PL: Insolvency proceedings as means to maximize the chances of investors in ponzi schemes to recover their investment

Recent events show that despite the rise of the Polish economy and the strengthening of capitalism, citizens are still susceptible to manipulations and fraud of various kinds by dishonest companies. You don’t have to look hard for corresponding examples. On 05.09.2012, the district prosecutor’s office in Gdansk has revealed that investors, damaged by the company Amber Gold, have meanwhile reported claims in the total extent of almost 274 Million PLN. Amber Gold received monies from investors due to promises of a guaranteed interest in the extent of 15 % per annum, what exceeded the average interest granted by banks for saving by 10 %. The money was to be invested by the company in gold, which the company said to buy on behalf of its investors through the funds received and which it claimed to sell after a certain period in order to distribute the “guaranteed” profits. In July 2012, the company ceased distribution of mature payments.

In the course of the investigations, which were carried out immediately by the district prosecutor’s office in Gdansk, 57 kg of gold were seized with the assistance of the Agency for Internal Security, however the value of the gold won’t suffice to satisfy all creditors. To this day it is not known what happened to the investments made by the customers, where it has been invested and transferred to, respectively what and by whom purchases have been made. Due to the application to open insolvency proceedings over the assets of Amber Gold, which was filed by the law firm bunk-alliance Maciej Puchala sp. k. in cooperation with the law firm PMR Sp. z o. o., the district court in Gdansk has appointed a preliminary insolvency administrator. As of 20.08.2012, the insolvency administrator is busy trying to preserve the debtor’s assets of deprecation and to prepare a report on the debtor’s financial situation for the court.

Even the above shows what substantial measures and measures protecting creditors’ interest are provided by the insolvency provisions. In order to protect the interests of the creditors the court has within 3 business days deprived Amber Gold’s management board of the financial control over the company and allowed the immediate analysis of the company’s assets through a public officer. In this way, the insolvency provisions enable already at a very early stage, to block actions by the dishonest debtor and to perform a detailed analysis of the financial situation. The insolvency administrator performs the pecuniary powers of the debtor, which means that for instance he looks through the books, can obtain information protected by banking confidentiality and cause changes in the supervisory and management boards of affiliated companies within the group structure.

As already mentioned above, in ponzi schemes, there are generally no assets in insolvency proceedings, which allow the satisfaction of creditor claims. However the money has not disappeared; it has merely been transferred to another place. For instance it could have been transferred to affiliated companies for sham transaction, loans or other transactions, by which the insolvency estate has been damaged. Polish insolvency law gives the insolvency administrator powers to invalidate those transactions, such as article 127, 128-134 of the Insolvency and Reorganization Act. Those provisions give the insolvency administrator, other managers or additional guardians power to challenge actions undertaken by the debtor prior to opening of insolvency proceedings, if those actions let to impairments of the insolvency estate, respectively if they have been carried out with parties related to the members of the management board. Such court proceedings are exempted from court fees, so that the creditors are not burdened with additional significant costs (an average 5% of the value of the claim) unlike creditors that pursue their claims in individual proceedings (which lose their right of existence after opening of insolvency proceedings), the insolvency administrator has an accurate and direct knowledge of the books and bank accounts of the debtor, he can audit the accounts and determine where the investments, paid in by the investors, were transferred to. In individual proceedings, the possibilities of the creditors are much lower. They cannot simply go to the company and request to have a look into the company’s books.

In summary it is to be noted that in a situation, in which a company might fall into insolvency and in which the suspicion of a ponsy scheme is given, the immediate application to open insolvency proceedings over the assets of the debtor is recommended to each creditor. The day of filing the application marks the time frame in which the insolvency administrator can easier challenge transactions of the debtor with third parties and regain “exported” investments.

The law firm was established in 2003 by Dr. Artur Bunk, an Attorney-at-Law. Qualified in 1995, he was admitted to the Frankfurt Bar in 1997 after obtaining an LL.D. in European Law at the University Viadrina in Frankfurt (Oder). During his career he has worked with the German law firm Pünder, Volhard, Weber & Axster (now Clifford Chance), was Head of Office at Rödl & Partner in Poland, and Senior Legal Counsel at the Legal and Restructuring Department of KfW. In addition to German, he also speaks fluent English and Polish.

Our offices are based around 45 minutes from Frankfurt/Main International Airport in and approx. the same distance from Frankfurt City.

Thanks to the professional experience and background of our Principal and our Attorneys we are in a position to meet the highest requirements and expectations of international clients, which forms an integral part of our business philosophy, enabled us to establish a profound know-how base on international matters unmatched by law offices of comparable size and background. With our network of external consultants (auditors, tax advisors), we are well equipped to perform advisory services usually only found in much larger law offices. Our comparatively low overheads and flexibility enable us to provide our services on a competitive basis.
bunk-alliance has established a close cooperation with law offices in Italy, India, Poland, Slovakia, with auditors and tax advisory offices in Germany and Poland and various governmental agencies.

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This release was published on openPR.