Set-off by assignee aware of debtor's material insolvency before declaration of bankruptcy

The article focuses on admissibility of a set-off declared by assignee before the declaration of debtor's bankruptcy provided that assignee was aware of the debtor's material insolvency when acquiring his claim. In practice, the problem concerns the interpretation of Article 94(1) of the Polish Bankruptcy and Reorganization Law which provides that set-off is inadmissible when a debtor of insolvent party acquired his claim by an assignment after declaration of bankruptcy or before declaration of bankruptcy, but being aware that conditions justifying it have been met. In a resolution from 4 September 2013 (case docket: III CZ P 4/13) the Polish Supreme Court held that aforementioned provision refers not only to a declaration of set-off that took place after the court's decision on debtor's bankruptcy, but also to a declaration made before that event. In the author's view, although the resolution responds to the need for clarification on that widely disputed matter, it simultaneously raises further questions about the nature of the set-off, temporal scope of the Polish Bankruptcy and Reorganization Law, and finding a fair balance between the individual interest of assignee declaring set off and other creditors of an insolvent entity. Author's main thesis is that unsettled status of assignee's set-off declared before debtor's bankruptcy follows both from retroactive effect of set-off in the Polish civil law and the notion of set-off understood as an instrument of execution of claims. Therefore, unequivocal solution of the discussed issue may require a legislative intervention.