When analysing the facts of the case, the Supreme Court found that the security interests created in order to secure the bank’s claims under the trust deed are ineffective, as they were created during the two months preceding the submission date of the bankruptcy motion. Pursuant to Article 127 clause 3 of the Polish Bankruptcy and Reorganisation Law, security interests created and payments of unmatured debt made during the two months preceding the submission date of a bankruptcy motion are ineffective.
The Supreme Court’s findings as to when a bank’s receivables under parallel debt originate were of fundamental importance for the ruling. In the Supreme Court’s opinion, the bankrupt companies became the bank’s debtors upon the conclusion of the trust deed, despite the fact that the underlying facility had not yet been disbursed and hence the receivables under the facility agreement were of a future nature. Despite the functional correlation between the parallel debt and the bank’s receivables under the facility agreement, the Supreme Court found that receivables under a trust deed originate upon the conclusion of such deed, irrespective of the disbursement date of the underlying facility. In the Supreme Court’s opinion, the trust deed created an “abstract debt under which the companies were obliged to repay future liabilities under the facility agreement”. As stated in the reasons for the judgment “the debt, which was secured with the security interests, existed already from the date of the trust deed; however it was not due and payable by the bankrupt companies at that point in time”.
Therefore, the Supreme Court found that the title transfer agreements are ineffective against the bankruptcy estate, since the bankruptcy motion was submitted in respect of the bankrupt companies before the lapse of two month period referred to in Article 127 clause 3 of the Bankruptcy and Reorganisation Law lapsed.
The most relevant aspect of this case however was that the Supreme Court did not question the legal concept of parallel debt (under foreign law) and therefore that it acknowledged the ability to create security for such debt under Polish law.