Final Court Victory in a Case Concerning a Ban on Conducting Business Activity.

Final Victory in Proceedings Concerning a Ban on Conducting Business Activity

In a case handled by our firm, the court has finally and conclusively dismissed a motion seeking to impose on our Clients a ban on conducting business activity and serving, among others, on the governing bodies of commercial companies.

Background of the Case

The proceedings concerned the liability of management board members in connection with the insolvency of a company and the statutory grounds set out in Articles 373 and 374 of the Polish Bankruptcy Law. The applicant alleged, among other things, that our Clients had failed to file for bankruptcy within the required timeframe and had undertaken actions that allegedly contributed to the deterioration of the company’s financial condition.

The Court’s Findings

Following proceedings that lasted more than eight years, the court fully accepted the arguments presented by our counsel and concluded that there were no grounds to impose a ban on conducting business activity on our Clients.

In particular, the court found that:

• our Clients could not be held responsible for failing to file a bankruptcy petition within the statutory deadline;
• upon obtaining reliable knowledge of the company’s financial situation, they took appropriate steps to assess it accurately;
• the bankruptcy petition was prepared and filed without undue delay;
• it was not proven that the Clients’ actions caused the company’s insolvency or worsened its financial condition;
• nor was it demonstrated that creditors suffered any detriment as a result of the Clients’ conduct.

The court also emphasized that a ban on conducting business activity is a discretionary measure intended to protect the security and integrity of commercial transactions, and should not constitute a disproportionate sanction against individuals who have not acted dishonestly or culpably.

Final Resolution of the Proceedings

The judgment of the court of first instance was subsequently upheld by the Court of Appeal, resulting in the final and binding conclusion of the proceedings with a complete victory for our Clients.

This ruling confirms that merely serving as a management board member during a period of financial difficulties does not constitute sufficient grounds for imposing a ban on conducting business activity. Such a measure requires proof of specific statutory prerequisites, including fault, a causal link between the individual’s conduct and the consequences for the company, and the person’s actual influence on the company’s situation.

Significance of the Judgment for Management Board Members

The case serves as an important reminder for corporate executives of the need to properly document their actions, respond promptly to signs of impending insolvency, and seek professional legal assistance at every stage of the proceedings.

We are pleased to have successfully protected our Clients’ professional reputation, career achievements, and ability to continue conducting business activities.

Lawyer Leading the Case

Marta Owczarczyk – Department Director, Attorney-at-Law, Restructuring Advisor, Insolvency and Restructuring Law Department.