The Restorative Law is working

PMR team

December 21, 2018

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Although it is difficult to find a spectacular example of a successful restructuring, according to experts the new legislation is having an effect. At the end of December it will have been two years since the new restructuring law came into force. There were, are and will be many objections to it. Despite this, the law, although not quite working as expected, is fulfilling its role.

Failures and successes

The most spectacular failures of the new law were witnessed in 2017. It was then that the restructuring proceedings the Matras bookstore chain, Alma delicatessen or the Włodarzewska developer.

– The failures in these cases, as well as in the majority of restructurings discontinued in 2018, were caused by the late commencement of the procedure and the inability to obtain new financing – says Piotr Zimmerman, legal counsel and restructuring advisor at Zimmerman Filipiak Restructuring.

This year, sanction proceedings were discontinued for, among others, pharmaceutical wholesaler Intra and large Kielce-based property developer Dorbud.

- Both court decisions are not yet final, but the mere fact that they have been made indicates a problem with effective sanitation, says Piotr Zimmerman.

Fewer bankruptcies

It is difficult for experts to name even one example where the restructuring was successful.

The non-standard solution applied by DGA Centrum Sanacji in the case of Mennica Metale Szlachetne can be considered as such, by first lending money to the rescued company money for the company for survival, and then selling the production plant in Radzymin to an investor.

Piotr Zimmerman, on the other hand, points out that thanks to the proceedings such large companies are still operating in the restructuring process such as Ruch, Action or the retail chain Piotr i Paweł.

Maciej Roch Pietrzak, proxy at PMR Restructuring Company, who believes that restructuring law is an opportunity to effectively help companies.

- Accelerated arrangement proceedings are particularly popular, although in practice they are not quick at all. Undoubtedly, the Act still requires some clarification in a few places, but this is a need for fine-tuning rather than revolutionary changes, believes Maciej Roch Pietrzak.

Overburdened courts

One of the the biggest problems of restructured companies is the lack of possibility of obtaining financing.

- Even if a trading company with weakened liquidity will enter restructuring on time, without supplementing liquidity it will not rebuild turnover and will not generate appropriate profits. This is the biggest problem causing the failure of restructuring proceedings to date - says Maciej Roch Pietrzak.

The length of court procedures is also a problem.

- The courts are very busy the number of consumer bankruptcies. This problem was signaled from the beginning, but the arguments for consumer cases of individuals to go to civil courts, not commercial ones, did not find recognition in the eyes of the legislator. Currently, this causes significant delays in conducting proceedings restructuring companies – explains Maciej Roch Pietrzak.