On 17 July 2023 A year has passed since it was to be implemented into the Polish legal order of the so-called “Directive” second chance’ i.e. Directive (EU) of the European Parliament and of the Council Directive 2019/1023 on a framework for preventive restructuring, debt write-offs and business bans and measures to increase the effectiveness of restructuring, insolvency and debt write-offs, as well as amending Directive 2017/1132 (Restructuring and bankruptcy directive).
The mentioned Directive 2019/1023 is commonly referred to as ‘the Directive’ second chance’ because it gives insolvent entrepreneurs access to at least one the nature of the proceedings which may lead to the total remission of debts, i.e. to prevent the execution of their unpaid liabilities by traders subject to redemption or to the remission of unpaid liabilities subject to redemption as such, within the framework of proceedings which could include the sale of assets or a repayment plan of creditors.
Indeed, the implementation of the above-mentioned directive is to amend the existing restructuring law. As the directive states, its aim is to:
- viable companies and entrepreneurs in financial difficulties had access to an effective national preventive restructuring framework to enable them to continue their activities;
- honest insolvent or over-indebted entrepreneurs could benefit from a full write-off after a reasonable deadline, thus allowing them to benefit from a second chance;
The effectiveness of proceedings relating to restructuring, insolvency and debt relief has been improved, in particular with a view to shortening the duration of these proceedings.
The Directive also states that restructuring should enable debtors in financial difficulties to continue their activities in full or in part, by changing the composition, status or structure of their assets and their liabilities or any other part of their capital structure, including by selling assets or parts of the undertaking, or, where so provided for in national law, the company as a whole, and by making operational changes.
On the website of the Government Legislative Centre, a draft amendment to restructuring and bankruptcy law was published – it assumes that existing solutions will be adapted to the regulations Directive 2019/1023.
It should be pointed out that, as a result of the implementation of the directive, we will be faced with separate preventive restructuring (approach for approval of the arrangement, accelerated arrangement procedure, arrangement procedure), to which entrepreneurs are both insolvent and threatened with insolvency, a sanctioning procedure aimed only at insolvent entrepreneurs (both legal persons and defective legal persons) and insolvency proceedings which seek to liquidate the company.
It should be noted that the Directive amends the rules on the protection of debtors who have initiated preventive proceedings against execution.
In the course of the next four months from the date of initiation of the proceedings, the executions against the debtor shall be suspended and no new executions shall be possible against the debtor.
At the request of the debtor, the protection may be extended by a Judge-Commissioner to all or some of the executions in respect of the debtor's assets, if this contributes to achieving the purpose of the proceedings. The total period of protection from execution shall not exceed 12 months.
It is worth pointing out that the implementation of the Directive may lead to positive changes in the legal situation of entrepreneurs who are facing insolvency or risk, but the implementation of the Directive has not yet been achieved and there is no certainty when it will actually occur.