Code of Commercial Companies |
| Ban on running a business and holding functions in companies from one to ten years | persons obliged to file the petition who are at fault for the delay | Article 373 of the Bankruptcy Law |
A management board member will be released from liability under Article 299 KSH if they show that the petition for bankruptcy (or the opening of restructuring proceedings) took place at the right time, that the delay was not their fault or that the creditor suffered no damage. That is why documenting board decisions during a crisis has significant evidential value.
Bankruptcy of an entrepreneur and company — the course
- Petition to the bankruptcy court — filed through the ICT system of the National Register of Debtors on an official form. The petition is accompanied, among others, by an up-to-date list of assets with valuation, a list of creditors with amounts and a list of securities. The fixed fee for a petition for the declaration of bankruptcy in 2026 is PLN 1,000.
- Proceedings on the declaration of bankruptcy — the court examines whether the debtor is insolvent and whether the assets will be enough at least for the costs of the proceedings. It may appoint a temporary court supervisor who secures the assets.
- Order declaring bankruptcy — the debtor's assets become the bankruptcy estate, and management of it passes to the trustee (syndyk). Creditors file their claims with the trustee electronically.
- List of claims and liquidation — the trustee verifies the filings, draws up the list, sells the assets and at least once a quarter files a report with the judge-commissioner.
- Distribution plan and conclusion — the funds go to the creditors in the categories provided for in the Act.
If the assets are not enough even to cover the costs of the proceedings, the court dismisses the petition. This does not, however, free the company's board from the risk of liability — dismissal of the petition on this ground is often grounds for a finding of ineffective enforcement.
Sole entrepreneur
A person running a business is liable for the company's debts with all their assets, including private ones. Their bankruptcy proceeds under the general provisions, but after the conclusion of the proceedings they can, within 30 days, file an application for a repayment plan to be set and the remaining obligations to be remitted (Article 369 of the Bankruptcy Law). This provides a path to debt relief similar to the one used by consumers.
Consumer bankruptcy
Natural persons who do not run a business use the simplified procedure regulated in Article 491¹ and the following. The petition is subject to a basic fee of PLN 30. After the declaration of bankruptcy, the trustee liquidates the assets forming part of the estate (excluding items necessary for daily life), and then the court decides on debt relief:
- a creditors' repayment plan — up to 36 months in which the bankrupt repays part of the debts; after its performance the remaining part is remitted,
- an extended plan — from 36 to 84 months, where the court finds that the debtor caused or significantly deepened the insolvency intentionally or through gross negligence,
- remission without a plan — where the bankrupt's personal situation clearly indicates a permanent inability to make any repayment,
- refusal of debt relief — among others when the insolvency was caused intentionally, e.g. by squandering assets.
While performing the repayment plan, the bankrupt cannot, without the court's consent, make legal acts concerning the assets that could impair their ability to perform the plan, and failure to perform the duties may lead to the plan being revoked.
A practical example
A sp. z o.o. running a wholesale of construction materials loses its main client. Since March it has not been paying the invoices of two suppliers, and in June the delay towards them exceeds three months. From that moment, the statutory presumption of insolvency applies, and the board has 30 days to decide. A sensible plan looks like this: commissioning accounting of the balance sheet as of the current day, analysis whether restructuring is realistic (e.g. an arrangement with creditors), and if not — filing a timely bankruptcy petition. Board resolutions and liquidity summaries from this period are worth archiving as evidence of due diligence.
Bankruptcy, liquidation or restructuring?
Bankruptcy is not the only way to end a business. A solvent company whose shareholders want to close it goes through liquidation of a sp. z o.o. — a procedure conducted by liquidators, without a trustee. A company with temporary difficulties but a profitable business model may consider restructuring proceedings; their timely opening also protects the board members from liability under Article 299 KSH. The full text of the regulations is available in the Internet System of Legal Acts.
How Good Balance can help
We help to assess the financial situation of the business, prepare the accounting data needed for the petition and plan the next steps. As part of a legal consultation we discuss whether bankruptcy, restructuring or liquidation is appropriate, and in case of changes in the composition of the board or in the articles of association we support with registering changes in the company.