- New Polish Restructuring Law
- June 15, 2015
- Law Firm: Jones Day - Cleveland Office
- On April 9, 2015, Poland’s National Assembly (Zgromadzenie Narodowe) adopted a new Restructuring Law, with the goal of introducing an effective mechanism to restructure a debtor-company’s business and prevent liquidation. The Restructuring Law, which is expected to become effective on June 1, 2015 (with certain exceptions) after it is approved by Polish president Bronisław Komorowski: (i) makes the existing Bankruptcy and Reorganization Law applicable to liquidation proceedings only; (ii) establishes new rules and procedures governing restructuring proceedings; and (iii) includes various regulations implementing the changes. The new Restructuring Law was patterned on the European and U.S. examples that have proved to be most effective (e.g., chapter 11 of the U.S. Bankruptcy Code, the English scheme of arrangement, and the French sauvegarde proceeding).
Under the new law, financially distressed companies that would previously have been liquidated will now have the opportunity to restructure in either an arrangement proceeding pursuant to a plan approved by creditors or a rehabilitation proceeding. The restructuring plan option is a streamlined proceeding whereby a debtor, cooperating with a plan supervisor, discloses its assets and liabilities, specifies how it will treat creditor claims, and solicits creditor approval of the plan. The court’s role is limited to approving or rejecting any plan approved by creditors.
A debtor unable to obtain creditor approval of a plan may resort to a court-supervised rehabilitation proceeding. Among other things, such proceedings give the debtor, under the supervision of a court-appointed administrator, the ability to reject unfavorable contracts, reduce its workforce, and sell redundant assets.