Vol 18 (2021) - Issue 5

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A Revamped Arrangement Sanctioning Proceeding: The Polish Scheme

Synopsis
Poland is about to introduce a set of new rules amending the Polish insolvency and restructuring laws.
Among others, the legislative package significantly amends rules governing an arrangement sanctioning proceeding (the "ASP"), which is one of the currently available restructuring proceedings in Poland. The primary purpose of amending the ASP is to codify in the restructuring law (the "Restructuring Law") special legal measures concerning a so-called simplified restructuring proceeding (the "SRP"). The SRP was introduced in June 2020 as part of a broader anti-COVID-19 legislation and was designed to facilitate the efficient restructuring cash-strapped businesses’ debts to give them a better chance of surviving the pandemic. The SRP was structured as an extended variation of the ASP, combining the traditional benefits of a judicial restructuring procedure, in particular a debt moratorium (which is normally not available in the ASP), with the highly limited involvement of a restructuring court (which, in turn, is the prime feature of the ASP). From the outset, the SRP was intended as an extraordinary and temporary measure due to expire by the end of June 2021 (the expiry date is to be moved to the end of November 2021). However, as the SRP proved extremely efficient and by far the most frequently used restructuring proceeding in Poland in the second half of 2020 and the first half of 2021, the Government decided to make the most important features of the SRP, with a few useful corrections, a permanent solution and to incorporate them directly into the Restructuring Law.
The new rules will come into force on 1 December 2021. On this date, the modified version of the ASP will replace the SRP. The new legislation will have profound implications on the Polish restructuring market.
It is very likely that the modified ASP, especially when coupled with the restructuring directive, which is still to be implemented in Poland1, will become the prime restructuring proceeding for distressed debtors in Poland.
This article discusses the key features of the modernised ASP, as introduced by the new legislation.