The Restructuring Law introduces procedures which make it possible to achieve the set objectives, namely the conclusion of an arrangement with creditors (and in the case of the sanation proceedings – also further corrective effects) in the shortest time possible. The two basic procedures at the court stage will be exceptionally short: approval of an arrangement as a result of independent collection of votes by the debtor will take 2 weeks and the fast-track arrangement proceedings – 2 months.
• Proceedings to approve an arrangement
These proceedings, which are the most deformalised ones, provide for individual (with the help of a restructuring adviser) collection of votes of the creditors by the debtor. They are dedicated for entrepreneurs which are at risk of becoming insolvent, or are insolvent to a small extent. An application for approval of an arrangement will be filed with the court, only after the debtor obtains the majority of votes required to accept the arrangement. Such a solution will help the debtor to actively and flexibly start individual talks with the creditors and to present the outcomes of such talks to the court. The debtor will have the obligation to select a person who has a restructuring adviser license, i.e. presently, the receiver license, who, as a professional, is to verify any arrangement proposals, both as regards their compliance with the applicable laws and regulations, and with the agreements with the creditors. These proceedings may not be conducted, if the debtor has over 15% of disputed liabilities, and, therefore, they are recommended in a situation, where the debtor is not in any serious conflict with the creditors. A greater amount of freedom of the debtor results in a weaker possibility to secure the debtor’s interests. Therefore, it will not be admissible to stay execution in this procedure.
• Fast-track arrangement proceedings
The fundamental difference between these proceedings and the proceedings to approve an arrangement is about the fact that an arrangement will be concluded not by way of individual collection of votes by the debtor, but at the Creditors' Meeting convened by the court. Moreover, it will be possible to secure the debtor’s assets by staying the execution of claims covered by the arrangement, if the execution could make it difficult or impossible to conclude an arrangement. These proceedings may not be conducted, if the debtor has over 15% disputed liabilities. These proceedings are located between the fact-track mode (the proceedings to approve an arrangement) and the standard arrangement proceedings.
• Arrangement proceedings
These proceedings will be conducted in line with principles analogous to those in the present bankruptcy proceedings with the possibility to come to an arrangement. It is dedicated to entrepreneurs which are already insolvent and want to save their enterprise instead of declaring bankruptcy (whose only form is liquidation bankruptcy). In principle, the entrepreneur will keep the management, however,
under continuous supervision of the court and the creditors. In exchange for those limitations, the debtor will be able to get protection against civil law execution (in line with the principle that the greater the security against execution, the greater the control over the debtor’s actions – interests of creditors also have to be protected against lawlessness of insolvent debtors). The debtor will also have to submit arrangement proposals as early as in the application to the court. This proceeding may not be conducted, if the debtor has less than 15% disputed liabilities.
• Sanation proceedings
The sanation proceedings will enable not only advanced restructuring of the debtor’s liabilities, but also restructuring of the debtor's assets and employment by introduction of legal solutions which are favourable to the debtor. They give greater protection against uncontrolled execution. It allows for termination of unprofitable contracts and reduction of unnecessary jobs, and sale of unnecessary assets. At the same time, the debtor’s ability to manage their assets will be considerably restricted. The court will appoint an administrator who will take over the powers of the management board and representation of the entrepreneur. The business will be subjected to restrictive supervision by the judge-commissioner and the creditors. These proceedings dedicated to insolvent businesses, which, however, may be reasonably saved. The objective is not only to write off the debts of the business, but also to completely restructure it economically, i.e. to restore the ability of the business to compete on the market so that it will not run into debt again.
• Partial arrangement
A partial arrangement allows for conclusion of an arrangement by way of independent collection of votes or a fast-track arrangement proceeding only with the key creditors. It provides the narrowest scope of interference in the operation of the debtor possible, by maximising the effects of the agreement with the biggest creditors. It allows for compulsory inclusion of creditors secured in rem in the arrangement, also during the course of sanation proceedings, in which they did not want to participate.
• Arrangement in bankruptcy
An arrangement in bankruptcy gives a greater chance of better management of the debtor’s assets, which is acceptable to the creditors, in the last period before the debtor’s liquidation, as well as and opportunity to use the existing potential of the debtor's business, which could not be used to conduct effective restructuring as a result of delayed reaction of the management board.