In the face of the epidemic, many Polish entrepreneurs must take decisive steps to protect their business from bankruptcy.
The coronavirus epidemic is taking an increasingly significant toll on the Polish economy. Its effects are being felt not only by small and medium-sized companies, but also by large entities. Fast and effective rescue actions are needed. In addition to state protective programs, an effective response to the needs of entrepreneurs may be restructuring.
It provides the legal basis and tools to protect the company in a crisis situation, the threat of insolvency or a drastic fall in profitability.
Suspension of payment of obligations and enforcement
The goal restructuring proceedings is to avoid declaring bankruptcy of the debtor by enabling him to enter into an arrangement with creditors. The basis for such actions is provided by the act in force in Poland since 1 January 2016 – Restructuring Law.
- Once restructuring proceedings are opened, legal effects are created that support companies and stop the crisis from worsening. They take effect from the day the court opens the proceedings. What exactly is being referred to?
Undoubtedly, one of the key legal consequences is the suspension of payments of liabilities incurred before the opening date of the proceedings. Payment will only be made after approval by creditors arrangement proposals – comments Małgorzata Anisimowicz, President of the Management Board of PMR Restrukturyzacje SA.
The restructuring of the debtor's obligations may include the postponement of the due date, payment by installments, reduction of the debt amount, conversion of the receivable into shares or stocks, as well as the change, exchange or cancellation of the right securing a specific receivable. Importantly, arrangement proposals may indicate one or more methods of restructuring obligations of the debtor. Another effect of applying this solution is also the stay of enforcement. It is inadmissible to conduct enforcement of receivables covered by the arrangement.
Securing key contracts
Entrepreneurs using this solution can also count on protection of key contracts for Companies. These include, among others, lease or tenancy agreements for premises or real estate in which the debtor's enterprise is conducted, as well as credit agreements in the scope of funds made available to the borrower before the day of opening the proceedings. They also include leasing agreements, property insurance, bank account, as well as protection of guarantee agreements or covering licenses granted to the debtor.
The filing of a restructuring application also protects board members from personal liability.
Support that gives you a chance to survive
A huge advantage of taking advantage of the opportunity debt restructuring there is also support that the entrepreneur receives. There is a team at his disposal restructuring advisers and often also experts in the field of finance, accounting and taxes, who provide assistance in making decisions that are key to the future of the company.
It is also about helping to secure new funding opportunities, such as loans, credits and even attracting a new investor with the support of a restructuring advisor.
Debt restructuring also has a key advantage over bankruptcy.. In case of submission by creditors' bankruptcy application and the debtor's restructuring application, the court is obliged to first consider the restructuring application.
- Tools aid resulting from the restructuring law is undoubtedly a quick and effective response to the crisis. Restructuring helps to survive the most difficult times and effectively protects companies against insolvency and bankruptcy. By using this solution in combination with current protective packages for companies affected by the epidemic, entrepreneurs can emerge from this difficult situation unscathed – sums up Małgorzata Anisimowicz.
2 April 2020. We invite you to read the full version:" Debt restructuring is a cure for companies' problems
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