In its resolution of 1 December 2017, III CZP 65/17, the Supreme Court addressed newly appointed limited liability company directors’ responsibility for debts arising after appointment where bankruptcy would inevitably be refused because the company was entirely insolvent. It considered Article 299 § 2 of the Commercial Companies Code, exempting directors from personal liability where the creditor suffered no loss despite failure to apply in time.
The resolution prompted scholarly debate because of its commercial significance. This article examines the Court’s position and arguments and their criticism.
The facts
Following unsuccessful enforcement, a creditor sued directors under Article 299. The District Court found that even an application immediately after appointment would not have produced recovery: the company was already wholly insolvent and Article 13(1) of the Bankruptcy Law would require refusal. It therefore applied the no-loss defence and dismissed the claim. The appellate court referred two questions:
1. Are directors liable under Article 299 § 1 where they fail to apply in time when the company is entirely insolvent and incur new obligations?
2. Does that failure cause creditor loss under § 2 where enforcement is unsuccessful and delay produces debts that would not otherwise arise, even if directors prove creditor recovery would have been identical had all duties been fulfilled?
The Supreme Court’s position
The Court held that a director appointed when the company was insolvent is liable for later debts even if a bankruptcy application would have been refused because assets could not cover costs or covered only costs. It gave five arguments, considered below alongside criticism.
The concept of loss
Two principal approaches exist. A. Kappes and A. Kidyba support exemption where asset analysis shows no creditor recovery even in bankruptcy. Numerous judgments reflect this, including V CSK 575/11 of 29 November 2012 and IV CSK 335/10 of 10 February 2011. No loss means failure to apply did not worsen recovery prospects.
The opposing approach makes a new director liable unless applying within thirty days of appointment. K. Osajda considers omission increases loss already caused by non-payment. The resolution similarly says no loss means the creditor’s assets suffer no adverse consequence from omission, yet liabilities automatically grow through interest on late performance, affecting creditor assets regardless of recovery prospects. It limits exemption to rare cases where company non-payment causes no creditor loss.
Marcin Walasiak strongly criticises this as undermining the defence’s purpose and legislative rationality: if loss means every creditor shortfall, directors could never invoke it, because unpaid company debt necessarily harms creditors. The Court gives no examples of its “rare cases”. If it means an independent event such as a market crash reducing recovery, the relevant defence would be absence of fault, not absence of loss.
The bankruptcy application’s function
The Court emphasises its information and warning function and Article 299’s objective of prompting applications as soon as insolvency occurs. Bankruptcy law allows thirty days from the grounds arising. Yet the Court does not address that a director joining an already bankrupt company is already late. An application likely refused under Article 13(1) will not improve creditor recovery. Its informational effect does matter, however: refusal is recorded in section 4 of the business register, achieving that purpose even where failure is inevitable.
Keeping insolvent companies trading
The Court says the opposite view would unacceptably permit management of already insolvent companies without personal liability. This seems mistaken. Even after applying and receiving refusal, directors incurring further debts may be liable, for example under Article 415 of the Civil Code or Article 21(3) of the Bankruptcy Law, as Kappes notes. Creditors would therefore remain protected even with the Article 299 exemption.
Who assesses the company’s assets?
The Court says only the court, not management, decides whether assets cover bankruptcy costs, so directors must apply despite expecting refusal. Yet its judgment of 11 March 2008, II CSK 545/07, requires directors to know the company’s current finances and ability to pay debts. They are expected to act diligently and understand finances. A mistaken assessment and failure to apply would still expose them to personal liability.
Rescuing the company
The final argument is that a different approach could hinder rescue: a rescuer could accept office without fear of Article 299 and need not begin with a bankruptcy application unfavourable to rescue. The Court believes its interpretation encourages timely restructuring before insolvency and improves creditor protection. It can also be seen as restricting management’s right to assess finances.
Conclusion
Although containing valid observations, the resolution substantially narrows the no-loss defence, making it difficult to use. It also restricts autonomous business decisions, seemingly ill-suited to the rapidly changing commercial reality facing Polish businesses.
Bibliography:
A. Chłopecka, Odpowiedzialność członka zarządu spółki z o.o. za długi spółki, Monitor Prawa Handlowego 2019, no. 1, pp. 38–45.
A. Kappes, Odpowiedzialność za długi zaciągane przez niewypłacalną spółkę z o.o. Glosa do uchwały SN z dnia 1 grudnia 2017 r., III CZP 65/17, Glosa 2019, no. 1, pp. 18–25.
M. Walasiak, Odpowiedzialność nowo powołanych członków zarządu za zobowiązania niewypłacalnej spółki z o.o. Glosa do uchwały SN z dnia 1 grudnia 2017 r., III CZP 65/17, Glosa 2021, no. 2, pp. 100–109.
T. Szczurowski, Odpowiedzialność z art. 299 Kodeksu spółek handlowych członka zarządu powołanego w czasie złej sytuacji finansowej spółki z o.o., Przegląd Ustawodawstwa Gospodarczego 2018, no. 7, pp. 41–44, bibliography: 10 items.
J. Zieliński, Glosa do uchwały Sądu Najwyższego z dnia 1 grudnia 2017 r., III CZP 65/17, RAiP 2020, no. 4, pp. 289–296.
