Entrepreneurs increasingly aware of restructuring solutions - 2023 summary.

The past year has brought further record figures for new restructuring proceedings. According to data from the Central Economic Information Centre, in 2023. as many as 4244 restructuring proceedings were opened, while in the previous year, 2379 proceedings were initiated, representing a year-on-year increase of 78%.

It should be recalled that in the first year of the implementation of the legislation - 2016 - 212 proceedings were opened under the provisions of the Restructuring Law, while in the period from 2017 to 2019 the number of new proceedings was in the range of 348 to 465 per year. The following years brought the first significant increases, which were in close correlation with the occurrence of negative phenomena caused by the Sars Cov-2 virus pandemic. The year of the pandemic outbreak brought a new solution in the form of a simplified restructuring procedure, which was introduced by the Act of 19 June 2020. on interest subsidies for bank loans granted to entrepreneurs affected by COVID-19 and on simplified proceedings for approval of an arrangement in connection with the outbreak of COVID-19, and enabled a company to be almost immediately protected from enforcement following the conclusion of an agreement with a restructuring adviser and the publication of its opening in the Monitor Sądowy i Gospodarczy. The solution proved to be a lifesaver for many Polish companies and, inter alia, thanks to it, the year 2020 brought 800 open proceedings, which translated into a year-on-year increase of 72%.

Since then, the structure of the proceedings opened has also changed, because while still in 2019. accelerated arrangement proceedings dominated, with more than 67% companies opting for this type, a year later only 28% entrepreneurs opted for this type, and as many as 49% just opted for simplified arrangement approval proceedings. The following year 2021 saw a continuation of these trends, with 1,888 new restructurings opened, of which more than 86% were simplified restructuring proceedings.

PMR Restructuring S.A.'s experience during this difficult period has shown above all the strong motivation and determination of entrepreneurs, who, instead of opting for liquidation and bankruptcy directions, decided to save their businesses, which was greatly facilitated by the already mentioned simplified restructuring procedure. Entrepreneurs have finally been given the freedom to choose the adviser they want to cooperate with and to secure their business with a 'protective umbrella' for a period of at least four months, while minimising the Court's involvement and ensuring their influence over the entire process.

At this difficult time, the importance of pre-restructuring analysis of companies and scenario projections of restructuring measures was particularly highlighted, including the selection of tools for their implementation as a path for the success of the entire process in the face of extremely turbulent changes in the environment. The restructuring plan - to which the analysts of the PMR Restructuring S.A. law firm place particular emphasis. - is not just an obligatory document that contains a positive story to which one does not return - but constitutes a signpost for the entrepreneur, which, preceded by an internal and industry analysis, based on targeted actions and variant forecasts, provides support in further operations and a long-term guarantee of success for the entire process.

In 2022, we observed a relative stabilisation of the dynamics of newly opened proceedings, with growth capped at 26% y/y and the number of newly opened proceedings at 2379.

The year 2023 proved to be a breakthrough, with 4244 new proceedings opened, the highest result since the Restructuring Law came into force. Everything seems to be following the 'marketisation of restructuring' through the already mentioned solutions introduced by the simplified restructuring procedure and implemented back in December 2021 to the procedure for approval of an arrangement. The possibility of immediate protection of the entrepreneur's assets and suspension of payment of liabilities, freedom in the choice of a restructuring advisor, duration and, above all, low costs, made this type of procedure the most popular in 2023. and was opted for by more than 92% of all entrepreneurs who decided to restructure their liabilities. Most proceedings were opened against individual businesses, which accounted for, as much as 72%, in second place - limited liability companies, which accounted for 15%, and in third place - farms - 7%. Among the industries, the most frequent restructuring was opened against commercial activities - 21%, construction - 14%, industrial processing - 14%, transport activities - 12%, agriculture, forestry and fishing - 9%.

PMR Restructurings S.A. forecasts that 2024 will be characterised by unabated interest in proceedings for approval of an arrangement, especially as the previous year demonstrated the extraordinary efficiency and effectiveness of such proceedings, which - at least from the perspective of those conducted by the PMR Restructuring S.A. law firm. - the vast majority of them ended with the acceptance of the arrangement by the creditors.

Data based on statistics Central Economic Information Centre [accessed 28.03.2024].