Is the information available electronically? Critical points of ESPD completion

2022.02.14.

In everyday practice, there are many problems of completion and interpretation of some of the points in Part III of the ESPD form. The controversial issues primarily concern the filling in of the sections of the ESPD relating to the grounds for exclusion in accordance with the stipulations of Article 62 (1) (c) of the PPA. Everyday practice in this area is extremely hectic, with practically there are as many contracting authorities as there are expectations, and this creates legal uncertainty for tenderers (and contracting authorities) in relation to the completion of these points of the ESPD. In the following we present our professional position on these issues, hoping that sooner or later we will be able to achieve a (more) unified jurisprudence on this issue as well.

In EU tendering procedures, when justifying the grounds for exclusion, tenderers (candidates) shall provide a declaration in the European Single Procurement Document (hereinafter: the 'ESPD') as a preliminary proof of the absence of grounds for exclusion, followed by the request for itemised justifications and the verification of the databases required by law for the leading tenderer at a later stage of the evaluation.

In the ESPD, the tenderer's declarations on the grounds for exclusion shall be made in Part III of the form, where the tenderer shall answer a number of questions to be decided, indicating whether information relating to his specific answer is available electronically.

The grounds for exclusion in accordance with the stipulations of Article 62 (1) (c) of the PPA are the following:

„62. § (1) The following economic operators shall be excluded from participating in the procedure as a tenderer, candidate, subcontractor or an organization participating in the certification of suitability:

...

c) who or which is subject of winding-up proceedings, who were subject to the publication of a decree in bankruptcy, the liquidation proceedings launched against whom were legally imposed, or against whom a similar process is in progress according to personal law, or who are in any analogous situation according to personal law;”

In accordance with the stipulations of Article 69 (2) of the PPA. „in the course of the award process, contracting authorities shall accept the European Single Procurement Document (ESPD), consisting of a self-declaration, for the purpose of the preliminary verification of the suitability criteria, the non-existence of the grounds for exclusion and the fulfilment of the criteria laid down in Article 82(5)”

In accordance with the stipulations of Section 1 (1) of Government Decree No.321/2015 on the method of verifying suitability and grounds for exclusion in public procurement procedures and on the method of defining the technical specifications of public procurement, the tenderer or candidate shall, in his tender or request to participate in public procurement procedures conducted in accordance with Part Two of the Act on Public Procurement - unless otherwise provided by the contracting authority in accordance with the stipulations of Article 100 (5) of the PPA - certify in advance, when submitting his tender or application to participate in the procedure under Chapter II, by submitting the single European public procurement document, that he is not subject to Article 62 (1) and (2) of the Act on Public Procurement and - if the contracting authority has so provided -, to Article 63 (1) of the PPA, that he also meets the suitability requirements laid down by the contracting authority in accordance with the stipulations of Article 65 of the PPA.

In accordance with the stipulations of Section 4 (1) (e) of Government Regulation No.321/2015, in the case of grounds for exclusion under Article 62 (1) (c) of the PPA, the tenderer, candidate or the economic operator attesting the suitability shall complete the relevant points of Section C of Part III of the ESPD.

In Section "C" of Part III of the ESPD, the following questions are raised in relation to Article 62 (1) (c) of the PPA:

Is the economic operator a subject of bankruptcy proceedings? (Related subsection: Is this information available electronically?)
Is the economic operator a subject of insolvency or winding-up proceedings? (Related subsection: Is this information available electronically?)
Has the economic operator entered into an arrangement with the creditors? (Related subsection: Is this information available electronically?)
Is the economic operator in any situation similar to bankruptcy as a result of a similar procedure under national laws and regulations? (Related subsection: Is this information available electronically?)
Are the assets of the economic operator managed by a liquidator or a court? (Related subsection: Is this information available electronically?)

In our view, each point shall (should) be correctly completed as follows:

First of all, we consider it necessary to clarify the content of the concepts that form part of the grounds for exclusion and the differences between them:

In the event of a temporary insolvency, bankruptcy proceedings provides an opportunity for the debtor company to reschedule or reduce its debts under the supervision of a designated trustee. During the proceedings, the debtor is granted a moratorium on payments, during which the debtor is required to reach an agreement with his creditors. The aim of bankruptcy is therefore not to liquidate the debtor, but to restore the firm to some form of viability; if this is not achieved, the bankruptcy proceedings will be converted into a winding-up.
In most cases, the aim of winding-up proceedings is to liquidate the insolvent debtor without a legal successor and to satisfy as many creditors as possible from the assets thus distributed, i.e. the aim is to dissolve the failed company once and for all.
The purpose of liquidation proceedings is to wind up a non-insolvent company without succession, i.e. to end the company's operations, but not because it has become insolvent.

1. Is the economic operator subject to bankruptcy proceedings?

If the economic operator is not subject to bankruptcy proceedings, the answer NO should therefore be selected.

To the question "Is this information available electronically?" the following responses are required:

In the case on an economic operator established in Hungary:

In the case of companies, the contracting authority can check the information from the extract from the commercial register (www.e-cegjegyzek.hu), the relevant data can be found in the extract, so a YES answer is required, but in addition, no URL, Code, Issuer is required to be entered in accordance with the stipulations of Section 6 (1) - (2) of Government Decree 321/2015.:

“1. If the contracting authority has direct access - according to Article 69(11) of the PPA - to the databases certifying the non-existence of the grounds for exclusion and the fulfilment of the suitability criteria, the economic operator shall indicate the access of such databases in the relevant parts of the standard form, except for the databases to be verified by the contracting authority in relation to the certification of exclusion grounds under the present decree.

2. The economic operators shall also indicate in the standard form which body is entitled to issue the certificates specified in Chapter III and Chapter IV., except of bodies operating databases to be verified by the contracting authority in relation to the certification of exclusion grounds under the present decree”

In the case on an economic operator not established in Hungary:

a YES or NO answer is required, depending on the specificities of the country concerned, with the addition of the URL and the name of the Issuer, if the bidder has chosen YES, in accordance with the stipulations of Section 6 (1) to (2) of Government Decree 321/2015.

2. Is the economic operator subject to insolvency proceedings or liquidation proceedings?

If the economic operator is not subject to insolvency proceedings or liquidation proceedings, the answer NO should be selected, mutatis mutandis.

To the question "Is this information available electronically?" the following responses are required:

In the case on an economic operator established in Hungary:

In the case on an economic operator not established in Hungary:

3. Has the economic operator entered into a composition agreement with the creditors?

The manager of the company under bankruptcy proceedings shall notify the court of the outcome of the composition conference either within 5 working days or, in the case of an extended moratorium, at the latest 45 days before the expiry of such moratorium. If a settlement has been reached, a copy of the related agreement shall also be attached. If the composition agreement is in accordance with the law, the court shall approve it by order and declare the bankruptcy proceedings closed. If a settlement has been reached, the company has the option to continue trading but cannot apply for bankruptcy protection until it has discharged its obligations to creditors prior to the opening of the previous bankruptcy proceedings, if the court has rejected the application for bankruptcy proceedings of its own motion within the last year or if less than two years have passed since the last bankruptcy proceedings against the company were closed. In these cases, the debtor may, in the event of insolvency, initiate liquidation proceedings against himself. However, if no composition agreement is reached or if it does not comply with the law, the court shall terminate the bankruptcy proceedings, declare the debtor insolvent in the subsequent liquidation proceedings and order the company to be liquidated.

So, if there is a composition agreement with the creditors, depending on where the whole process is at the moment, either the addendum “cs.a.” (under bankruptcy procedure) is added to the name of the company or nothing is added to it, it means that the bankruptcy procedure is terminated (in the worst case, in the event of liquidation, the addendum “f.a.” (under liquidation procedure) is attached to the name of the company).

The issue of a composition agreement with the creditors can therefore arise when the bankruptcy proceedings are already pending, i.e. in this case the “cs.a.” addendum is added to the name of the company in the extract from the commercial register, but this entry does not refer to the fact that a composition agreement with the creditors has been entered into, but to the pending bankruptcy proceedings. It must therefore be stressed that the mere fact that a company has entered into a composition agreement with the creditors is not shown anywhere in the extract from the commercial register.

A related question:

if an economic operator has entered into a composition agreement with its creditors, is it thereby already excluded due to a ground for exclusion stipulated by Article 62 (1) (c) of the Act on Public Procurement?

If the entry in the extract from the commercial register as described above (still) includes the addendum "cs.a", then the relevant ground for exclusion applies; if this addendum (and no other entries giving rise to a ground for exclusion) is not included, then the relevant ground for exclusion is not applicable.

In the light of the above, if the economic operator has not entered into a composition agreement with its creditors, then, obviously, the answer NO should be selected.

To the question "Is this information available electronically?" the following responses are required:

In the case on an economic operator established in Hungary:

In the case of companies, the information can NOT be verified by the contracting authority neither from theextract from the commercial register NOR from other electronic databases, so the answer NO shall be entered.

In the case on an economic operator not established in Hungary:

4. Is the economic operator in any situation analogous to bankruptcy as a result of a similar procedure under national laws and regulations

In the introduction, the most important differences between bankruptcy, liquidation and winding-up proceedings were explained, and the “v.a.” (under winding-up procedure), "f.a." and "cs.a." addendum is attached to the short form of the company, which immediately indicates whether the court has ordered winding-up, liquidation or bankruptcy proceedings against the company and whether these are still pending. If the "b.a." addendum is attached to the end of the company name, it means that the company is being registered by the Court of Registration, and if the addendum "kt.a." is added, it means involuntary cancellation proceedings. Otherwise, the data structure of the extract from the commercial register is described in detail at https://occsz.e-cegjegyzek.hu/?rovatok.

It can therefore be concluded that the bankruptcy proceedings (which, in our view, should be in any case considered as a situation similar to bankruptcy in this respect, since it is bankruptcy itself) are indicated in the extract from the commercial register as described above.

A situation similar to bankruptcy in the case of economic operators that are not registered in the commercial register or that are foreign, can be interpreted as summarised in the introduction, in other words, it must be examined whether there is a temporary insolvency of the economic operator that would lead to some institutionalised procedure for rescheduling its debts, reduction of its debts, in principle in cooperation with its creditors, in order to restore its normal functioning and solvency and enable it to continue its activities, but such a procedure may also result in winding-up on the grounds of insolvency.

On the basis of the above, if the economic operator is not in a situation that would be considered as equivalent to bankruptcy under national law, then, logically, the answer NO should be chosen.

To the question "Is this information available electronically?" the following responses are required:

In the case on an economic operator established in Hungary:

In the case on an economic operator not established in Hungary:

5. Are the assets of the economic operator managed by a liquidator or a court?

As we have already shown above, any pending liquidation, bankruptcy, winding-up, etc. proceedings is indicated even in the company name, and the data - although not very informative, because it only shows who ordered it, when and under what reference number - is shown in the entries in the commercial register, including the data on court enforcement and insurance measures.

In the case of a liquidation, it is obviously true that if the relevant information (under liquidation procedure) appears in the company register, it follows directly that the company's assets are being managed by a liquidator.

In the case of bankruptcy and winding-up, since the aim is to restore the company's viability and to liquidate a legal person that is not insolvent, the liquidator's management of assets is excluded by definition, but there is no judicial management of assets in this case, since judicial management of assets can take place in the case of an insurance measure, a criminal measure or even an involuntary cancellation.

In our view, therefore, in the case of Hungarian companies, the fact of managing assets by a liquidator or, where applicable, by a court, can be found in the extract from the commercial register.

In the light of the above, therefore, if the economic operator is not in a situation where its assets are being managed by a liquidator or a court, the answer NO should be selected as the obvious choice.

To the question "Is this information available electronically?" the following responses are required:

In the case on an economic operator established in Hungary:

In the case on an economic operator not established in Hungary: