A carnival game of cat and mouse, or the liquidation of public media

The reason for this publication is a communication from the Minister of Culture and National Heritage of 27 December 2023, which reads: “In connection with the decision of the President of the Republic of Poland to suspend financing of the public media, I have taken the decision to put the companies Telewizja Polska S.A., Polskie Radio S.A. and Polska Agencja Prasowa S.A. into liquidation. In the current situation, such action will make it possible to secure the further functioning of these companies, to carry out the necessary restructuring in them and to prevent lay-offs of employees employed in the aforementioned companies due to the lack of financing. The state of liquidation can be withdrawn at any time by the owner.”

From the content of the communication, one can deduce the motives behind the (presumably) resolutions of the general meeting to dissolve these companies.

The decision in question is politically inspired, i.e. it is a direct reaction to the President’s move to withhold funding from the public media. In other words, politically it is a veto for veto.

From my point of view, proceeding with the liquidation of companies may be treated as a manifestation of instrumental treatment of the law, which, at least on the normative level, is - for practical, functional and axiological reasons - not obvious.

It is possible that the adoption of resolutions on the dissolution of companies will further complicate the situation of media companies, and will add an additional layer to the political dispute - the battle of lawyers, also lavishly remunerated from public funds.

Why, then, is the opening of the liquidation questionable?

Firstly, the wording of the official announcement published on government channels is itself controversial. Since the Minister’s decision is intended to secure the continued operation of those companies, to carry out the necessary restructuring in them and to prevent the employees employed in them from being laid off for lack of funding, liquidation, that is, the winding up of the undertaking, is out of the question.

The liquidation process takes place in order to complete the liquidation activities, the catalogue of which is defined by the provision of Article 468 § 1 of the Commercial Companies Code. In accordance with its content, liquidators should terminate the company’s current interests, collect debts, fulfil obligations and liquidate the company’s assets (liquidation activities). They may undertake new business only if this is necessary to complete ongoing affairs. Real estate may be disposed of by public auction, and by negotiated sale only by a resolution of the general meeting and at a price not lower than that resolved by the meeting.

If it was the will of the minister to carry out restructuring, necessitated by the possible threat of insolvency, then the initiation of restructuring procedures should have taken place.

The difference between liquidation and restructuring is that, in the case of liquidation, the aim is the definitive cessation of operations, whereas in the case of restructuring, the aim is the financial or asset recovery and the return of the company to normal market operations.

As a consequence, the above statements about liquidation as a recipe for securing the existence of media companies should be qualified as an expression of misunderstanding of the institution of dissolution of the company or simply - intentional sham resolutions motivated by ad hoc political interests.

The sham nature of the resolutions is also indicated by the following passage from the Minister’s communication: “The state of liquidation may be reversed at any time by the owner.”

Since the minister’s intention was to proceed with liquidation only in the event that the financial situation of the media companies did not recover within a certain time frame, the institution of conditional dissolution of these entities should have been used. From a legal point of view, there are no obstacles to passing resolutions to dissolve the companies under the suspensive condition that, for example, the management board does not successfully carry out the restructuring process and does not secure sources of funding for the corporation it manages within a certain time perspective.

The adoption of resolutions on the dissolution of companies under a condition precedent (e.g. the failure of the process of recovery of the financial situation of these entities within a specific timeframe) would have been much more transparent for all market participants and citizens expecting transparent and efficient public media from those in power.

Nevertheless, one can guess that the resolutions to dissolve the companies were passed unconditionally, only that - as the decision-makers unceremoniously state - Poles, nothing happened, everything can be undone. When? The communication does not specify this, so it must be assumed that in due course - in the event of a possible change in factual circumstances and the mood of those in power.

This way of communication by political hubs is objectionable, as it does not specify any time limits for the process of liquidation “on a trial basis” and deepens the state of ambiguity and chaos around the public media.

I am not convinced that the opening of the liquidation of media companies will cut the Gordian knot. It will sooner lead to another loop.

My scepticism relates, inter alia, to the appointment of liquidators who, from a legal point of view, are not members of the bodies, but only statutory representatives.

Nevertheless, especially in the case of a “trial” liquidation process, the position of liquidators will be almost identical to that of board members. One of the grounds for such a statement is provided, inter alia, by Marek Błoński (liquidator of PAP S.A.), who has publicly assured that “it is not the Owner's intention to cease the Agency’s activities”, and that at the current stage “only the legal formula of operation is changing”.

Since, according to the decision-makers, in the process of liquidation “only the legal formula of operation is changing” (and the company is not heading for an imminent end), the legal status of the liquidators should be assessed as in the case of members of media company bodies.

Therefore, in my opinion, the verification of the legality of the applications for the entry of liquidators in the register should also take into account the compliance of legal acts with constitutional standards (within the framework of diffuse control of constitutionality).

The conclusions of the Constitutional Court’s judgment of 13 December 2016 (K 13/16) are unequivocal in this respect and boil down to respect for the separateness and independence of the National Broadcasting Council (“KRRiT”) and the public media from the government, which should be guaranteed by appropriate statutory mechanisms.

Particularly in a situation where the process of liquidation of media companies was to drag on for years (until the change of president or new parliamentary elections), the appointment of managers (even if formally holding the status of liquidator) should be free of the unfettered discretion of each governmental and political authority of the day, i.e. meet constitutional standards.

In view of the above, even in the event of the opening of the liquidation of media companies, the ruling camp should introduce statutory solutions that restore the KRRiT’s competence in the process of appointing decision-makers of public media and provide guarantees of the independence of the companies concerned from the executive power.

From my point of view, as long as the law reconstituting the KRRiT’s powers, anchored in the Constitution, is not enacted, there is no possibility of selecting the bodies or statutory representatives of media companies in a manner consistent with the legal order.

In such a situation, in the face of inertia or disinclination on the part of the legislative and executive powers, the field is opened anyway to the judicial power, i.e. in this case the registry court.

It may not be easy for political hubs to escape from the axe that a court registrar or judge in the National Court Register may wield.

The first occasion for confrontation will be the entry of the opening of liquidation, which may prevent a freezing order by prohibition of entry, issued following, for example, a prosecutor's motion challenging the resolution of the general meeting to dissolve the company.

Secondly, the registry court may raise doubts regarding the appointment of a liquidator without the role of the KRRiT (due to the lack of relevant statutory provisions).

Thirdly, pursuant to Article 463 § 4 of the Commercial Companies Code, at the request of persons having a legal interest therein, the registry court may, for good reasons, dismiss liquidators and appoint others, which may also become a point of contention in the management process of media companies.

Fourthly, the registry court will have to assess the legality of the election of new supervisory board members anyway, as the supervisory board continues to function during the liquidation period and its resolutions are necessary for the liquidators to carry out a number of actions (Article 462 of the Commercial Companies Code).

The legal dispute surrounding media companies is not over. It will still depend, among other things, on the courts (including the registry courts) for whom the time for bitter regrets will come after the carnival.