Companies in deep crisis are increasingly seeking salvation from bankruptcy in restructuring proceedings, which can be used when no other restructuring measures are possible.
Sanctioning proceedings can be conducted against both an already insolvent debtor and one at risk of insolvency. – It allows for taking remedial actions to counteract bankruptcy, but also for implementing corrective actions to restore the company’s operating efficiency by presenting an achievable and time-defined restructuring plan – points out Małgorzata Anisimowicz, President of the Management Board of PMR Restrukturyzacje.
Carrying out such a procedure involves a radical reconstruction of the enterprise, affecting all areas of its operation. Therefore, as Małgorzata Anisimowicz emphasises, it is the most thorough restructuring of the debtor's liabilities, assets and operational structures, aimed at restoring its ability to fulfil its obligations, while at the same time protection against execution. On top of that, it can be carried out without taking away the entrepreneur's management. However, this depends on the decision of the court.
The condition for carrying out sanitation proceedings is to file a restructuring application with the court by the debtor company. In relation to a legal person entered in National Register The court may also report them to the curator and personal creditor. Opening sanitation proceedings causes the termination of the power of attorney and other powers of attorney granted by the debtor, but they can be restored later during the proceedings. The property used to run the business and the property belonging to the debtor become the rehabilitation estate. All enforcement proceedings are suspended by operation of law, which means full protection of the debtor-business against enforcement during the entire proceedings.
The next step is to present the list to the judge within 30 days. creditors and restructuring plan. If the court has appointed its administrator, he should reach an agreement with the entrepreneur – debtor. Therefore, the 30-day period may be extended to three months. The restructuring plan must be reviewed by the court before it is approved. creditors council.
Launching the process gives the troubled company the valuable time it needs to make fundamental and strategic changes. It can continue to operate. Redundant assets can be disposed of and unfavourable contracts, 'unpayable' under normal economic conditions, can be rescinded.
No later than 12 months after the opening of the restructuring proceedings, to vote on an arrangement with creditors. It can take place earlier, immediately after the implementation of all or part of the restructuring plan. Remedial actions give creditors a chance to satisfy their claims to a greater extent than would be possible in the event of bankruptcy of the company.
The restructuring procedure is finally beneficial for the employees. In the case of reduction of employment, employees companies can benefit from the Guaranteed Employee Benefits Fund.
Companies decide on restructuring proceedings must face many problems. The biggest one is financing. Banks set very strict conditions, which may de facto mean negative decisions on credit applications. Therefore, the possibility of obtaining funds for the implementation of restructuring plans and for conducting current operations from other external sources, e.g. investment funds, is extremely important.
Experts also talk about the psychosocial burden – the company it is perceived by contractors and public institutions as enterprises in bankruptcy. Despite this, the restructuring proceedings may end in success. – An example is the one we are conducting at Yamo, a distributor of computer equipment, where almost all creditors supported the arrangement, the company obtained during restructuring necessary financing and continues to operate – says Małgorzata Anisimowicz.
The risk of failure increases if the decision to start restructuring activities is made too late. The choice of the consulting company with which the debtor company wants to start cooperation is also important. The partner should have experience, offer comprehensive activities, a wide range of cooperation with financial institutions, an interdisciplinary team consisting of specialists in law, economics, finance, market analysis and negotiations. It is important that within one the company was provided with comprehensive restructuring services, i.e. from the decision-making stage to its final outcome, taking into account support in obtaining financing to secure the implementation of plans.
on 10 December 2019
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