View from the creditor's perspective
We present to you the next part of the reflections on the redesign of theThis time, the creditors are the most important participants in the proceedings, as the fate of the amended agreement, and often also of the debtor's further existence, rests in their hands.
Statistically, the largest number of proceedings for modification of an arrangement are initiated as a result of a reduction in income from the debtor's business in order to obtain the approval of the creditors for such a modification of the method of repayment that will ensure its continued enforceability and at the same time be acceptable to the creditors. In progress proceedings to modify the arrangement the previously approved arrangement is still in force and, in principle, should be implemented by the debtor. The phrase "in principle" is not used by accident, because while there are no regulations that would directly allow the debtor to refrain from paying the arrangement installments, in In practice, this happens very often and means that creditors reduction or at least periodic suspension of repayment at least during the proceedings.
It is necessary to begin by explaining the consequences of the delay in implementing the approved agreement, which can crystallize even in a situation, when the entrepreneur has only one arrears in the payment of due arrangement instalments. In such a case, among other things, the creditor and the supervisor of the implementation of the arrangement have the possibility of filing an application for the revocation of the arrangement, the successful recognition of which results in the loss of all the benefits deriving from it, including the redemption earned, and the entirety of the liabilities becoming immediately due and payable, including interest.
The creditor is therefore in a coercive situation, which requires an individual assessment of the balance of benefits and costs and the decisions of which he will also be the ultimate beneficiary.
On the one hand, he may disagree with the decision of the debtor (creditor or supervisor of the implementation of the arrangement - (as all these entities are entitled to submit an application for a variation of the arrangement) to conduct the variation procedure. The first moment of expressing such disapproval is the issuance of the decision to open the arrangement, or more precisely the announcement of this fact, as from the date of the announcement the creditor has seven days to lodge a complaint against the said decision.
On the other hand, it may turn out that the proposed directions changes in the final settlement will be for the creditor more favourable than alternative scenarios, e.g. bankruptcy proceedings or forced execution.
The procedure for amending the arrangement covers all creditors who had the right to vote at the creditors' meeting at which the arrangement was adopted and whose claims were in dispute at the time of the vote on the original arrangement, and after the acceptance of the arrangement were confirmed by a final court ruling or a final administrative decision. However, creditors whose claims have been fully satisfied do not have the right to participate. Therefore, if the creditor was entitled to vote on the original arrangement (even if they did not exercise this right) and their claim has not been fully repaid, they are covered by the proceedings by operation of law, which means that any decision on the acceptance of the arrangement taken with the participation of the majority of creditors required by law (50%+1) holding more than 2/3 of the claims of the voting creditors, It will also be for binding on him
You often ask whether you have to declare your participation in the proceedings in some way - we answer - 'no'. In these proceedings, creditors do not declare their claims and their eligibility to participate in the proceedings is determined by the court supervisor by including them in the list of creditors entitled to vote on the arrangement. According to the Restructuring Law, such a list should be prepared within two weeks from the date of opening the proceedings to change the arrangement and placed in the files of the proceedings. Verification of whether and in what amount the receivable has been included in the proceedings can be made by contacting the court supervisor directly or by verifying the list of creditors in the files of the proceedings kept in the National Register of Debtors, and for this purpose it is necessary to submit an application in advance for granting access to the case files. If any discrepancies are discovered, it is worth reporting them to the court supervisor, you can also submit such information to the case files via the aforementioned National Register of Indebted Persons.
The most important moment for the debtor, but also from the creditors' perspective, is the date of the creditors' meeting to vote on the modification of the arrangement, of which they should be notified, at least three weeks before the appointed date. Together with the notice, the arrangement proposals, ballot papers, instructions on how to vote and possibly other documents (e.g. the Restructuring Plan) that should enable a decision to be taken are provided. At this stage, a doubt may arise as to the amount disclosed on the ballot that entitles one to vote on the arrangement, as this is not the amount outstanding under the current arrangement. Voting power in these proceedings is determined as the difference between the amount the creditor voted on the original arrangement and the amount of repayments made.
At this point, a few words about arrangement proposals – taking into account the reasons most often underlying the change in the arrangement, i.e. a reduction in income, one can most often expect additional write-off, postponement or extension of the repayment period. There are of course proposals that assume certain compensations, e.g. in the form of additional interest or an increase in the total value of the repayment to compensate for the lost benefits during the deferral period, but the opening of the proceedings change of arrangement is always associated with some, to put it mildly, "inconveniences". Making a decision in a forced situation, often under the influence of strong emotions, requiring time commitment, analysis of extensive documentation, sometimes in the face of the lack of a full picture of the course of the procedure is extremely difficult for creditors. It can lead to a decision that will ultimately will have negative consequences for the creditor himself.
Therefore, it is worth remembering that the creditor can also benefit from support restructuring adviser, which, as an entity with full knowledge of restructuring and bankruptcy proceedings, will be able to fully analyse the debtor’s situation, assess the feasibility of the submitted arrangement proposals, consider appropriate steps in the course of the proceedings and recommend a decision that will be best from the point of view of protecting and securing the creditor’s interests.
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