In response to the epidemic COVID-19 an additional restructuring procedure was introduced into the Polish legal system – a simplified restructuring procedure, due to the occurrence of a threat of insolvency and insolvency of many economic operators.
The main advantage of the simplified restructuring procedure is to provide insolvent or threatened firms with insolvency immediate protection against execution, while at the same time deformalising the lack of involvement of the court at the opening stage.
According to the assumptions, it is faster than the traditional procedure for approving the agreement, and many activities are carried out without the participation of a court.
In order to carry out the simplified restructuring, it is sufficient to conclude an agreement with the restructuring advisor, which will serve as the arrangement supervisor and to announce the opening of proceedings in the Court and Economic Monitor, indicating the debtor's data, the arrangement day and the arrangement supervisor.
Introduced at the end of June 2020 simplified restructuring procedure to be initially applicable to 30 June 2021, elongated to 30 November 2021 However, due to its unusual popularity, 1 December 2021 will function as an improved system approval procedure
Effects of the simplified restructuring procedure
As a result of the simplified restructuring procedure, the debtor is granted immediate and full protection by all executions. Therefore, all pending enforcement proceedings are suspended and the initiation of new ones is excluded. It should be noted that this applies to all claims, including those secured in kind.
To date, it has been possible to execute the subject of the security in the course of the restructuring procedure, with the exception of, of course, sanitization proceedings where such execution was not possible. However, the simplified restructuring procedure should be carried out within a specified period.
The legislator provided that the procedure for approving the agreement would be terminated by law if, within the time limit four no application for approval of the arrangement shall be received by the court from the date of the notice.
At the same time, at the request of the parties, the court will be able to waive the effects of the notice if it leads to the detriment of creditors.[1].
The main objective of the procedure is therefore to draw up such arrangement proposals with creditors to ensure that both parties are satisfied. As practice shows, this model of restructuring proceedings in many cases led to the adoption and approval of agreements by the court.
However, it is worth pointing out that a simplified restructuring procedure can only be initiated once, so it is so important to negotiate with creditors an arrangement whereby the debtor can fulfil or partially fulfil the obligations imposed on him.
Changes from 1 December 2021
Introduced at the end of June 2020 simplified restructuring procedure to be initially applicable to 30 June 2021, elongated to 30 November 2021 However, due to its unusual popularity, 1 December 2021 will function as an improved system approval procedure.
In the improved procedure for approval of the arrangement, there will be a change in the fact that the debtor will be able to regulate some of the obligations that are covered by the arrangement while ensuring protection against execution at the level of the sanitization procedure. In other words, in addition to the suspension of enforcement proceedings from the date on which the notice of arrangement was made, it is possible to revoke the activities carried out in the safeguard and enforcement proceedings before the date of notice, if necessary for the continuation of the business of the debtor.
However, it is important that no one can benefit from the revised approval procedure. The debtor will be excluded from whom in the past 10 for years, the procedure for approval of the arrangement in which the notice of establishment of the arrangement day was made or the restructuring procedure was terminated.
The examination of the amendment therefore leads to the conclusion that the protection of the debtor against execution will be increased. Such a condition gives one of the parties the possibility to regulate the claims covered by the agreement by the debtor and from second may provide room for the debtors to abuse it.
In addition, the fact that the debtor has the option to choose the claims that he wishes to pay, while at the same time revoking the previous activities, may lead to a risk of action in favour of one creditors, at the expense of others.
However, it can be noted that the rules on simplified restructuring procedures have been recognised as insolvent or threatened by insolvency. Only practice will show whether the purpose of the law to enter into force on the day 1 December 2021 The transparency of the restructuring procedure will be achieved and increased.