1. Paradigm shift – the new Polish law introducing modern tools of restructuring
Whitebook on the Principles of Restructuring – the banks approach to the new regulations

2. Situation analysis under old regime – practical shortcomings and pitfalls of the insolvency law of 2003 (PUiN)
Situation under insolvency law of 2003
Two-staged proceedings
Preliminary proceedings Nadzorca Sadowy Zarzadca Przymusowy
Final proceedings:
Liquidation Reorganization

3. Situation analysis under old regime – practical shortcomings and pitfalls of the insolvency law of 2003 (PUiN)
Major pitfalls:
no debtor‘s relief, no automatic stay, no clawback (only in extraordinary circumstances) resulting in a „rat-race“ for attachment orders
incalculable court decision (order on preliminary proceedings could take months!)
up to 75% of filings for the opening of preliminary proceedings were rejected
indefinite and incalculable period of insecurity and chaos until the opening of proceedings to be avoided under any circumstances
Unclear treatment of insolvency gains and losses
Result: 99,8 % of filings resulted in liquidation of the entity
Parties resulting to out-of-court informal solutions with numerous risks (tax treatment, avoidance claims, criminal charges etc.)
Privileged creditors (Tax, Social Security, Wages (partial))

4. Situation analysis under old regime – practical shortcomings and
Situation analysis under old regime – practical shortcomings and pitfalls of the insolvency law of 2003 (PUiN)
Result:
In the absence of sufficient assets, majority of proceedings had not been opened
reason: no opening of proceedings when predictable that assets shall not cover costs of proceedings AND forthcoming obligations
notice periods for rental agreements: 6 months after opening of proceedings
- In most cases a restructuring of an indebted company has proven virtually impossible
- The success rate has been far below 1% range
- Companies did everything to avoid proceedings. „Informal“ restructurings under „umbrella“ of corporate liquidation proceedings
Therefore Law Reform of Mai 2015

5. New approach and tools available under the new Law on Restructuring (Prawo Restrukturyzacyjne)
Separation of Insolvency and Restructuring proceedings – new „labeling“ of restructuring efforts
Primacy of Restructuring - if debtor files for Restructuring and creditor for the opening of insolvency proceedings, the latter will be deferred until the application for Restructuring is decided upon.
Better control over the proceedings for creditors and debtor
Acceleration of proceedings and reduction of the „Uncertainty Phase“
Providing solutions for typical problems and uncertainties appearing with out-of-court restructurings (tax issues, risks of preference avoidance claims, possibility of a cram-down of resilient creditors)
Four different proceedings of Restructuring with various degrees of debtor protection and limitation of disposal
Preparations for the Reform: Establishment of a committee of experts and invitation of groups that typically represent the interests of Stakeholders (e.g. ZBP, BLPA)

6. New approach and tools available under the new Law on Restructuring (Prawo Restrukturyzacyjne)
Joint solutions in all proceedings:
Debtor and creditors may jointly propose the Restructuring Administrator (must be a licensed professional, attorney or auditor license not sufficient) – if requirements are met, the court is bound by the proposal
This makes the process much more calculable and predictable
Tax treatment of reorganization profits/losses is clearly provided for
Secured creditors (mortgagees and other collateral holders) can be obliged to participate in restructuring

7. New approach and tools available under the new Law on Restructuring (Prawo Restrukturyzacyjne)
Decisively shortened deadlines for court rulings
Paper adjudication in the first two proceedings (no hearing)
Automatic stay in proceedings 3-4
Partial settlement/reorganization scheme possible

8. New approach and tools – Confirmation of Scheme of Arrangement Track 1 Procedure
Procedure on Confirmation of Scheme of Arrangement
Extrajudicial part
Parties (Debtor and Creditor) choose (preferably jointly) restructuring advisor who at later stage shall become appointed court trustee
Company concludes an advisory service agreement with restructuring advisor. The chosen advisor should have the backing of the major creditors
With the help of the advisor the decision should be made which classes of creditors shall be formed and which creditors shall become part of the Scheme of Arrangement
Preparation of a Restructuring Plan/Scheme of Arrangement. The plan may include additional security, partial disinvestments, debt-to-equity swaps a.o.
Confirmation of the Effective Date
Formal voting on the plan. 2/3 majority in each class required and the majority of classes. The plan should include an alternative calculation of a liquidation scenario, should creditors intend to contest the approval

9. New approach and tools – Confirmation of Scheme of Arrangement Track 1 Procedure
Judicial Part
Application for confirmation of the approved Restructuring Plan/Scheme of Arrangement by the court – application to be filed by the appointed restructuring advisor
Approval decision of court (within two weeks)
After 7 days after approval Restructuring Plan (and the suggested changes) becomes enforceable
Implementation of Restructuring Plan under supervision of court trustee (the appointed restructuring advisor)

10. New approach and tools – Expedited Settlement Procedure Track 2 Procedure
Judicial preliminary procedures
Application by debtor
Paper adjudication/decision within a week from application
No stay-order during adjudication
Main Proceedings
Appointed restructuring advisor must present the Settlement plan within a month/Confirmation by court
Stay-order protecting debtor/limitation of disposal for protection of creditors
Preparation of Creditors list (no adjudication/final decision on disputed claims)

11. New approach and tools – Settlement Enhancement Procedure Track 3 Procedure
Preliminary court proceedings
Debtor files for opening of proceedings
If necessary: Stay order, protection from enforcement, limitation order limiting the rights of disposal of Debtor
Decision by adjudication based on documents (no hearing)
Deadline for court decision: two weeks In the exceptional case of a hearing extension for additional six weeks

12. New approach and tools – Settlement Enhancement Procedure Track 3 Procedure
Initiated procedure
Finalized list of claims and complete approval procedure also on disputed claims
Preparation of the Reorganisation Plan + Vote amongst creditors
Enhancement of Reorganisation Plan approved by creditors by the court

13. New approach and tools – Reconstruction Procedure Track 4 Procedure
Request for the opening of a Reconstruction Procedure (filed by Debtor)
Automatic stay order, protection from enforcement and limitation on disposal – usually appointment of a Restructuring Administrator (exceptionally the Debtor may retain control over part or all of his assets within set limitations)
Initiation decision by court – deadline 2 weeks (exceptions possible)
Finalized list of claims prepared and adjudicated by court
Appointed Restructuring Administrator has various dispositive rights of termination, alteration of legal relationships with regard to workforce reduction, termination of long-term commitments, possible adjustment of long-term commitments
At the end a voting on the suggested Reconstruction Plan takes place and the court confirms the approved Plan.

14. The Bank‘s approach to restructuring Whitebook on Principles of Restructuring
Project initiated by ZBP – main advisor BLPA Restructuring
Goal of Initiative
initiate discussion among banks to enhance best practice approach
encourage cooperation between creditors ensuring a coordinated approach to restructuring
enhance the standardization and predictability of approach

15. Steps to be taken – current status
Preparation of initial catalogue of Principals of Restructuring (BLPA – done)
Discussion among bank experts, moderated by BLPA on the Principals and
Preparation of Final Whitepaper to be voted upon by bank experts (BLPA – done)
Circulation and discussion of Whitepaper with other institutions (National Bank, Supervisory Commission, Ministry of Justice etc.) - done
Publication of „Whitebook on Principles of Restructuring“

16. International Offices
Berlin
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Frankfurt
Katowice
Poznań
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Szczecin
Warszawa
Worms
Moscow
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Chicago __________________________
Bucharest
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Athens
Cooperation partners