Restructuring & Insolvency Guide in Poland

Insolvency Law in Poland

Insolvency Law in Poland –  Quick Facts

Legal Regulation of Insolvency	Polish Act on Bankruptcy
Definition of Insolvency	loss of ability to perform its pecuniary obligations, i.e.: delay in performance of I financial obligations exceeds three months, or the company’s monetary liabilities exceed the value of its assets, and this condition lasts for more than twenty-four months.
Deadline to Request Insolvency	30 days from the date on which the grounds for declaring bankruptcy arose
Rejection of Insolvency	debtor proves that the claim is entirely disputable, or assets of the insolvent debtor are insufficient to cover the expenses of insolvency
Deadline to Report a Claim in Insolvency	Determined by the Court – not shorter then 1 month and no longer then 3 months
Is it Possible to Report a Claim after the Deadline?	Yes, subject to covering additional expenses

Insolvency in Poland / Overview

Throughout 2022, 349 bankruptcies of companies were recorded in Poland, i.e. 7.2 % less than in 2021 (then it was 376). Inflation hit the hospitality (HoReCa) business the hardest. In turn, the largest increase in the number of bankruptcies was recorded in trade and repair of motor vehicles, industry, information and communication, construction. During the economic crisis entrepreneurs conducting business activity in Poland or cooperating with Polish contractors should know the effects of declaring bankruptcy of Polish entrepreneurs and the rules of conducting bankruptcy proceedings in order to react more effectively and faster in the conditions of financial difficulties of partners from Poland.

Bankruptcy proceedings are initiated when the debtor is unable to pay its debts and are aimed at securing assets and paying creditors as much as possible. Issues related to reporting a claim in bankruptcy are regulated by the Polish Bankruptcy Act of 28 February 2003.

Purpose of Bankruptcy Proceedings

The purpose of bankruptcy proceedings against an entrepreneur (business entity) is to sell all the debtor’s assets and allocate the funds obtained in this way to satisfy creditors as much as possible. At the same time, as far as possible, efforts should be made to preserve the debtor’s current enterprise.

Definition of Insolvency?

Bankruptcy is declared in relation to a debtor who has become insolvent. The debtor is insolvent when it loses the ability to perform its pecuniary obligations, i.e. in case, inter alia when:

• the debtor’s delay in performance of its financial obligations exceeds three months, or
• the company’s monetary liabilities exceed the value of its assets, and this condition lasts for more than twenty-four months.

Considering the above, in practice, insolvency means, as a rule, the lack of cash available both in hand and on bank accounts, in the amount allowing for the settlement of due pecuniary liabilities.

Filing a Bankruptcy Request

An application to declare a company bankrupt may be filed by:

• the debtor (in the case of a company – by a member of the company’s management board or another persons authorized to represent the company),
• each of the debtor’s personal creditors,
• some other entity or person specified in the Bankruptcy act (e.g. administrator, curator, etc.).

Moreover, on the part of the debtor there is even a statutory obligation to file bankruptcy with the court no later than within 30 days from the date on which the grounds for declaring bankruptcy arose (i.e. the debtor became insolvent) under pain of criminal liability (a fine, the penalty of restriction of liberty or imprisonment for up to one year).

In addition, members of the management boards of companies should also remember that failure to file for bankruptcy within the statutory period may result in civil liability for damage caused by failure to file for bankruptcy within the statutory period and joint and several liability for the company’s obligations.

Therefore, in the event of signs of insolvency, the management board members should immediately contact a Polish attorney at law or legal adviser to effectively and timely submit a bankruptcy motion.

Grounds for Dismissing the Bankruptcy Motion

The court shall dismiss the bankruptcy motion if:

• the motion is filed by the creditor and the debtor proves that the claim is entirely disputable and the dispute arose between the parties before the bankruptcy petition was filed, or
• if the assets of the insolvent debtor are insufficient to cover the costs of the proceedings or are sufficient only to cover these costs.

The court may also dismiss the bankruptcy motion if:

• there is no threat that the debtor will lose the ability to perform its due pecuniary obligations in the short term, or
• if it is found that the debtor’s assets are encumbered with a mortgage, pledge, registered pledge, treasury pledge or maritime mortgage to such an extent that the debtor’s remaining assets are insufficient to cover the costs of the proceedings.

Costs of the Bankruptcy Proceedings

The person submitting the bankruptcy motion shall make an advance payment for expenses in the course of bankruptcy proceedings in the amount of one average monthly salary in the enterprise sector announced by the President of the Polish Central Statistical Office (the average monthly salary in 3rd quarter of 2022 is PLN 6,736.60).

In addition, the applicant has to pay a court fee for the bankruptcy motion in the amount of PLN 1,000.

Court Fee / Insolvency Request	PLN 1,000
Advance for Insolvency Expenses	one average monthly salary in the enterprise sector  (Q3 2022 – PLN 6,736.60).

Bankruptcy and Restructuring Proceedings

A bankruptcy motion may not be submitted during the restructuring proceedings.

In the case of filing a bankruptcy petition and a restructuring petition at the same time, the restructuring petition shall be examined first and the consideration of the bankruptcy motion – suspended.

Temporary Supervisor

The court may secure the debtor’s assets upon request or ex officio, including in particular by appointing a temporary court supervisor.

The debtor, after the appointment of a temporary court supervisor, is entitled to perform only ordinary management activities. To perform activities exceeding the scope of ordinary management, the consent of the temporary court supervisor is required under pain of nullity.

Legal Consequences of Bankruptcy

What about Assets of Insolvent Company?

Upon the issuance of the court ruling on bankruptcy declaration, the trustee takes over the management of the assets. The bankrupt (its management board), at the same time loses the right to manage, use and dispose of the property – any legal actions of the bankrupt regarding the property included in the bankruptcy estate are invalid.

On the date of declaring bankruptcy, the assets of the bankrupt become the bankruptcy estate. The trustee should determine the composition of the bankruptcy estate as at the date of declaring bankruptcy by drawing up an inventory describing the movables, real estate, cash and the property rights of the bankrupt, as well as by drawing up a list of receivables.

After the declaration of bankruptcy, the components of the bankruptcy estate may not be encumbered with a mortgage, pledge, registered pledge, treasury pledge or maritime mortgage in order to secure claims arising before the declaration of bankruptcy. Moreover, a compulsory mortgage or a tax lien cannot be established on the bankruptcy estate, also to secure claims arising after the declaration of bankruptcy.

What about Obligations / Liabilities of Insolvent Company?

Provisions of agreements concluded by the bankrupt preventing or hindering the achievement of the purpose of bankruptcy proceedings are ineffective in relation to the bankruptcy estate. However, agreements for the transfer of ownership of property, receivables or other rights concluded to secure receivables are effective against the bankruptcy estate if they were concluded in writing with certified date.

The pecuniary obligations of the bankrupt, the date of payment of which has not yet occurred, become due on the date of declaration of bankruptcy, while non-pecuniary property liabilities become monetary liabilities and from that date they become payable, even if the deadline for their performance has not yet come.

The Bankruptcy Act of Poland contains detailed regulations in relation to specific types of contracts and the trustee’s rights to perform of or withdraw from such contracts, therefore the effects of the declaration of bankruptcy should be assessed by the professional lawyer individually in relation to each separate contract.

What about Court Proceedings after Declaration of Insolvency?

After the declaration of bankruptcy, court, administrative or court-administrative proceedings concerning the bankruptcy estate may be initiated and conducted only by or against the trustee of the bankruptcy.

What about Enforcement Proceedings after Declaration of Insolvency?

Enforcement proceedings directed against the assets included in the bankruptcy estate, initiated before the date of declaration of bankruptcy, shall be suspended on the date of declaration of bankruptcy. These proceedings shall be discontinued by operation of law after the decision on the declaration of bankruptcy becomes final and binding.

After the date of declaring bankruptcy, it is generally unacceptable to direct enforcement against the assets included in the bankruptcy estate and to execute the order on securing or ordering security on the assets of the bankrupt.

Stages of Insolvency

Bankruptcy proceedings basically consist of two stages:

1. Proceedings on insolvency declaration, and
2. Insolvency proceedings as such.

The first of these stages begins with the effective filing of a bankruptcy motion and ends with the issuance of a decision to declare bankruptcy or dismissal of the bankruptcy motion. The second stage begins only after the completion of the first stage and only when the conditions for the debtor’s insolvency are met, i.e. the debtor is declared bankrupt.

The proper bankruptcy proceedings consists of:

1. Reporting claims by entitled persons against the debtor;
2. Development of a list of claims by the trustee;
3. Determining the composition of the bankruptcy estate;
4. Liquidation of the bankruptcy estate;
5. Distribution of the funds among creditors;
6. Completion of bankruptcy proceedings.

Below we present a brief description of each of these steps.

1. Reporting of Claims

If Polish debtor declared bankruptcy, the creditor has to submit its claim to a Polish court bankruptcy, if it fails to do this, it may lose the possibility of recovery in the future.

What is the deadline to report a claim in insolvency?

Polish court issuing the decision on bankruptcy of the company calls the creditors to lodge the claims within the prescribed period, not shorter than one month and not longer than three months. If you have not received the call, contact our Law Firm immediately.

What if I failed to report a claim?

Submission of claims in the Polish bankruptcy proceedings is considered as a form of debt recovery provided by the law. Failure to report the claim results in loss of the possibilities to satisfy it from bankruptcy assets. Each creditor must report the claim to the Polish bankruptcy court. Only creditors who’s claims are secured on the assets of the bankrupt (by lien, pledge or mortgage) will be placed on the list automaticaly – ex officio. However, it is almost a rule that they also submit their claims to the bankruptcy court, not to lose their opportunity to recover the debt.

What is the aim of claim reporting in insolvency?

Submission of claims should be regarded as a form of pursing it under court proceedings, and the approval of the list of claims – as the decision (court judgment). Submitting of claim interrupts the limitation period of the claim.

The claim should be made in writing in two copies. Unfortunately, the Polish law is very formalized and poses a number of specific requirements. Fulfillment of the legal requirement is frequently very complicated. Lodgement of the claim not meeting with requirements will be rejected by the court and will not have any legal effect.

Can I report a claim after the deadline?

Generally, the claim may also be reported after expiry of the submissions period. The court will require the creditor to cover additional costs resulting from the late submission regardless of the reason of delay. These additional costs include, in particular, the costs of taking evidence, the costs of notices, the costs of the appeal. However, if the lodgement occurs after approval of the final plan of the division of the bankruptcy funds, the claim will be rejected. (Article 252 paragraph 2 of the Bankruptcy Act of Poland).

I reported the claim, what is next?

If the claim meets the requirements, the judge-commissioner sends a copy of it to the trustee. The latter, in turn, verifies whether the claim is reflected in the bankrupt’s books of accounts. On the basis of the submitted copies of applications, the trustee draws up a list of claims.

2. List of Claims

The trustee draws up a list of claims no later than two months after the expiry of the period for lodging claims and then submits it to the judge-commissioner. The preparation and transfer of the list is announced in Polish Court and Economic Monitor (MSiG).

Within two weeks from the date of the announcement of the preparation of a list of claims by the trustee, the creditor and/or bankrupt may submit an objection to the judge-commissioner. In the event of a negative recognition of the objection, the decision of the judge-commissioner may be appealed to the bankruptcy court.

If the objection or complaint is successful, the judge-commissioner makes correction on the list of claims.

After the conclusion or discontinuance of bankruptcy proceedings, an extract from the list of claims approved by the judge-commissioner, containing the designation of the claim and the sum received on account by the creditor, is an enforcement order against the bankrupt, which means in practice that an excerpt from the list is a substitute for a judgment against a bankrupt company.

3. Determining Composition of Insolvency Estate

The trustee draws up an inventory and list of receivables to determine the composition of the insolvency estate and thus determines the bankrupt’s assets to be sold in order to satisfy creditors.

The inventory is being submitted to the judge-commissioner together with a liquidation plan within thirty days from the date of declaration of bankruptcy.

4. Liquidation of the Bankruptcy Estate

The liquidation plan specifies the proposed ways of disposal the assets of the bankrupt, in particular the sale of the enterprise, collection of debts from debtors of the bankrupt and execution of his other property rights. The liquidation plan also estimates the expenses and the economic justification for continuing the business of the bankrupt.

Liquidation of the bankruptcy estate is carried out by selling the bankrupt’s assets or by collecting debts from the bankrupt’s debtors and exercising its other property rights. If it is impossible to sell the enterprise as a whole, the trustee sells individual assets of the bankrupt separately.

The trustee draws up a liquidation plan together with an estimate of expenses within thirty days of the bankruptcy declaration.

5. Distribution of the Funds among Creditors

The provisions of the Bankruptcy Act of Poland determine the order in which creditors are to be paid off, due to the fact that according to the Polish legislator, some claims deserve to be satisfied in the first place, and others should be satisfied only if the bankrupt still has funds.

Priority / Categories of Claims in Insolvency
I Category	employee claims for the time before the declaration of bankruptcy in relation to the bankrupt, with the exception of claims of persons managing the bankrupt; farmers’ receivables for the supply of agricultural products; pensions for compensation for causing illness, incapacity for work, disability and other in part for the period before the declaration of bankruptcy; social security contributions for the period of the last three years before the date of declaration of bankruptcy; some other receivables arising in the course of possible restructuring proceedings.
II Category	The second category is formulated according to the residual principle. It consists of other receivables not subject to satisfaction in other categories, in particular taxes and other public fees and other social security contributions receivables.
III Category	The third category consists of interest on receivables included in higher categories in the order in which the capital is satisfied, as well as court and administrative fines and receivables for donations and bequests.
IV Category	In practice, the funds are usually exhausted at a much earlier stage, so the creditors in the fourth category usually are paid off as an exception. This category includes receivables of partners or shareholders due to a loan or other legal transaction with similar effects, in particular the delivery of goods with deferred payment, made to the bankrupt being a capital company within five years before the declaration of bankruptcy, together with interest.

If you are informed that your Polish debtor can be declared bankrupt, please contact us to check, and if that is the case we will file the claim before bankruptcy court.

6. Distribution Plan

The distribution plan is a list of payments provided for individual creditors included in the list of claims, specifying the manner of exercising their rights in bankruptcy proceedings.

The division plan is drawn up by the trustee and presented to the judge-commissioner.

The judge-commissioner shall notify the bankrupt and the members of the creditors’ committee and announce that the division plan can be viewed at the court registry and objections against the division plan may be filed within two weeks from the date of the announcement. If no objections have been filed, the judge-commissioner approves the distribution plan.

The division plan shall be executed immediately after its approval.

7. Completion of Bankruptcy Proceedings

Insolvency proceedings rarely end with the satisfaction of all creditors of the bankrupt, because usually the financial situation of the bankrupt debtor is so difficult that it does not allow full repayment of all creditors. Nevertheless, it is one of the ways to end bankruptcy proceedings. The second of these ways is also an execution of distribution plan.

The court discontinues the proceedings in case of obstacles to the continuation of the proceedings, i.e. in case when:

• the assets of the insolvent debtor are not sufficient to cover the costs of the proceedings, or
• all creditors submitted a joint application for discontinuation of the proceedings.

FAQ – Insolvency in Poland

What is the deadline to file for insolvency in Poland?

30 days from the moment the debtor become insolvent.

When the company is considered to be insolvent in Poland?

When it losses of ability to perform its pecuniary obligations, i.e.: is in delay in performance of I financial obligations exceeds three months, or the company’s monetary liabilities exceed the value of its assets, and this condition lasts for more than twenty-four months.

What are the stages of insolvency process in Poland?

1. Reporting claims by the creditors
2. Development of a list of claims by the trustee
3. Determining the composition of the bankruptcy estate
4. Liquidation of the bankruptcy estate
5. Distribution of the funds among creditors
6. Completion of bankruptcy proceedings

Restructuring Law in Poland

Restructuring in Poland / Quick Facts

Legal Regulation of Restructuring	Polish Restructuring Law
Purpose of the Restructuring	to avoid declaration of bankruptcy by making an arrangement with creditors, and in the case of remedial proceedings – also conducting remedial actions provided that the legitimate rights of creditors are secured
Types of restructuring proceedings	proceedings for the approval of an arrangement, accelerated arrangement proceedings, arrangement proceedings, remedial proceedings.
Basic features of approval of arrangement	extrajudicial nature. The proceeding is initiated by the debtor and conducted mainly by selected arrangement supervisor. The role of the restructuring court appears only at the stage of control of the legality of the adopted arrangement, may be conducted if the sum total of disputed receivable debts giving the right to vote on arrangement does not exceed 15 % of the sum total of receivable debts giving the right to vote on an arrangement, concluding an agreement with the arrangement supervisor does not limit the debtor in the management of its assets in principle.
Arrangement date	No sooner than 3 months and no later than 1 day prior to the day of filing an application to the court for the approval of the arrangement.
Majorities of votes for adopting the arrangement	Personal majority – more than half of the votes in favor of the arrangement from among the total number of voting creditors, and Capital majority – 2/3 of the total receivables due to the voting creditors.
Deadline for issuing a decision approving the arrangement by the court	2 weeks from the date of submission of the application.
Refusal to approve the arrangement	If the arrangement: it infringes the law, it is evident that the arrangement will not be performer, or the total sum of disputed receivable debts giving the right to vote on the arrangement exceeds 15 % of the total sum of receivable debts giving the right to vote on the arrangement, conditions are glaringly detrimental to the creditors who voted against the arrangement and lodged their reservations.

Restructuring in Poland / Overview

The purpose of restructuring, in turn, is to avoid bankruptcy and reach an agreement with creditors. According to the Central Economic Information Centre, the falling number of bankruptcies in 2022 is influenced by the increasing restructuring proceedings. This is all thanks to the fact that these proceedings (proceedings for approval of the arrangement) can be started without the participation of the court and without waiting for months for a decision to open it. Proceedings for approval of the arrangement, as one of the modes of restructuring proceedings, is relatively quick, also because both the debtor and the restructuring advisor must do everything to conclude the arrangement within this period.

The principles and procedure of restructuring proceedings are regulated in the Polish Restructuring Law of May 15, 2015.

Types of restructuring proceedings in Poland

• proceedings for the approval of an arrangement,
• accelerated arrangement proceedings,
• arrangement proceedings,
• remedial proceedings.

Due to the fact that debtors most often apply for restructuring under proceedings for the approval of an arrangement approval proceedings (e.g. in 2022 they accounted for 90.12% of all proceedings), the rest of this article will focus only on this type of proceedings.

Restructuring – approval of an arrangement

The characteristics of the arrangement approval procedure, which distinguish this procedure from other restructuring proceedings, are:

• its extrajudicial nature. The proceeding is initiated by the debtor which signs an agreement with a selected arrangement supervisor (having the status of restructuring advisor). Collecting creditors’ votes as to the arrangement proposals also takes place without any court interference. The role of the restructuring court appears only at the stage of control of the legality of the adopted arrangement, and the condition for the effectiveness of the concluded arrangement with creditors is its formal approval by the court examining the application in this regard,
• may be conducted if the sum total of disputed receivable debts giving the right to vote on arrangement does not exceed 15 % of the sum total of receivable debts giving the right to vote on an arrangement,
• concluding an agreement with the arrangement supervisor does not limit the debtor in the management of its assets, until the court decision approving the arrangement has been issued, except for the situation when an announcement on setting the arrangement date is published (see p. 4 below).

Two options of the proceedings for an approval of an arrangement

The debtor may use one of the two options of the procedure for approval of the arrangement:

• The arrangement supervisor can publish an announcement about setting the arrangement date, which activates a special protection over the debtor. This protection lasts 4 months from the date of the arrangement announcement in the Court and Economic Monitor (the debtor may also submit an application for approval of the arrangement in order to be covered by the protection until the final conclusion or discontinuation of the proceedings). The protection covers, among others: the suspension of enforcement proceedings against the property of debtor, or inadmissibility of termination of contracts of fundamental importance for running the debtor’s enterprise (e.g. rental, lease, loan, surety, leasing, insurance, license, etc.) without the consent of the creditors’ committee. Moreover, after the announcement is published, the performance of actions exceeding ordinary management activities by the debtor will require a consent of the arrangement supervisor.
• The proceedings are carried out without making the above mentioned announcement, i.e. without protection against enforcement, but also without restrictions on the debtor’s own property management.

Arrangement date

The arrangement date is the date on the basis of which the circle of creditors which are entitled to vote on the arrangement is determined and the effects of the arrangement are assessed at the stage of its approval by the court. The receivable debts arisen after the arrangement date shall not be covered by the arrangement. Moreover, the receivable debts include interest on receivables covered by the arrangement, for the period from the arrangement date.

The debtor must set an arrangement date immediately after signing the agreement with the arrangement supervisor. Restructuring without this action will not be able to be effectively carried out.

The arrangement day shall be no sooner than three months and no later than one day prior to the day of filing an application to the court for the approval of the arrangement.

Partial arrangement

A partial arrangement applies to situations where it is not necessary to conclude an arrangement with all creditors. In practice, a partial arrangement is used in the case of large enterprises that have many creditors and it is impossible or pointless to propose satisfactory arrangement proposals for all creditors. In this case the main purpose is to conclude an arrangement only with strategic or the largest creditors.

Selection of creditors covered by a partial arrangement shall take place on the basis of objective, unambiguous and economically justified criteria concerning the legal relationships linking the creditors with the debtor, from which relationships the obligations covered by arrangement proposals result. Determining the criteria in order to leave out a creditor who is against making a partial arrangement shall be inadmissible under pain of refusal to approve the arrangement by the court.

A partial arrangement can be adopted by the majority of 2/3 (66,6 %) of creditor’s votes, which are calculated on the basis of the shares in the total sum of receivable debts to which creditors covered by the partial arrangement and having the right to vote are entitled.

Stages of restructuring (arrangement approval proceedings)

The following stages of the arrangement approval procedure can be distinguished (model situation):

1 – The debtor signs an agreement with a restructuring advisor for an arrangement supervisory

The arrangement supervisor with whom the debtor concludes an agreement to supervise the course of these proceedings may only be a person holding a restructuring advisor license.

The arrangement supervisor informs the debtor about the sources of financing available to the debtor, including public aid, and also cooperates with the debtor in order to obtain this financing. If there is such a need and possibility, the arrangement supervisor takes steps to obtain an additional source of financing the debtor’s activity, including public aid.

As part of the supervision exercised, the arrangement supervisor may control the debtor’s activities regarding its property, as well as the debtor’s enterprise, including checking whether the debtor’s property, which is not part of the enterprise, is sufficiently protected against destruction or loss.

The activities of the arrangement supervisor include in particular:

• drawing up a restructuring plan together with the debtor,
• preparation of arrangement proposals together with the debtor,
• drawing up a list of claims and a list of disputed claims,
• cooperation with the debtor in the field of efficient and lawful collection of votes while maintaining the rights of creditors,
• submitting a report on the possibility of implementing the arrangement.

If and after the announcement is published (vide  sec. 4.1 above), the activities exceeding the ordinary management taken by the debtor will require the consent of the arrangement supervisor.

2 – The arrangement supervisor and the debtor develop the arrangement proposals

The restructuring of the debtor’s liabilities can be carried out in many ways, in particular by:

• the deferment of the date of satisfaction;
• spreading repayment into installments;
• reducing the amount thereof;
• converting receivable debts into shares;
• amending, exchanging or repealing the right which secures the specific receivable debt, etc.

3 – Voting on the arrangement

Voting on the arrangement may take place by casting votes on ballots placed in the ICT system (KRZ), where the votes are collected by the arrangement supervisor, or in person if the arrangement supervisor convenes a meeting of creditors to vote for the arrangement.

After setting the arrangement date, the arrangement supervisor posts the voting cards in the KRZ system and notifies all creditors covered by the arrangement by letter about the manner of voting. If the supervisor decides to convene a meeting of creditors, he/she shall notify of its date, presenting at the same time arrangement proposals.

Two majorities are required to adopt the arrangement:

• the first one is called a personal majority and consists in obtaining more than half of the votes in favor of the arrangement from among the total number of voting creditors,
• the second one, called the capital majority, consists in obtaining a majority of 2/3 of the total receivables due to the voting creditors.

4 – Submission of an application for approval of the arrangement to the restructuring court

After the arrangement is adopted by the creditors, as specified above, the arrangement supervisor shall file an application for approval of the arrangement to the restructuring court.

The application shall include, among others: identification of the debtor, arrangement proposals, as well as the result of the creditors’ vote. The collected ballot papers, as well as the report of the arrangement supervisor must be attached to the application.

5 – Consideration of the application by the court

The court shall issue a decision approving the arrangement within two weeks from the date of submission of the application.

6 – Issuing a decision approving the arrangement or refusing to approve the arrangement

From the date of issuing the decision on approval of the arrangement to the date of its entry into force:

• enforcement proceedings regarding the claim covered by the arrangement are suspended by operation of law,
• a creditor having a receivable debt secured on the debtor’s property by a mortgage, pledge, registered pledge, treasury pledge or a ship’s mortgage may, in the course of accelerated arrangement proceedings, carry out execution out of the object of security only,
• the supervisor of the arrangement exercises the powers of the court supervisor. After the court decision on the approval of the arrangement has been issued, the debtor may only perform ordinary management activities. The consent of the court supervisor is required to perform activities exceeding the scope of ordinary management. An act exceeding the scope of ordinary management performed without the required consent is invalid.

7 – Appeal against the decision on approval of the arrangement

The court decision on the approval or disapproval of the arrangement may be appealed against. The appeal shall be lodged within two weeks from the publishing of the court decision in KRZ.

Effects of a legally approved arrangement

Upon completion of court stage of the restructuring proceedings, the entire management returns to the debtor. It is the debtor’s obligation to perform the arrangement.

After the court decision becomes final, the supervisor of the arrangement becomes the supervisor of the execution of the agreement, unless the arrangement provides otherwise. The supervisor controls the debtor’s performance of the arrangement and reports to the court once every three months.

Completion of restructuring proceedings also provides for the discontinuation of security and enforcement proceedings against the debtor in order to satisfy the debts covered by the arrangement.

Refusal to approve the arrangement

The court shall refuse to approve the arrangement if it infringes the law, in particular if it provides for granting public aid in a manner contrary to the provisions or if it is evident that the arrangement will not be performed.

The court may refuse to approve the arrangement if its conditions are glaringly detrimental to the creditors who voted against the arrangement and lodged their reservations.

The court shall refuse to approve the arrangement in the proceedings for approval of the arrangement or in accelerated arrangement proceedings, if the total sum of disputed receivable debts giving the right to vote on the arrangement exceeds 15 % of the total sum of receivable debts giving the right to vote on the arrangement.

Discontinuation of restructuring

The court shall discontinue restructuring proceedings if, in particular:

• conducting the proceedings would be aimed at detriment to creditors,
• the arrangement was not adopted,
• the decision declaring the debtor bankrupt has become final and binding,
• no application for approval of the arrangement is submitted to the court within 4 months from the date of the announcement.

The court may discontinue restructuring proceedings if, in particular, the circumstances of the case, i.e. for example the behavior of the debtor, indicate that the arrangement will not be performed.

Restructuring failure – what debtor may do next?

If the restructuring fails, i.e. in the event of a decision to discontinue the restructuring proceedings or a decision refusing to approve the arrangement, the debtor still can submit a simplified bankruptcy petition within the time limit provided for lodging a complaint against the court’s decision (14 days).