Restructuring proceedings - beneficial changes for the entrepreneur?
The new Restructuring Law is intended to solve at least some of the problems faced by an insolvent entrepreneur or an entrepreneur that is at risk of insolvency. What beneficial solutions are introduced by the new restructuring procedure in relation to the aforementioned group of entrepreneurs? We answer below.
New restructuring proceedings - benefits
The new restructuring procedure introduces favorable solutions for entrepreneurs having problems with insolvency. Among them, the following can be distinguished:
Separation of restructuring proceedings from bankruptcy proceedings - from the entrepreneur's point of view, the most important thing is certainty as to the status of the entity that will be held in business, namely whether it will be the subject of restructuring proceedings or a subject in bankruptcy. Thanks to the separation of restructuring proceedings from bankruptcy proceedings, an entrepreneur submitting an application for opening one of the restructuring proceedings will be sure that it will not lead to bankruptcy. In addition, its final loss in the proceedings, or failure to conclude an arrangement, will not automatically result in the entrepreneur's bankruptcy.
Organizing the types of restructuring proceedings - the new law systematizes and organizes the methods of conducting the above-mentioned procedures. Under the new regulations, the debtor will be able to choose the method of conducting the proceedings from among:
- proceedings for approval of an arrangement;
- accelerated arrangement proceedings;
- arrangement proceedings;
- rehabilitation proceedings, and the possibility of an arrangement in bankruptcy under Art. 266 of the Bankruptcy and Rehabilitation Law.
The size of disputed claims and restructuring proceedings
It should be clarified at this point that the debtor will not be able to freely use all the methods indicated above, because, for example, in the case of accelerated proceedings and composition proceedings, the criterion for the possibility to use is the size of the disputed claims.
- Definition of insolvency - the definition of insolvency will also change. The new definition states that an insolvent entity is one that has lost the ability to meet its due pecuniary obligations, and the loss must be permanent. The court will recognize the insolvent entity which is in arrears with payments for a period exceeding 3 months.
- Voting change - the quorum at the meeting has been reduced from ½ to 1/5 of the creditors entitled to vote on the arrangement.
- Acceleration of the proceedings - numerous deadlines and requirements have been introduced for the courts and the judge commissioner. In order to minimize the phenomenon of excessive length of proceedings, the partial remuneration of the supervisor and the manager was dependent on the speed of the proceedings.
- Introducing a system of incentives to provide safe loans and credits to an entrepreneur at the stage of restructuring proceedings