BANKRUPTCY LAW AND RESTRUCTURING


OUR CUSTOMERS:

  • entrepreneurs starting their businesses: we offer training that serves the purpose of prevention and is aimed to avoid the risk of insolvency and the risk of bankruptcy, as well as to provide advice on optimization of risk prior to transactions;
  • debtors - business owners and individuals who do not conduct business operations who have fallen into a debt spiral and need help in negotiations with creditors or assistance in drafting a bankruptcy petition;
  • business owners planning to restructure their businesses;
  • creditors intending to conduct negotiations with their debtors and to prepare debt restructuring plans;
  • businesses owners who have declared bankruptcy before the decision concerning selection of the proper form of the process;
  • receivers, administrators, and court supervisors who need legal representation and advice in bankruptcy and restructuring procedures in which they are involved.

 

Bankruptcy:

Bankruptcy law, as a separate branch of law, is governed by the Act of 28 February 2005 - Bankruptcy Law (Journal of Laws of 2016, item 2171). On 1 January 2016, a law was adopted to govern composition proceedings separately from bankruptcy proceedings.

The subject matter of the Bankruptcy Law includes:

  • bankruptcy proceedings conducted by debtors - business owners and other entities legally considered as equivalent to business owners;
  • proceedings in relation to individual debtors who do not conduct business operations (commonly referred to as "consumer bankruptcy");
  • proceedings concerning judgments imposing a prohibition to conduct business operations.

One must keep in mind that bankruptcy law is a collection of legal norms that govern a specific type of relationships, namely relationships between creditors and debtors, regardless of the type and title of the relevant debt.

At the same time, there are two terms that need to be distinguished: "bankruptcy" - defined as a specific factual and legal state of an insolvent debtor and "bankruptcy proceeding" - a selection of norms that govern the course (procedure) of the bankruptcy process.

As reported by the Central Business Information Center (Centralny Ośrodek Informacji Gospodarczej) based on the announcements published in the Polish Court and Commercial Gazette (Monitor Sądowy i Gospodarczy), by the end of the 2nd quarter of 2017, announcements of bankruptcy of 272 businesses were published in the Gazette. A comparison of the data for 2015 and 2016 indicates that the number of bankruptcies is decreasing.[1]

On the other hand, in the year since the adoption of the liberalized laws that govern bankruptcy of individuals who do not conduct business operations (the so-called "consumer bankruptcy") there was a large number of bankruptcies declared by courts. By the end of the second quarter of 2017, 2778 verdicts were issued concerning bankruptcy of individuals not conducting business operations. A comparison of data concerning consumer bankruptcies in the first half of 2017 compared to the first half of 2016 shows a 39% increase of proceedings of this type.[2]

One must keep in mind that, from the point of view of a business owner (debtor), bankruptcy is not a stigmatizing event because, along with liquidation of a company in compliance with the provisions of the Code of Commercial Companies, it is one of the possible ways to end business operations, and in the case of individuals not conducting business operations, this is often the only legally permitted way of “clearing” their debts.


[1] [http://www.coig.com.pl/2017-upadlosci-firm.php]


[2][http://www.coig.com.pl/2017-upadlosc-konsumencka-lista_osob.php]


[3][http://www.coig.com.pl/2017-restrukturyzacje-firm.php]

 





Restructuring:

The restructuring law introduced by the Act of 15 May 2015 gives new tools to debtors that enable them to save their businesses that are undergoing a crisis.

The act introduces new proceedings:

  • remedial (sanation) proceedings;
  • composition proceedings;
  • accelerated composition proceedings;
  • composition approval proceedings.

An analysis of the provisions of the restructuring law leads to the conclusion that restructuring proceedings are intended to find a compromise between the creditors and the debtor and the objective of such a compromise is to restructure the business so that the debtor becomes solvent again.

In 2016, 212 restructuring proceedings were initiated and by the end of 2017, their number was as high as 154. [3]

The subject matter of the aforementioned Act includes:

  • the principles of conclusion of arrangements between debtors who are insolvent or face the risk of insolvency and creditors, and the consequences of such arrangements,
  • performance of remedial actions, i.e. actions aimed to restore insolvent debtors' ability to pay their debts on a timely manner.

As a part of our services, depending on our customers' needs, we provide:

  • advice concerning selection of the mode of the proceedings (composition, liquidation bankruptcy, and restructuring)
  • drafting of a bankruptcy petition
  • advice on how to effectively draft a bankruptcy petition so that it is not dismissed or rejected by the court
  • drafting of a fraudulent conveyance petition;
  • drafting of a petition to declare an encumbrance of bankruptcy assets to be ineffective (pursuant to Art. 130 of the Act)
  • drafting of an objection related to a list of debts and allegations concerning a distribution plan for the bankruptcy assets
  • we also offer the services of a practitioner and an experienced restructuring consultant (a legal counsel and a partner in our Firm)
  • we effectively help control the costs of the bankruptcy assets borne by the receiver.

 

Regardless of whether you are a debtor or a creditor, when you select our Firm:

  • you receive services provided by the best experts,
  • you have control over the course and the costs of the bankruptcy proceedings,
  • you can - pursuant to the current provisions of the restructuring law - freely choose and indicate to the court an administrator, a mandatory supervisor, or a supervisor of the arrangement (from among persons holding the license of a restructuring advisor) - who is a legal counsel and a founder of our Firm.