Court supervisor in restructuring proceedings

According to the Restructuring Law, the primary objective of the proceedings is to avoid bankruptcy. During the restructuring proceedings, the debtor and the out-of-court body carry out a number of activities aimed at improving the economic situation of the debtor's enterprise so that it can continue to operate in economic circulation. We distinguish the following types of restructuring proceedings:

• Proceedings for approval of the arrangement
• Arrangement proceedings
• Accelerated arrangement procedure
• Sanitation proceedings

Arrangement proceedings and accelerated arrangement proceedings are opened upon a court decision. The court, issuing a decision on opening restructuring proceedings also designates a supervisor Court.

Who is the Court Supervisor?

In accordance with Article 23 of the Restructuring Law restructuring proceedings are being conducted with the participation of a supervisor, who may be an arrangement supervisor or a court supervisor or administrator. The court supervisor is therefore one of the extrajudicial bodies in the restructuring proceedings, which - as the name suggests - supervises the proper course of the proceedings. In addition to supervising the proceedings, the court supervisor also has a number of rights and obligations, which are included in the Restructuring Law.

First of all, in the above-mentioned proceedings, the right to manage the company is limited to the exercise of ordinary management, and any activities exceeding the scope of ordinary management require the consent of the arrangement supervisor. Due to the fact that the scope of ordinary management is a general concept and different for every company, the arrangement supervisor should always instruct the debtor at the initial stage of the proceedings what activities fall within the scope of ordinary management, and for what activities he should apply to the supervisor for consent. The supervisor has 30 days from the receipt of the application to give consent, however he may also give consent after the debtor has performed such an activity. Each time, the lack of such consent means that that the act performed by the debtor becomes unimportant.

The duties of the judicial supervisor include, first of all, 

• Notification to creditors about the opening of restructuring proceedings
• Preparation of a restructuring plan and a list of receivables and a list of disputed receivables
• Rate arrangement proposalsand, if necessary, advising the debtor to change them in order to ensure compliance with the law and the possibility of their execution, taking action to ensure that creditors submit the largest possible number of valid votes, participating in the meeting of creditors and submitting an opinion on the possibility of implementing the arrangement.

It should be noted that the debtor may, together with the restructuring application, request the appointment of a specific person or company to perform the function of a court supervisor, if at least 30% of receivables covered by the arrangement support this application, with the exception of creditors in a special relationship with the debtor, referred to in art. 116 of the Restructuring Law. Together with the application for the appointment of a specific person as a court supervisor, the debtor - in order to speed up the examination of the application and reduce correspondence to a minimum - should attach to the application the consent of the restructuring advisor to perform the function of a court supervisor.

Who can become a judicial supervisor?

The function of a judicial supervisor is extremely important in the proceedings restructuring due to the scope of competences and obligations that a court supervisor must fulfill. Therefore, the legislator decided that a court supervisor can only be a person who has a license restructuring adviser and a commercial company whose partners who are liable for the company's obligations without limitation with all their assets or members of the management board representing the company hold a restructuring advisor license.

When appointing a court supervisor, the court, in addition to the formal requirements described above, takes into account such circumstances as the number of cases in which the restructuring advisor acts as a court supervisor, administrator or trustee in bankruptcy proceedings, as well as the experience and additional qualifications of the restructuring advisor.

Sometimes, however, these selection criteria are not sufficient. In the case of restructuring of entities classified as a so-called Large Enterprise, the supervisor of the arrangement can only be a person who has a license of a restructuring advisor with the title of a qualified restructuring advisor. This is required in situations where the restructuring concerns:

• An entrepreneur who, in at least one of the last two financial years, employed an average of 250 or more employees on an annual basis, or achieved an annual net turnover from the sale of goods, products and services and financial operations exceeding the PLN equivalent of EUR 50 million, or achieved a balance sheet total of assets prepared at the end of one of these years that exceeded the PLN equivalent of EUR 43 million;
• Companies of significant importance to the state economy in the sense of the regulations governing the management of state property;
• Entrepreneurs of particular economic and defence importance, included in the list specified in the implementing provisions issued pursuant to the Act on organising tasks for the benefit of state defence carried out by entrepreneurs.

Court Supervisor's Remuneration

The Restructuring Law precisely defines the method by which the remuneration of the judicial supervisor is calculated. Due to the fact that eachnot restructuring is different, it is impossible establish a fixed amount of remuneration for the court supervisor. The legislator has made the remuneration of the court supervisor dependent on the individual situation of the restructuring entity. The calculation of remuneration consists of four parts:

• Depends on the number of creditors participating in the proceedings;
• Depends on the sum of the receivables owed to the creditors who are participants in the proceedings;
• Determined by the court in accordance with the type of restructuring proceedings, the scope of activities undertaken by the court supervisor in the course of the proceedings and the work put into achieving the purpose of the proceedings – within a limit of up to ten base remunerations;
• Established in the event that, for reasons beyond the control of the judicial supervisor, the arrangement proceedings last longer than twelve months – within a limit of up to ten base remunerations.

The base salary in the case discussed here means the average monthly salary in the business sector, without bonuses paid from profit in the third quarter of the previous year. This data is published by the President of the Central Statistical Office. At the same time, the remuneration of a judicial supervisor must be within the range of two to forty-four times the base salary.