SPECIAL ISSUE PREVENTIVE RESTRUCTURING 12. Revolution or Evolution? Polish Experience in the Implementation of the Preventive Restructuring Directive

Directive (EU) 2019/1023 aims to unify preventive restructuring standards across the European Union. In Poland, the draft of the Directive's implementation is still in progress. Despite the delay, most of the planned changes will be an evolution rather than a revolution. Most of the solutions brought by the Directive are already present in the Polish law since 2016. The article characterises both the instruments already existing in Poland and the experiences derived from them, as well as identifies areas where changes will be made in relation to the implementation of the Directive. 

1. Introduction

This article^[1] confronts the present state of insolvency law^[2] in Poland and proposals for change arising from EU law. The purpose of this study is to present the current status of implementation of Directive (EU) 2019/1023 (PRD 2019) into the Polish insolvency law as well as discuss and evaluate the proposed changes in search of revolutionary (or evolutionary) solutions to the problem of insolvency and imminent insolvency of entrepreneurs.

 

Particular care has been taken by the authors to cover both the issues of protection of the enterprise against enforcement actions during restructuring proceedings and the issues related to the conclusion and confirmation of the plan. We draw attention to those regulations that will cause the greatest difficulties in interpretation and application.

 

This article is structured as follows. We will first provide an overview of the domestic restructuring and bankruptcy regime in Poland before implementing the PRD 2019 (Section 2). One must know that the significant reform of Polish insolvency law introducing inter alia the pre-insolvency measures along with the out-of-court restructuring proceedings and the debt discharge of private individuals, entered into force in January 2016. In Section 3 we will discuss the legislative background of the implementation process of the PRD 2019. Subsequently, Section 4 provides an overview of the key features of the reformed insolvency law. This is followed by Section 6 which discusses an outlook on the reformed Polish insolvency regime and presents some concluding remarks.

 

2. Overview of domestic pre-reform restructuring and insolvency law regime

Most of the legal solutions regarding preventive restructuring and debt relief of natural persons were in force in Poland long before the adoption of the PRD 2019. The discussion on introducing new solutions in the field of preventive restructuring and debt relief to both consumer and non-consumer insolvency took place mainly in the years 2013 to 2015. It was then that a team of experts from the Ministry of Justice drafted the new Restructuring Law of 2015 (Prawo restrukturyzacyjne, RL 2015).^[3] It came into force on January 1^st, 2016.

 

It provided for both in-court^[4] and out-of-court restructuring proceedings.^[5] In the latter, the plan was concluded out-of-court, but was subject to subsequent court approval. It was available both to insolvent debtors and to those threatened with insolvency (pre-insolvent). Between 2014 and 2020 a few changes in personal (consumer and business) bankruptcy and restructuring provisions resulted in an astonishing increase in consumer insolvency proceedings.^[6]

 

An important reason for subsequent (post-2016) changes regarding the protection of the debtor during an out-of-court restructuring^[7] was the COVID crisis. In July 2020, as part of the support package in response to the COVID-19 crisis, provisions were introduced to protect debtors against individual enforcement actions and termination of executory contracts. The protection lasted four months and was extended in the event of the conclusion of the plan.

 

With respect to restructuring, Polish regulations provided for a special cross-class cram-down regulation since 2003. If the plan was not adopted in one or more classes of creditors by a majority of 2/3 of the total amount of claims and a majority of more than half of the number of creditors, the plan was nevertheless confirmed if it jointly acquired 2/3 of the total amount of claims and the dissenting creditors received under the plan more than they would receive in case of bankruptcy.

 

Also, in the field of debt relief (discharge) for private individuals (natural persons), Poland had quite liberal regulations introduced in 2015. Debt relief is possible for everyone once every 10 years, and only those who become insolvent by deliberate actions are excluded from the system. Currently, in late October 2023, there are about 1,000 restructuring proceedings and 5,000 consumer bankruptcies per quarter conducted in Poland.

 

Debtors in Poland can use one of four restructuring proceedings. The common goal of these proceedings is to conclude a plan with creditors to avoid the debtor's bankruptcy.^[8] The diversity of available proceedings allows for tailoring to the debtor's needs. Proceedings have been structured to achieve a balance between the protection from enforcement and the protection of key contracts given to the debtor, and the restrictions on the debtor’s management of its assets. Poland distinguishes the following restructuring proceedings:

1. Arrangement approval proceedings.^[9] These proceedings have two variants. The historically first variant does not provide for protection of the debtor's assets and key contracts, but also does not impose any restrictions on the debtor. The second variant, introduced in December 2021^[10] provides for a public announcement of the opening of the proceedings. In that case, the stay is provided to the debtor, while also imposing a supervision over the debtor’s affairs and assets (the consent of the practitioner in the field of restructuring (PIFOR)^[11] is required for actions exceeding the ordinary course of business). Both the stay and the supervision may be lifted by the court. This public variant is currently the most popular restructuring proceedings in Poland.^[12] Voting on the public or private plan is organised by the debtor himself, who, if the plan is accepted by the affected creditors, files an application with the court for approval of the plan.
2. Accelerated arrangement proceedings.^[13] These are court-initiated and court-driven public proceedings. The debtor, who has an exclusive right to apply for these proceedings, in exchange for partial protection of his assets and contracts relations, is free to act within the scope of the ordinary course of business. The consent of the PIFOR^[14] or the council of creditors is required for actions exceeding the ordinary course of business.^[15] It usually lasts between 9 and 12 months.
3. Arrangement proceedings.^[16] The procedure is similar to the accelerated arrangement procedure. It is applicable when the debtor has a larger number of disputed claims^[17] - the procedure provides, inter alia a more precise way of determining the list of claims with the general right of appeal to the court. It usually lasts between 12 and 18 months.
4. Remedial proceedings.^[18] These proceedings grant the broadest protection of the debtor’s enterprise against the individual enforcement actions of the creditors. The remedial proceedings involve the appointment of an administrator (PIFOR),^[19] which results in the debtor losing the ability to manage his enterprise. Exceptionally, the court may allow the debtor to act within the scope of ordinary management.^[20] The PIFOR is entitled to rescind from legally binding contracts, sell the assets free of charge, liens and any incumbrances, as well as terminate employment contracts under the bankruptcy rules (with reduced employment protection). Remedial proceedings allow for in-depth restructuring measures of the debtor's enterprise. These usually last between 18 and 30 months.

 

3. PRD 2019: reforming the domestic preventive restructuring regime

Unfortunately, the PRD 2019 has not yet been implemented in its entirety. We still lack some detailed solutions, such as provisions limiting the duration of the stay in the in-court proceedings, provisions on the absolute or relative priority rule, on the creditors’ best interest test, and provisions on an early warning system. The draft act implementing the PRD 2019 (Draft) that should finalise the implementation process is already published and awaits the final stages of both governmental and parliamentary discussion before its adoption.^[21]

 

Upon the adoption of the PRD 2019 by the EU legislator, the discussion on its implementation in Poland commenced and concerned issues such as the time limitation of the stay of enforcement actions, in particular in view of respecting the principle of fair balance between creditors’ and debtor’s rights, as well as the best interest of creditors test, and the conditions for a cross-class cram-down.

 

Furthermore, transparency of a restructuring process and the creditors’ access to adequate information at the right time were considered important topics.

 

For the first time in the history of Polish insolvency law, it was specified that every secured claim (in rem) should ex lege be covered by the plan, without the need for the consent of the secured creditors.^[22] In addition, some procedural issues have been streamlined, and in the last stage of the legislative process provisions have been added to the criteria for selecting a PIFOR, which can act as a supervisor (nadzorca), an administrator (zarządca), and a receiver (syndyk).^[23]

 

Most of the proposal was drafted by a working group appointed by the Minister of Justice in October 2021. The meetings and discussions were also attended and enriched by external experts, which included academics, representatives of financial institutions, and judges. 

 

Poland has used the clause for a one-year extension of the deadline for the implementation of the Directive.^[24] With the extension, the implementation deadline expired on 17 July 2022. However, only the first Draft was published on 4 July 2022.

 

The Draft has been amended several times, and its (probably) final version was published for consultation at the beginning of August 2023.^[25] The project was adopted by the Ministry of Justice and accepted by the former government and was then referred to parliament. After the bill is passed by the Sejm (the lower chamber of the Polish parliament), it will go to the Senate (the higher chamber of the Polish parliament) and then to the President. Meanwhile, in the parliamentary elections, which took place on the 15^th of October 2023, the three political blocs creating the democratic opposition won. The new government was formed on the 13^th of December 2023 and it will decide on the future faith of the Draft. In our opinion though, the Draft in its majority of rules should be taken over and put forward into the swift legislative process. We can only presume the date of entry into force of the Draft’s key provisions will be set in 2024.

 

4. Main features introduced by the reform

 

4.1 Objective and scope of the proceedings

The purpose of insolvency proceedings in Poland is to resolve the debtor’s financial crisis resulting from his insolvency and the related conflicts that can arise between a debtor and its creditors.^[26] In the case of a restructuring proceeding, the aim is to avoid that a debtor is being declared bankrupt by enabling him to restructure his debts by concluding a plan with his creditors. In the case of remedial proceedings, as a variant of restructuring proceedings, it also involves carrying out remedial actions such as sale of selected assets of the debtor, or withdrawal from the debtor's unprofitable contracts, while securing the legitimate rights of creditors.^[27] The implementation of PRD 2019 does not envisage modifying the purposes of the different proceedings.

 

The personal scope of restructuring proceedings will also not change, they are and will be available primarily to debtors who are entrepreneurs (both natural persons and legal persons, as well as other organisations and partnerships).^[28] Access to the restructuring proceedings is therefore widely available.^[29] However, Polish law does not provide for restructuring or bankruptcy proceedings of a group of companies. This is because these proceedings apply only to individual debtors and their creditors (the so-called principle of individualism).^[30] The Polish legislator decided not to change this approach, even in connection with the long-awaited (and controversial) amendment to the Commercial Companies Code (CCC 2000), which entered into force in October 2022. This latter reform introduced comprehensive regulation regarding groups of companies.^[31]

 

The Draft will not remodel the catalogue of restructuring proceedings available in Polish law, instead it will introduce revisions to these proceedings. Currently, an insolvent debtor (threatened with insolvency) may use each one of the aforementioned four proceedings: arrangement approval proceedings, accelerated arrangement proceedings, arrangement proceedings, and remedial proceedings.^[32]

 

The Draft introduces a formal division into:

1. Preventive restructuring: including proceedings for the approval of an arrangement, accelerated arrangement proceedings, and arrangement proceedings, which will be available to an insolvent debtor or a debtor threatened by insolvency.
2. Remedial restructuring: including -as of now – only remedial proceedings, which will be available only to insolvent debtors.^[33]

 

The introduced distinction implements the objectives of the PRD 2019 in a way that some obligatory provisions of the Directive (e.g. short time limits of a stay) would be transposed and be effective only to the preventive and not the remedial restructuring proceedings. Remedial proceedings, which enable a debtor to carry out an advanced economic restructuring,^[34] will be separated from preventive restructuring proceedings. On the one hand, such a division will make it possible to exclude remedial proceedings from the PRD 2019’s provisions and provide debtors with a stronger position and more time, which will be necessary to carry out profound changes within the debtor’s enterprise. On the other hand, doubts arise from the proposed possibility of conducting remedial proceedings only against an insolvent debtor, while in practice the best chances of success of restructuring are guaranteed by the commencement of proceedings at the time of identifying the first economic problems (i.e. at the time of threat of insolvency).^[35]

 

Except for the out-of-court procedure for the approval of an arrangement, which should be carried out within a maximum period of four months, the duration of other restructuring proceedings so far has not been strictly limited. Accelerated arrangement proceedings and arrangement proceedings, being less complicated proceedings, will in practice last about 9-18 months. Due to the higher level of complexity, the remedial proceedings last roughly 18-30 months.

 

It is for the restructuring court to determine possible grounds for discontinuance of the proceedings.^[36] The extension of the duration of remedial proceedings is facilitated by the practically unlimited duration of a stay in the course of these proceedings. The implementation of the PRD 2019 does not introduce a rigid time frame for restructuring proceedings. However, due to the shortening of the period of a stay, the duration will be limited to four months with possible extension to a maximum period of 12 months, except for remedial proceedings where the initial stay is limited at 12 months with possible further extensions (with no statutory limit). It should therefore be assumed that the duration of proceedings will be shortened.

 

4.2. Criteria to enter the proceedings

A debtor must be insolvent or threatened with insolvency in order to open restructuring proceedings. The concept of insolvency is central to the insolvency law. It is a legal qualification, not a factual situation, though. The state of insolvency most often arises in connection with the loss of financial liquidity. According to Article 11(1) of the BL 2003, a debtor is insolvent if he has lost the ability to meet his due financial debts (the liquidity test). In addition, a debtor who is a legal entity is also insolvent when all his financial debts (matured and not-matured) exceed the market value of his property, and this situation persists for a period exceeding twenty-four months (the over-indebtedness test).^[37] The occurrence of a state of insolvency makes it possible to initiate any restructuring proceedings as well as bankruptcy proceedings.

Since the introduction of restructuring proceedings in Poland in 2016, the ground for initiating them, in addition to the state of insolvency, is the state of threat of insolvency. After the implementation of PRD 2019, the state of threat of insolvency or imminent insolvency will only allow the initiation of preventive restructuring proceedings. Pursuant to Article 6(3) of the RL 2015, a debtor threatened with insolvency should be understood as a debtor whose economic situation indicates that he may soon become insolvent.

 

The condition for imminent insolvency is very flexible, and it is not difficult to make plausible. As a result, there is a risk of misuse of restructuring procedures by financially sound debtors who may try to simply reduce their liabilities. For this reason, when assessing the application, the court^[38] should carefully analyse the financial situation of the debtor and the justification for initiating the proceedings provided by the debtor.^[39]

 

In addition, the court refuses to open restructuring proceedings if the effect of such proceedings would be to the detriment of creditors^[40], which means that the harm would result from the opening of the proceedings themselves. This does not include the harm arising from the specific consequences of a proceeding, such as a PIFOR’s right to withdraw from unprofitable contracts.^[41] It should also not be confused with a best-interest-of-creditors test that will be performed during the confirmation of the plan.

 

The court will take into account the current situation of creditors and assess the material change that the opening of proceedings will have for the creditors. This includes considering the alternative possibilities for creditors in pursuing their claims. In doing so, the court will take into account the difficult economic situation of the debtor.^[42] From this point of view, the condition for rescuing the debtor takes into account the interests of creditors.

 

Another element of the assessment of the grounds for initiating restructuring proceedings could have been the viability test,^[43] but the Polish legislator did not decide to implement it as a separate tool. However, the court opening the proceedings will surely take into account whether the business of the debtor is viable or could be made viable once the necessary turnaround actions have been taken. We presume that even more emphasis will be placed on the viability aspect since the legislator decided to introduce the best-interest-of-creditors test (best-interest-test).^[44] The court would pay attention not only to the existence of the optimistic business scenarios of the debtor but also to the prospect that these scenarios encompass higher satisfaction of creditors than in the liquidation proceedings.

 

4.3. Involved actors

The same players are involved in all restructuring proceedings, but depending on the proceedings, their roles, rights and duties may differ. The proceedings involve the following:

 

Practitioner in the field of restructuring (PIFOR)

In Poland, the PIFOR is a person licensed as a restructuring advisor who has a different role depending on the respective restructuring proceeding. A PIFOR will act - personally or within the frame of a company or partnership over which he has full control - as an arrangement supervisor (arrangement approval proceedings), court supervisor (accelerated arrangement proceedings and arrangement proceedings), or administrator (remedial proceedings).^[45] Depending on the type of proceedings, the scope of the PIFOR’s duties varies. The PIFOR undertakes, inter alia actions aimed at voting on the plan, he prepares a list of claims, a restructuring plan, organizes and leads the voting on the arrangement (but does not vote himself), and also supervises the current activities of the debtor by consenting to the debtor performing certain actions, and as an administrator also administers the estate and runs day-to-day business operations. From a legal point of view, the PIFOR performs actions on behalf of himself but for the benefit of the debtor.^[46]

 

Debtor

As a rule, only the debtor may initiate restructuring proceedings, as he has the best information about the economic situation of his business.^[47] Also as a rule, during the proceedings it is the debtor who retains partial control over his assets and the day-to-day operations of his business (Debtor in Possession). This principle implements Article 5 of the PRD 2019 and will be maintained in all preventive restructuring proceedings. In those proceedings, the debtor will be able to independently perform activities in the field of ordinary management.^[48] To perform activities exceeding the scope of ordinary management, the consent of the PIFOR – and sometimes of the creditors’ committee^[49] – is required. 

 

A different regime applies in remedial proceedings. There, the principle is to completely divest the debtor of control over his assets and activities in favour of a PIFOR. The court has an option though to grant the debtor permission to perform activities in the field of ordinary management.^[50] In the course of the proceedings, the debtor may challenge several decisions of the PIFOR and the court (judge-commissioner). The debtor’s consent for adopting a consensual plan (arrangement) is not required. Creditors may initiate these remedial proceedings too, unless a debtor is a natural person.

 

Creditors

Creditors exert a decisive influence on the outcome of the proceedings by voting on the plan. During the proceedings, the interests of creditors are protected by the PIFOR and by the judge-commissioner along with the restructuring court. Also, a creditors’ committee can be appointed.^[51] The committee can give its approval to the debtor for performing certain actions (e.g. taking out a new loan or loan, encumbering assets with a mortgage or pledge).^[52] In addition, creditors may individually contest the amount of receivables covered by the claims list, which entitles them to vote on the plan, as well as challenge the content of the plan.

An important role used to be played by the creditors’ general meeting. During the formally invoked meeting, the creditors voted on the resolution on the adoption of the plan.

 

However, after the COVID-related simplifications, the plan will be voted on via the electronic system of the National Register of Debtors without convening the general meeting, and therefore the significance of the meeting dropped.

 

Judge-commissioner

The judge-commissioner directs and presides over the course of the restructuring proceedings, in particular, he supervises the PIFOR’s activities.^[53] This judge-commissioner takes numerous decisions in the course of the proceedings (i.e. approves the list of claims, sets the conditions for voting on the plan, and convenes a creditors’ meeting).^[54] If no creditors’ committee has been appointed, the judge-commissioner replaces the committee with respect to granting consent to the debtor for performing certain actions.^[55] In practice, the model of judge-oriented type of proceedings in Poland is leaning gradually but constantly toward a creditor-oriented model.

 

The court

The restructuring court decides on the opening of restructuring proceedings and decides on the confirmation or refusal of the plan.^[56] It also acts as an appeal court against decisions of the judge-commissioner.^[57] Currently, the court does not appoint the judge-commissioner as it used to before 2020. With some exceptions, the judge-commissioner is randomly selected by drawing lots in the IT system.

 

Other actors

The circle of persons and entities participating in restructuring proceedings will not change with the implementation of PRD 2019. The employees and owners (shareholders and/or, stockholders) of a debtor do not participate in the proceedings (unless they act in the capacity of creditors). The consent of the debtor’s shareholders to initiate restructuring proceedings is not required. The shareholders also have no formal influence on the course of a restructuring proceeding and the implementation of a restructuring arrangement. Noticeably, if the owner^[58] is also a creditor, he may not exercise his right to vote on the plan.^[59]

 

4.4. Stay

Currently, the scope of a stay – suspending individual enforcement actions – depends on the type of restructuring proceedings. In the case of remedial proceedings, the law provides for full protection of the debtor against individual enforcement actions as well as against bankruptcy proceedings. Enforcement proceedings initiated before the opening of restructuring proceedings are suspended and the initiation of new ones is inadmissible.^[60] The same scope of protection may also apply in the out-of-court arrangement approval proceedings, but only if the debtor announces the arrangement date in the National Register of Debtors.^[61] The arrangement date is the calendar date on which the list of receivables participating in the proceedings is determined.^[62]

 

In the case of accelerated arrangement proceedings and arrangement proceedings, the stay doesn't apply to certain excluded claims; in other proceedings the stay is general.^[63] Other creditors (e.g. creditors holding collateral (security) in rem on the debtor’s assets) may in principle enforce their right against the collateral, although a judge-commissioner may suspend enforcement for a maximum of 3 months if enforcement is directed to collateral that is necessary for the operation of the business.^[64]

 

The implementation of the PRD 2019 will lead to significant changes to the stay described above. The cited regulations will be replaced by Articles 189a-189e of the RL 2015. The new regulations will implement the obligatory provisions of Articles 6(1)-(2) and (5-9) of the PRD 2019. In the case of preventive restructuring, the stay period will last only 4 months from the date when the proceedings are opened. The stay will cover both the individual enforcement actions already commenced (with the possibility of revoking seizures) and the prohibition of taking new actions.^[65] As regards the duration of the stay, the proposed rules allow 3 modifications:

1. At the debtor’s request in the application to open restructuring proceedings, protection against enforcement actions is effective from the date of filing an application by the debtor.^[66]
2. The judge-commissioner will be able to lift a stay if an application to do so has been submitted by the debtor or the PIFOR, and when there is a reasonable suspicion that the required majority for adoption of a plan will not be obtained with the vote on the plan, or when the stay would result in gross harm to the creditor affected by the stay.^[67]
3. At the request of the debtor or the PIFOR, the judge-commissioner will be able to extend the duration of a stay. The total duration of a stay may not exceed 12 months.^[68]

 

The rules on automatic stays will therefore change significantly in Polish practice and should lead to an improvement in the efficiency of restructuring proceedings (also on the part of the court).

 

In the case of remedial proceedings, the stay will be granted automatically for a period of 12 months with the possibility of a further extension. This functions similarly to the abovementioned conditions, but without specifying a maximum duration of the stay. Such a flexible approach is justified by the complexity of remedial proceedings and will not constitute a significant change compared to the current situation. These proceedings often concern large debtors (in terms of the scale of operations, assets, or the number of creditors), which significantly prolongs the preparation of documents such as a restructuring plan, inventory, or list of claims. In the course of remedial proceedings, far-reaching reorganisation of the debtor’s enterprise is often carried out, which takes time. Therefore, a premature expiry of a stay could undermine those efforts.

 

4.5. The plan

 

4.5.1. Scope of a plan

In general, the scope of a plan includes:

(1) the monetary and non-monetary claims arising before the date of opening of restructuring proceedings;

(2) the interest for the period from the date of opening of restructuring proceedings until the confirmation of the plan;

(3) the claims dependent on a condition if the condition has materialised during the proceedings or the performance of the plan.^[69]

 

There are also some exemptions, a plan does not include:

(1) (maintenance) claims for causing sickness, incapacity for work, disability, or death and pensions;

(2) claims for the release of property (rei vindication) and cessation of infringement of rights;

(3) claims included in and covered by another insolvency plan;

(4) employment claims, unless the creditor agrees to be covered by the plan.^[70]

 

The doctrine names the above plan a general plan.^[71] We can also distinguish the selective plan that includes only certain claims whose restructuring has significant influence on further operation of the debtor's enterprise.^[72] This selective plan may be adopted exclusively in arrangement approval proceedings and in accelerated arrangement proceedings. Formation of classes of claims covered by the selective plan is based on well-defined criteria.^[73]

 

Both general and selective plans are collective plans, as all restructuring proceedings are collective ones.

 

4.5.2. Proponents of a plan

In all three court proceedings, plan proposals are submitted by the debtor, but they may also be submitted by a committee of creditors, the PIFOR, or by a creditor or creditors holding jointly more than 30% of the sum of the claims which are restructured under the plan, except creditors who do not have voting rights.^[74]

 

In the out-of-court arrangement approval proceedings, the debtor submits plan proposals. It is not clear whether arrangement proposals may be submitted by creditors holding 30% of the sum of claims, but there are strong arguments to claim the creditors should definitely have this right, as an expression of their private autonomy and ownership rights over the claim, and it should be confirmed in the future legislative initiatives.^[75]

 

4.5.3. Plan measures

Under provisions of the RL 2015, the restructuring of the debtor’s obligations may include, inter alia: (1) postponement of the payment date; (2) spreading the repayment into instalments; (3) reduction (haircut) of the claim; (4) debt-for-equity swap; and (5) change, exchange, or repeal of the right securing a specific claim. Arrangement proposals may indicate one or more of these restructuring options. Debt-to-assets (datio in solutum) conversion is also optionable. 

 

Statutory limitations with regard to plan measures apply only to certain claims, such as secured creditors’ claims, social security claims, and EU funds.^[76] Under the Draft the proposals for creditors secured in rem should provide for a certain minimum degree of satisfaction: they should be treated no less favourable than in bankruptcy proceedings unless the creditor agrees to less favourable terms. In practice, this will mean that the main axis of discussion and possible dispute between the debtor and the creditors and between the creditors will be the value of the collateral (understood as the underlying value of the assets) presented by the PIFOR in the best-interest-test and in the list of claims.

 

These proposals may not provide for any method of satisfaction other than that provided for in the agreement between the debtor and the creditor out of which the claim has arisen, unless the creditor has given his consent.^[77] This means that, for example, a financial creditor secured with a mortgage cannot be offered the conversion of the claim into shares, unless he/she agrees. If he/she does not agree on that different method of satisfaction he/she may not be overruled by the court.

 

4.5.4. Class formation

Under the Draft, the division of creditors into classes shall be based on objective, unambiguous, and economically or legally justifiable criteria relating to the legal relationship between creditors and debtor.^[78] The division into separate classes is mandatory for:

(1) employees, if they have given their consent to be affected by the plan;

(2) farmers under contracts for the supply of products from their farms,

(3) creditors with small claims,^[79]

(4) creditors secured by rights in rem,

(5) creditors that are simultaneously partners or shareholders of the debtor holding above 5% of shares.^[80]

 

The division into classes may be verified by the court before voting, at the request of those who may submit plan proposals.^[81] A division that has been approved, is binding on the court which is ultimately requested to decide on confirmation of the plan.

 

4.5.5. Information requirements

In any restructuring proceedings, not later than 30 days before the start of voting, the PIFOR is required to provide creditors with information, including in particular: (1) a list of claims; (2) a list of claims disputed by the debtor; (3) a restructuring plan; (4) a best-interest-test; (5) an opinion on the feasibility of the arrangement; (6) the private creditor test or the private investor test, addressed to public creditors.

 

The best-interest-test includes several steps. Firstly, it involves a valuation of the debtor’s business indicating the adopted methods and assumptions, which include:

(a) the value of the debtor’s business assuming the implementation of the plan, successful restructuring, and continuation of business activity by the debtor, and

(b) the value of the debtor’s assets, assuming bankruptcy and sale of the enterprise as a whole as well as the sale of individual assets (piecemeal sale). If the debtor’s assets are encumbered with a mortgage or pledge of any kind, the valuation should be provided separately for each encumbered asset.^[82]

 

Secondly, the best-interest-test requires information on the expected degree of satisfaction of creditors under the plan, and also in bankruptcy proceedings. It should contain the following data:

(a) the value of the debtor’s assets referred to in point (b) above,

(b) the anticipated duration of the bankruptcy proceedings and the amount of costs of bankruptcy proceedings and other liabilities of the bankruptcy estate,^[83] and

(c) the category in which they would be satisfied in bankruptcy proceedings.^[84]

Lastly, there should be an assessment of whether the claims covered by the plan will be satisfied to a greater extent in the case of conclusion and implementation of a plan, or in bankruptcy proceedings.^[85] 

 

Noticeably, the best-interest-test is not drawn up in the case of micro-enterprises.^[86]

 

4.5.6. Verification and additional information

When preparing valuations and other documentation required by creditors to prepare for voting, the PIFOR may take into account creditors’ remarks as to the methodology and expertise of those preparing the valuation. Such remarks may also be made by the judge-commissioner and the creditors' committee.^[87]

 

In addition, the participants in the proceedings (creditors and debtor) may submit objections to documents and analyses prepared by the PIFOR before the voting. The PIFOR may take into account these objections and submit corrected documents, or submit a statement of non-consideration of the objections together with a justification. Subsequently, the objections submitted and not taken into account are resolved by the court at the stage of approval of the plan.^[88]

 

4.6. Adoption and confirmation of a plan

 

4.6.1. Voting rights

With some exceptions, all creditors entered in the claims list, which is compiled by the PIFOR, have voting rights corresponding to the amount of claims on the list.^[89] In other words, each creditor has one vote with face value of his recognized claim.

Creditors related to the debtor, in particular relatives and relatives by marriage in the case of natural persons, as well as members of the governing bodies and owners (partners or shareholders, including natural persons holding more than 25% of the share capital), and entities related to commercial law companies, may not vote.^[90] Creditors who have acquired a claim after the opening of restructuring proceedings may also not vote.^[91]

 

Partners or shareholders have no voting rights derived from equity or partnership rights.^[92] They have no direct influence on the content of the plan or the procedure of its adoption and confirmation. Also, the debtor may not vote although may submit the plan proposals and therefore may have substantial influence on the plan.

 

4.6.2. Adoption by creditors

The rules for adoption and confirmation of a plan (in each of the restructuring proceedings) differ between consensual and non-consensual plans. As a general rule, the plan requires the approval of a simple majority of the voting creditors who have cast a valid vote and who together hold at least two-thirds (2/3) of the total amount of the claims of the voting creditors. If the plan is voted on in classes of creditors, the plan is approved by the creditors if in each class a simple majority of the voting creditors who together hold at least two-thirds (2/3) of the total amount of claims of the voting creditors of that class, vote in favour of the plan. The plan, that is approved by the majority of creditors as described above, including the cases of intra-class cram-down, is referred to as a consensual plan.

 

In the absence of the required majority in one or more classes, a non-consensual plan may still be adopted – in line with the PRD 2019 – subject to the requirements for a cross-class cram-down.^[93]

 

Therefore, In the absence of a majority in each class, the court may declare the plan acceptable if: 

1a) a majority of the creditors' classes voted in favour of the plan, including at least one class of creditors secured by rights in rem or creditors with a claim higher ranking (senior creditors) than ordinary non-preferred creditors (junior creditors), and failing this, 

1b) the plan was approved by a class or classes of creditors representing at least half of the classes of creditors which, in the event of a going-concern sale in a bankruptcy proceedings would not be out-of-the-money; 

2) under the plan, any dissenting class of creditors is treated (1) at least as favourable as any other class of creditors with the same ranking in bankruptcy proceedings, and (2) more favourable than any other class with a lower ranking in bankruptcy proceedings; 

3) the existing partners or shareholders will not obtain, as a result of the adoption of the plan, any value under the plan exceeding the amount of the new funds they contribute as part of the implementation of the restructuring plan.^[94]

 

For establishing the ranking of creditors in points 1a and 2 above, the ranking should take into account the preference rules of bankruptcy proceedings.^[95]

 

The limitations on allocating value to partners or shareholders (point 3 above) under the plan do not apply in all cases. They are not applicable if:

(1) the plan provides for full satisfaction of creditors, or

(2) the value of the funds contributed by partners or shareholders, is greater than the value of the reduction in the amount of the claim provided for in the plan for creditors voting against the plan, or

(3) only natural persons are partners or shareholders of the debtor.

 

4.6.3. Court confirmation

A plan must be approved (confirmed) by the court, even if it was adopted by the majority of creditors or all of them. The content of the plan forms the operative part of the court’s decision on a request for confirmation. 

 

The court always refuses to confirm a plan if the plan (its normative content) violates the law. This is the case, in particular, if the plan provides for the granting of illegal state aid, infringes mandatory provisions of binding law or – as pointed out in the legal doctrine^[96] – the procedural rules were breached in the process of the plan’s adoption. The court may refuse to confirm a plan if it is obvious that the plan can not be executed. It is presumed that it is obvious that the plan can not be executed if the debtor fails to perform its ordinary obligations that have arisen after the date of opening of the restructuring proceedings.^[97] Lastly, the court may refuse to approve the plan if its terms are grossly harmful to creditors who voted against the plan and who have raised objections with the court.^[98]

 

Poland had already introduced a best-interest-of-creditors-test before the adoption of the PRD 2019, a version of this test was a part of our non-consensual plan adoption. The test could be invoked only if the plan was not adopted in one of the voting classes. Under current Article 119(3) of the RL, despite not having obtained the necessary majority in some classes of creditors, the plan shall be adopted:

1) if the creditors^[99] holding jointly two-thirds of the total sum of claims voted in favour of the plan and

2) if the creditors from the class or classes which voted against the plan will be satisfied under the plan to an extent no less favourable than in the event of bankruptcy proceedings.

 

Article 119(3) of the RL will be repealed once the PRD 2019 is fully implemented in Poland.

 

Under the new regulations, the court will refuse to confirm a plan if any creditor who voted against the plan (regardless of the results of the voting in any of the classes) has raised justified objections alleging that it would be in a worse position as a result of the plan than if bankruptcy proceedings had been conducted.^[100]

 

To that purpose, the best-interest-test will be prepared by the PIFOR and presented to creditors 30 days before the voting. The test will compare:

(a) the value of the debtor's enterprise and the degree of satisfaction of creditors, assuming the implementation of the restructuring plan and the continuation of business activity by the debtor, with

(b) the liquidation value of the debtor's assets and the degree of satisfaction of creditors assuming the bankruptcy scenario.^[101]

 

Although the best-interest-test is principally related to the introduction of the cram-down mechanism, it will also allow for control of the economic justification of restructuring proceedings.

 

4.7. Possibilities for a debt-for-equity swap

The conversion of claims into shares has already been provided for under Article 270 of the BL 2003 since 2003.^[102] In 2015, this solution was transferred to the RL 2015. The regulations explicitly provide that the restructuring of the debtor’s liabilities may consist of the conversion of receivables into shares.^[103] The RL 2015 introduced additional requirements regarding the content of a plan’s proposals, allowing the plan to provide for the conversion of debt into equity. The plan must indicate the following:

1. the amount by which the share capital will be increased, 
2. the number and nominal value of new shares or the value by which the nominal value of existing shares will be increased,
3. it is specified that the issuance of new shares is effected with the exclusion of the right of priority or pre-emptive right, provided that the exclusion of the right of priority or pre-emptive right occurs,^[104]
4. whether the newly issued shares are bearer or registered,
5. the issue price of new shares, and
6. the date from which the new shares are to participate in the dividend.

 

Voting on a plan providing for a debt-for-equity swap is possible only after obtaining the consent of the President of the Office of Competition and Consumer Protection or the European Commission or demonstrating that such consent is not required.^[105] The legally approved plan replaces the required provisions of CCC 2000 related to the increase of the company’s share capital, joining the company, taking up shares or stocks, and making a contribution in-kind to the share capital.^[106]

 

The possibility of converting receivables under the arrangement raises numerous theoretical and practical questions, both at the stage of formulating arrangement proposals and the plan’s confirmation.^[107] Such a plan directly affects the rights of the debtor’s owners and it may be held to violate the property rights of the owners.

 

However, the Act does not require acceptance of the content of the proposal by the shareholder (or even by the debtor). The shareholders are not required to accept the debt-to-equity plan, they also do not vote nor have any other instruments to defend themselves against conversion, which may obviously lead to the loss of control over the debtor as a result of the dilution of shares.^[108]

 

The regulation concerning arrangement proposals will be supplemented by Article 155 paragraph 4 of RL 2015, according to which arrangement proposals may not provide satisfaction to any creditor higher than the value of their claims. The provision transposes Article 11(1)(d) PRD 2019 and aims to protect against over-satisfaction of financing creditors who, based on arrangement proposals, could receive higher payments than the value of claims (e.g. through conversion).

 

4.8. Executory contracts

Article 256 of the RL 2015 protects selected contractual relationships to which the debtor is a party from the date of opening of restructuring proceedings until their final termination or discontinuation. Until the end of November 2021, only the following contracts listed specifically in article 256 of the RL 2015 were protected: a tenancy agreement of premises in which the debtor’s enterprise is conducted, credit facility agreements, loan agreements, leasing agreementsbank account agreements. The regulation omitted many important commercial contracts, which significantly hindered the effective conduct of proceedings.^[109]

 

Since December 2021, the protection extended to other contracts of fundamental importance for the debtor’s business (executory contracts). To identify them, RL 2015 imposes on the PIFOR the obligation to prepare a list of executory contracts. This amendment of 2021 implemented the provisions of Article 7(4) of the PRD 2019.

 

The contractual relationships of the debtor are also protected by Article 247 of the RL 2015. According to this article so-called ipso facto clauses – provisions of the contract stipulating the change or termination of the legal relationship to which the debtor is a party in the event of an application for the opening of restructuring proceedings or its opening – are null and void.^[110]

 

In addition, a specific instrument for remedial proceedings is the right of withdrawing (rescinding with ex tunc effect) from an agreement by the PIFOR with the prior consent of the judge-commissioner.^[111] Thanks to this rule, the debtor can rescind from unprofitable contracts without exposing himself to the risk of incurring contractual penalties exceeding the actual loss of the other party to the agreement. This solution makes it possible to carry out an effective and thorough turnaround of the debtor’s enterprise.

 

4.9. Jurisdiction for and recognition of court decisions in Europe

Poland has notified the European Commission of all proceedings regulated in the RL 2015, including out-of-court proceedings for the purpose of including these proceedings in Annex A of Regulation (EU) 2015/838 (EIR 2015).^[112] The last Polish notification took place in December 2020. Jurisdiction for, as well as the recognition of the effects of opening and conducting Polish insolvency proceedings results directly from the provisions of the EIR 2015.

 

5. Outlook and Conclusion: focus points for domestic practice

The full implementation of PRD 2019 has not yet taken place, so it is difficult to discuss the reception of the new framework by its addressees. Currently, in Poland, an improvement of the operation of the National Register of Debtors (Krajowy Rejestr Zadłużonych), introduced on 1 December 2021, poses a major challenge. The National Register of Debtors is an ICT system under which restructuring and bankruptcy proceedings are conducted fully online. It means the entire proceedings are conducted via and within an IT system that is available online for private participants, insolvency practitioners and courts. Almost no paper motions or applications are filed, and all judgements and other judicial instruments are issued and transmitted via the National Register of Debtors.^[113]

 

Undoubtedly, some of the solutions covered by the Polish Draft that intends to implement PRD 2019 will cause a great deal of interpretative difficulties. This applies to the provisions on the relative priority rule, especially with regard to shareholders. The role of liquidation and restructuring valuation of the debtor’s enterprise and the best-interest-test will also be crucial. It is also important that on the occasion of the implementation of the PRD 2019, the provisions on the prohibition of enforcement actions in all four restructuring proceedings will be unified, and the creditors' information rights will be increased, as well as their impact on the course of proceedings and the change of the plan supervisor in the procedure for approval of the plan.

 

Unfortunately, some of the important solutions of the PRD 2019 have not been implemented. This concerns the normative framework for early warning tools and the obligations imposed on board members. This also applies to the rights of creditors secured by rights in rem to maintain and protect the value of their collateral. Nor have any instruments been put in place to better secure new or temporary funding and financing of the insolvency projects.

 

^[1] This article was closed on 27th of October 2023.

^[2] The terms insolvency law and insolvency proceedings are used to refer both to restructuring and bankruptcy law, as well as to restructuring and bankruptcy proceedings jointly.

^[3] The Restructuring Law of 15 of May 2015 (Official Journal 2015, sec. 978).

^[4] There are three in-court restructuring proceedings: (1) accelerated arrangement proceedings; (2) arrangement proceedings, and (3) remedial proceedings.

^[5] The arrangement approval proceedings.

^[6] The consumer bankruptcy was introduced in Poland in 2009. During the first 5 years, until the first stage of the amendments, only about a total of 140 cases were opened. The projection for 2023 only is more than 20.000.

^[7] Between 2016 and 2020 no stay during an out-of-court proceedings was provided by the rules of RL 2015. Therefore, it played almost no role in a restructuring landscape.

^[8] Article 3 of the RL 2015.

^[9] Articles 210-226h of the RL 2015.

^[10] On the basis of the former anti-Covid out-of-court restructuring proceedings that had been in force between July 2020 and the end on November 2021.

^[11] Acting as a “plan supervisor” (“nadzorca układu”).

^[12] Between Q1 and Q3 of 2023, there were 2971 arrangement approval proceedings opened which constitutes 92,55% of all restructuring proceedings opened in this period of time.

^[13] Articles 227-264 of the RL 2015.

^[14] Acting as a “court supervisor” (“nadzorca układu”).

^[15] See Article 39 of the RL 2015 (for the PIFOR) and Article 129 of the RL 2015 (for the council of creditors).

^[16] Articles 265-282 of the RL 2015.

^[17] When the sum total of disputed receivable debts giving the right to vote on a plan exceed 15 per cent of the sum total of receivable debts giving the right to vote on arrangement (Article 3 (4) of RL 2015).

^[18] Articles 283-323 of the RL 2015.

^[19] „Zarządca”.

^[20] Article 288 (3) of the RL 2015.

^[21] See: https://legislacja.rcl.gov.pl/projekt/12361503/katalog/12891118#12891118 (last viewed: 26th of September 2023).

^[22] Article 1 (22) of the Draft amending Article 151 of the RL 2015.

^[23] Article 5 of the Draft concerning the amendment to the law regulating the conditions of the PIFOR profession.

^[24] Prawo.pl, https://www.prawo.pl/biznes/dyrektywa-restrukturyzacyjna-wchodzi-w-zycie-17-lipca-brakuje,516026.htm, (last viewed:26th of September 2023).

^[25] The Draft has been publicly consulted and is at the stage of development by the Council of Ministers, which will then forward the Draft to commence the parliamentary debate. See also: https://legislacja.rcl.gov.pl/projekt/12361503/katalog/12891118#12891118 (last viewed: 26th of September 2023).

^[26] A. Hrycaj, Restructuring law and proceedings, Wolters Kluwer Polska: Warsaw, 2019, p. 16 (Polish language version).

^[27] Article 3(1) of the RL 2015. On the other hand, bankruptcy law puts emphasis primarily on maximizing the satisfaction of creditors (Article 2(1) of Polish Bankruptcy Law, BL 2003).

^[28] According to the Polish Commercial Companies Code, companies are divided into partnerships – considered to be defective legal persons and capital companies – considered legal persons (Articles 8 and 12 of CCC 2000).

^[29] Article 4 of the RL 2015.

^[30] P. Filipiak, 'Restructuring of related companies (groups of companies)', Chapter 7 in: A. Hrycaj, A. Jakubecki, A.J. Witosz (eds), System Prawa Handlowego. Volume 6. Restructuring and bankruptcy law, C.H. Beck: Warsaw, 2020, p. 275-276 (Polish language version).

^[31] Articles 211-2116 CCC 2000. See also A. Sikorska-Lewandowska, 'New Group of Companies Law in Poland', European Company Law, 2022, 19(6), p. 156-159; B. Sołtys, 'Several comments and proposals to the code regulation of the new holding law', Przegląd Prawa Handlowego, 2021, 1, p. 5-16 (Polish language version).

^[32] Articles 2 and 6 of the RL 2015.

^[33] Article 1 (1) of the Draft amending Article 2 (1) of the RL 2015.

^[34] Remedial actions make it possible to achieve the purpose of the proceedings by means of instruments appropriate for bankruptcy proceedings, and thus significantly interfere with the organisational and property structure of the debtor. The key remedial actions include the possibility of withdrawing from unfavourable mutual contracts (Article 298 of the RL 2015), the possibility of reducing employment on the same terms as in bankruptcy proceedings (Article 300 of the RL 2015), the possibility of disposing of unnecessary assets on principles analogous to bankruptcy proceedings (Article 323 of the RL 2015).

^[35] The division into preventive and remedial restructuring is justified by the fact that remedial proceedings are beyond the framework of other restructuring proceedings and are similar to bankruptcy proceedings. See: https://legislacja.rcl.gov.pl/projekt/12361503/katalog/12891118#12891118 (last viewed: 26th of September 2023).

^[36] Articles 325 and 326 of the RL 2015.

^[37] Article 11 (2) of the BL 2003.

^[38] The court assesses the application to open accelerated arrangement proceedings, arrangement proceedings, and remedial proceedings. In the case of proceedings for approval of the arrangement, the verification of the grounds for restructuring takes place at the stage of examining the application for approval of the arrangement.

^[39] P. Filipiak, 'Grounds for opening restructuring proceedings', Chapter 3 in: A. Hrycaj, A. Jakubecki, A.J. Witosz (eds), System Prawa Handlowego. Volume 6. Restructuring and bankruptcy law, C.H. Beck: Warsaw, 2020, p. 80 (Polish language version).

^[40] Article 8 paragraph 1 of the RL 2015.

^[41] Article 298 of the RL 2015.

^[42] Ibid., p. 83.

^[43] Article 4(3) of the PRD 2019.

^[44] Article 2(1)(6) of the PRD 2019 and draft of Article 10a of RL 2015, see also comments in: 4.6.3.

^[45] Articles 23-64 of the RL 2015. He or she may also act as a bankruptcy trustee in bankruptcy proceedings under the provisions of BL 2003.

^[46] Articles 52 and 53 of the RL 2015.

^[47] The exception is the remedial proceedings where creditors may file for opening if a debtor is not a natural person.

^[48] Ordinary management activities should be understood as activities related to the day-to-day operation of the debtor's enterprise, undertaken routinely, related primarily to the subject of the main activity.

^[49] Article 129 of the RL 2015.

^[50] Article 288 paragraph 3 of RL 2015. Due to the practical difficulties in the management of the company by the court-appointed PIFOR, such consent is generally granted.

^[51] Articles 121-139 of RL 2015.

^[52] Article 129 of the RL 2015.

^[53] Article 18 of the RL 2015.

^[54] The delegated judge is not appointed in the procedure for the approval of the arrangement.

^[55] Article 129 of the RL 2015.

^[56] Articles 164-165 of the RL 2015.

^[57] Article 200 of the RL 2015.

^[58] Holds at least 25% of the shares.

^[59] Article 116 of the RL 2015.

^[60] Article 312 of the RL 2015.

^[61] In the proceedings, the debtor independently with the support of the court-appointed supervisor votes on the plan. The debtor may vote and apply for approval of the plan without publicly available information about the vote, but in this case, he is not entitled to protection against enforcement.

^[62] Article 211 of the RL 2015.

^[63] Articles 259 and 278 of the RL 2015.

^[64] Articles 260 and 279 of the RL 2015.

^[65] Article 189a paragraphs 1 and 2 of the RL 2015.

^[66] Article 189b of the RL 2015.

^[67] Article 189a paragraph 6 of the RL 2015 (draft).

^[68] Article 189d of the RL 2015 (draft).

^[69] Article 150 of the RL 2015.

^[70] Article 151 of the RL 2015.

^[71] A.J. Witosz in: A. Hrycaj, A. Jakubecki, A.J. Witosz (eds), System Prawa Handlowego. Volume 6. Restructuring and bankruptcy law, C.H. Beck: Warsaw, 2020, p. 500 (Polish language version).

^[72] Articles 180 -188 of the RL 2015.

^[73] Article 180 of the RL 2015.

^[74] Article 155 (2) of the RL 2015.

^[75] See, among others, P. Filipiak [in:] Prawo restrukturyzacyjne. Komentarz, wyd. III 2023, red. P.Filipiak, A. Hrycaj, LEX, comment to Article 212, recital 16-17.

^[76] Articles 151 (2a), 153 and 154 of RL 2015.

^[77] Article 161a of the RL 2015 (draft).

^[78] Article 161 (1) of the RL 2015 (draft).

^[79] The law does not specify the term "small claims". The value should be determined on a case-by-case basis depending on the value of the individual claims covered by the plan. In practice the claim is deemed small if its face value is no higher than roughly 10.000 EUR.

^[80] Article 161 of the RL 2015 (draft).

^[81] Article 161 (4-6) (draft) of the RL 2015 (draft).

^[82] Article 10a (1.1) of the RL 2015 (draft).

^[83] Article 230 of the BL 2003.

^[84] Article 10a (1.2) of the RL 2015 (draft).

^[85] Article 10a (1.3) of the RL 2015 (draft).

^[86] Article 10 of the RL 2015 and Article 10a of the RL 2015(draft).

^[87] Article 10a (3) of the RL 2015 (draft).

^[88] Article 211b (2) of the RL 2015 (draft).

^[89] Article 107 of RL 2015.

^[90] Article 116 of RL 2015.

^[91] Article 109 of RL 2015.

^[92] Article 116 of RL 2015.

^[93] Under article 165b(1) of RL 2015 (draft) the court may adopt a plan under the cross-class cram-down rules and then may confirm it under the confirmation rules (Article 165 of RL 2015).

^[94] Article 165a of the RL 2015 (draft).

^[95] Articles 342 of the BL 2003.

^[96] See: A.J. Witosz in: A. Torbus, A.J.Witosz, A. Witosz (eds.), Restructuring Law. Commentary, Warsaw 2016, comment on Article 165, nb 2 (Polish language version).

^[97] Article 165 of the RL 2015.

^[98] Article 165 (2) of the RL 2015.

^[99] General body of creditors regardless of the class division.

^[100] Article 1 (30) of the Draft adding Article 165b of the RL 2015.

^[101] Article 10a, paragraphs 1 and 2 of the RL 2015.

^[102] A. Witosz, 'Conversion of receivables into shares in bankruptcy with the possibility of concluding an arrangement and the moment of increasing the share capital of a bankrupt company', Przegląd Prawa Handlowego, 2007, 5, p. 26-31 (Polish language version).

^[103] Article 156 paragraph 1 (4) RL 2015.

^[104] The exclusion of the right of priority or pre-emptive right is statutory and it occurs also in the cases where the company deed or articles of association do not provide for such possibility.

^[105] Article 118 paragraph 3 of the RL 2015.

^[106] Article 169 paragraph 3 of the RL 2015.

^[107] L. Giliciński, P. Moskała, 'Conversion of receivables into shares or stocks in restructuring law', Monitor Prawa Bankowego, 2015, 12, p. 93-102 (Polish language version); D. Marciniak, 'The moment of increasing the share capital in the conversion of receivables into share capital in the Act - Restructuring Law', z, 2018, 12, p. 34-38 (Polish language version); S. Witkowski, 'Parity of conversion of receivables into shares in restructuring proceedings', Doradca Restrukturyzacyjny, 2020, 1, p. 83-89 (Polish language version).

^[108] T. Grzesiak, M. Kaliński, 'Protection of partners' rights in a conversion arrangement – constitutional doubts', Doradca Restrukturyzacyjny, 2018, 1 p. 58-67 (Polish language version).

^[109] For example, you can mention here, loan, franchise, or factoring agreements.

^[110] The provision concerns accelerated arrangement proceedings, arrangement proceedings, and remedial proceedings. The twin regulation concerning the procedure for the approval of the arrangement is contained in Article 225 of the RL 2015.

^[111] Article 298 of the RL 2015.

^[112] Regulation (EU) 2015/838 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings (recast), O.J. L 141/19.

^[113] Proceedings are conducted almost entirely electronically (including the motion to open the proceeding, the issuance of rulings by the court, the conducting of a voting on the arrangement).