The COMI (Center Of Main Interest) in insolvency law in Poland

The company had its registered office in England, but had opened a branch in Poland [Betterware Poland Limited, bankruptcy announced in 2012, publicly available by the court.] (A branch is regarded by the Polish Commercial Companies Code as a “part” of a legal entity, having no separate corporate existence). In practice, the business activity, i.e. the sale of household equipment on the internet, was conducted by the company within the territory of Poland only.

Even though all members of the management board lived in England and Wales, during the proceedings it was proven that the main decision-making process took place in Poland (and was conducted by an attorney of the Management Board), the day-to-day operation and accounting was conducted there, all employees and co-operatives were in Poland, and the products were sold in Poland to Polish purchasers. This led the court to the conclusion that, in practice, the company – even though it was registered in England – conducted almost no commercial activity in that country. The bankruptcy court in Warsaw found it legitimate to open bankruptcy proceedings under Art. 3 of the EIR.

This is the first case where a Polish court has ordered the bankruptcy of a company with a registered office in the territory of another state. Generally, the application of the EIR is still not common in Poland. Courts in major cities (like Warsaw or Poznań) have dealt with the EIR mainly with respect to the initiation of secondary proceedings under Art. 3 para 2 of the EIR – and here the jurisprudence is quite wide. This results from the currently observable trend of structuring groups of companies, i.e. it is noticeable that many such groups have their mother companies in England, France, the Netherlands or Germany, and they operate in Poland through a subsidiary company or a branch – in both cases it is common that the main and strategic decision-making process remains with the holding company.

As regards current opinion in Poland on forum shopping pursuant to Art. 3 of the EIR, certain jurisdictions are believed to be very “debtor friendly” (e.g. France). There have been a number of cases within the last few years where Polish banks granted financing to companies – members of international groups – which were then subject to bankruptcy proceedings in other member states (such as the French sauvegarde proceedings).