In 2018-2019, there were approximately 460 restructuring proceedings each year in Poland. In 2020, this number rose sharply to 791 (an increase of 75%), of which 50% were simplified restructuring proceedings (so-called covid restructuring). It is estimated that in 2021 the number of restructuring proceedings may double compared to 2020, of which up to more than 80% will be simplified restructuring proceedings.
Simplified restructuring as a temporary restructuring tool introduced by Shield 4.0 has gained popularity due to its simplicity and informalised nature (out-of-court procedure). However, covid restructuring formally disappears from the legal system on 30 November 2021. In its place, on 1 December 2021, an amendment to the Restructuring Law comes into force, amending the procedure for approval of an arrangement, giving this mode of restructuring the shape known from the simplified restructuring procedure.
The amended procedure for approval of the arrangement (PoZU) will be initiated by an announcement about setting the arrangement day. By making the announcement, the debtor will be protected against enforcement and against termination of agreements of fundamental importance for the running of the enterprise (lease, rent, credit, leasing, property insurance, guarantees, letters of credit, etc.).
If within 4 months from the date of posting the notice, the debtor does not collect a sufficient number of votes in favour of the arrangement and does not submit to the court a request for approval of the arrangement, the effects of the notice shall expire by operation of law.
The amendment also provides for the strengthening of creditor protection through institutional control over the course of proceedings by a court supervisor.
The amended PPA will follow the following scheme:
1) conclusion of an agreement on the supervision of the course of the proceedings with the supervisor of the arrangement;
2) preparatory activities – determining the arrangement day, drawing up an inventory of claims, an inventory of disputed claims, and a preliminary restructuring plan
3) making an announcement about the establishment of the arrangement day;
4) drawing up the relevant restructuring plan;
5) drawing up the arrangement proposals;
6) voting on the arrangement – an independent collection of votes by the debtor on voting cards, via an IT system or at a creditors’ meeting;
7) statement of approval of the arrangement by the supervisor of the arrangement;
8) filing an application for approval of the arrangement with the restructuring court;
9) approval of the arrangement by the restructuring court.