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In July 2021, the implementation deadline for the EU Restructuring Directive expired. Although Poland has had a pretty modern Restructuring Law since 2016, the Directive requires some major amendments to be made in the act.
Current Progress
The draft law had been prepared before the 15 October 2023 election. The European Commission has started proceedings against Poland for the implementation delay, so the new government re-used the old draft. The EC’s action has given the Minister of Justice a unique opportunity to fast-track the project, sidestepping negotiations and consultations. As per the current plan, the anticipated date for the changes to take effect is 24 November 2024.
Key Highlights of the Project
Let’s delve into the somewhat overlooked project, which holds essential solutions:
- Creditor Satisfaction Test: A mechanism enabling creditors to assess whether voting for the arrangement is a genuine alternative to bankruptcy or enforcement.
- Further Limitation of Secured Creditors’ Rights: Aligned with the Directive, secured claims are now automatically covered by a moratorium, protecting them from enforcement. This change applies universally, not just in specific arrangement proposals as it does currently.
- Cross-Class Cram-Down Provisions: Introducing more intricate rules for accepting arrangements against the will of specific creditor groups, known as cross-class cram-down, compared to the current regulation.
- Time Limits on Debtor’s Protection: The protection from enforcement is limited to four months, extendable to a maximum of twelve months. In rehabilitation proceedings, this period is set at twelve months with an extendable option without limitations. Debtors can automatically benefit from this protection upon the announcement of the restructuring application in the National Debtors’ Register.
- Appointment Principle for Supervisors, Administrators, and Liquidators: The principle of appointing these roles from a judicial list, prioritized based on the declared category of cases by the respective individuals. Naturally, there are exceptions to this rule.
Conclusion
As the legal landscape evolves, this project promises significant changes in restructuring procedures. Stay informed, as the anticipated effective date is approaching on 24 November, 2024. For a deeper understanding of these legal intricacies, keep an eye on further updates and discussions in the legal community.
Michał Cecerko
Radca Prawny, Licencjonowany Doradca Restrukturyzacyjny, Partner
michal.cecerko@dzp.pl
