Can Director in a Polish Company Be Held Personally Liable For Company Debts?

A director in a Polish limited liability company, who did not file for bankruptcy within 30 days from the moment of company becoming insolvent, will be held personally liable for the company debts, if the execution against the company turns out to be ineffective. This results from Art. 299 of the Commercial Code which says that if the execution against the company turns out to be ineffective, the members of the board are jointly and severally liable for the company’s liabilities.
So, if the execution against the company turned out to be ineffective, each creditor of the company is able to sue a member of the board individually or all of them jointly and severally for the unpaid debt together with interests and the costs of execution proceedings.
 
A director will not be held liable for the company debts if he can prove that he filed petition for bankruptcy on time which means not later than within 30 days from the moment of company becoming insolvent. This results from Art. 299 para 2 of the Commercial Code which says that a member of the board can free himself from the liability referred to in para 1, if he can prove that he filed petition for bankruptcy on time.
 
Please note that the petition for bankruptcy must be filed on time ( i.e. not later than within 30 days from the moment of company becoming insolvent) and all other formalities (including the payment of the court fee) must be met. If the petition for bankruptcy is rejected by the court or if the technical defects of this petition for bankruptcy are not remedied on time, it will not work and it will not be sufficient evidence to avoid personal liability.
 
If a director did not file for bankruptcy within 30 days from the moment of company becoming insolvent, he can free himself from personal liability only if he can prove the following:
 

• • that the failure to apply for bankruptcy was not his fault (i.e. that even if he had acted with extraordinary care, he would not have been able to file for bankruptcy on time)
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•    or
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  • • that despite the failure to apply for bankruptcy on time, the creditor did not incur any damage (i.e. that even if the director had filed for bankruptcy on time, the creditor would not have been able to receive any money).
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    Please note that the only thing which the creditor has to prove in the proceedings against the members of the board is that the execution against the company turned out to be ineffective. It is the directors who want to defend themselves, who have to prove that either there has been no fault on their side or that the creditor did not incur any damage.
     
    To sum up, if you are a director in a Polish company, it is up to you to keep a finger on your company’s pulse and to call for help if necessary. You should be aware that you are personally liable for the company’s debts and that this liability is almost automatic. This is unique comparing with other jurisdictions.