Simplified Restructuring Procedure
On 4 June, the Sejm of the Republic of Poland passed an act on subsidies to interest rates on bank loans granted to provide financial liquidity to entrepreneurs affected by the effects of COVID-19 and on amendments to some other acts, i.e. the so-called „Tarcza Antykryzysowa 4.0” (Anti-Crisis Shield), which, among other things, introduced a simplified restructuring procedure. As indicated by the legislator, this change is to apply for a period which is assessed as „the duration of the negative economic impact caused by the spread of the COVID-19 epidemic”. What is important that by introducing simplified restructuring procedure, legislator aims to simplify the procedure as much as possible and its maximum acceleration.
How to start the simplified restructuring procedure?
The simplified restructuring procedure begins with its announcement in Monitor Sądowy i Gospodarczy. Before the announcement, the debtor prepares and submits to the selected supervisor of the arrangement proposals, a list of receivables and a list of disputed receivables. This kind of annoucement could be done only once, therefore the debtor has just a one chance to go through his stalemate in a fast and easy way. The restructuring adviser has 3 days to notify the restructuring court of such announcement. The debtor retains the right to set an arrangement day, which should be no earlier than 7 days before and no later than 7 days after the submission of the request for a notice. The restructuring adviser is also the supervisor of the agreement. He is responsible for the preparation of the agreement proposals, for the collection of votes or for submitting a motion to the court to approve the agreement. The entrepreneur starts his cooperation with a restructuring advisor by concluding an agreement with him. The role of the court has been kept to a minimum - such proceedings take place without a court. The court takes a decision only at the last stage of the procedure, verifying the arrangement adopted by the creditors.
Rights and protection of debtors
With the announcement of the proceedings, the debtor is protected against all types of enforcement - the existing ones are suspended and no new ones can be initiated. Interestingly, this applies to all claims, including those secured in kind. This is a something new, since previously the secured creditor in kind was in a winning position, as he could conduct the enforcement of the object of the claim security. Moreover, from the beginning of the proceedings, the possibility of termination by creditors of contracts such as: rent, loan, lease, guarantee or bank account agreement is excluded. However, under the simplified restructuring procedure, the debtor may only carry out the ordinary management activities. In case he wants to exceed this scope, the consent of the restructuring advisor is required.
Rights of creditors
As the debtors obtained many privileges under the simplified restructuring procedure, it was also necessary to safeguard the interests of the creditors. Creditors have the right to apply to the court to annul the suspension of enforcement if such a suspension of enforcement leads to harm to the creditor, among other things: if the debtors are satisfied only by certain creditors, but also if they intentionally dispose of their assets. It is also possible that a debtor acting in bad faith will open proceedings if he should actually have already declared his bankruptcy or if he deliberately delays the payment of creditors. In such a situation, creditors are entitled to a claim for compensation for damage resulting from the unjustified opening of the simplified restructuring procedure.
The course of the simplified restructuring procedure
The debtor, with the support of his restructuring advisor, presents the arrangement proposals to the creditors. Next step is a voting - for or against the agreement. An important solution in times of coronavirus epidemics is the possibility to hold a creditors' meeting to vote via electronic media. The traditional formula is also acceptable. The agreement comes into effect when a majority of the creditors who cast a valid vote are in favour of it and have a total of at least ⅔ of the total claims of the voting creditors. The simplified restructuring procedure has been strictly defined by the time. The debtor has 4 months to carry it out. If the debtor does not apply to the court for approval of the arrangement within 4 months from the date of the announcement, the arrangement will be legally cancelled. The court's decision on the approval of the arrangement is contestable. The period for lodging a complaint is 2 weeks.
In conclusion, the simplified restructuring procedure takes place almost entirely out of court. The restructuring adviser, who is the supervisor of the agreement, plays an important role in it. The transfer of the proceedings to the advisors relieves the courts of the burden and allows for an effective acceleration of the proceedings. The provisions are episodic - it will be possible to launch the simplified restructuring procedure until 30 June 2021.