Adam Studziński | In Principle

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.

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.

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.

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.

During a crisis, the risk of running a business increases, and not just for “natural” reasons. There is also a growing number of unlawful behaviours by businesses, from incurring obligations they cannot honour to evading their existing liabilities. Too many businesses treat hard times as a great opportunity to shift the risk of their operations to counterparties who aren’t as “clever.”

A creditor has a chance to obtain satisfaction through a fraudulent transfer claim even if the debtor disposed of its assets before the claim arose. The intention to injure future creditors is demonstrated by the foreseeability of insolvency, and thus the debtor’s expectation of becoming insolvent with respect to potential creditors.

The possibility of seeking damages from a person who has knowingly benefited from a wrong done to another may offer the victim the only practical chance of obtaining even partial recompense. Often the immediate wrongdoer is insolvent, while someone else gains from the unlawful act.

Liability for money laundering in the case of persons assisting in actions taken by dishonest debtors to the detriment of creditors.

The defectiveness (unlawfulness) of a tax decision isn’t enough. Injury must also be proved, and an ordinary causal link between issuance of the decision and the injury.

Legal measures for amicable resolution of a criminal case initiated by a creditor to enforce a receivable against assets depleted by the unlawful acts of the debtor.

A creditor affected by asset-stripping by a debtor doesn’t have to remain a passive victim of dishonesty.

The penal sanction of the duty to redress loss or provide satisfaction for injury, which may be imposed on a dishonest debtor by the criminal court, protects the interests of creditors.