Table of Contents:
1. PZU 2.0 – Characteristics
2. PZU 2.0 – Advantages
3. PZU 2.0 and Creditors’ Interest
4. Defense Against Restructuring Initiated to the Detriment of Creditors – Annulment of the Announcement’s Effects
5. Conclusion
The goal of any restructuring proceeding is to avoid the declaration of a debtor’s bankruptcy by enabling restructuring through an arrangement with creditors while securing the legitimate rights of creditors.
Thus, not only does the debtor’s interest in restructuring matter, but the interest of creditors is equally significant.
PZU 2.0 – Characteristics
The arrangement approval proceeding is unique because a significant part of it takes place without court involvement. Judicial participation only occurs upon filing an application for arrangement approval. Before December 1, 2021, this simplified procedure, with its lower costs, came at the expense of lacking protection for the debtor against creditors’ enforcement actions.
As of December 1, 2021, a revolutionary change was introduced—the arrangement approval proceeding with an announcement of the arrangement date (commonly known as PZU 2.0). This new form of restructuring was preceded by the short-lived simplified restructuring procedure.
PZU 2.0 – Advantages
The arrangement approval proceeding with an announcement has become the most popular type of restructuring. Its success is attributed to factors such as: (i) the short time required to obtain protection from enforcement actions, (ii) broad protection for the debtor during the announcement’s effect, (iii) a simplified procedure, (iv) a short duration, and (v) lower costs compared to other proceedings.
The key advantage of PZU 2.0 is the swift process of obtaining protection similar to that provided by the most advanced restructuring procedures. Once a restructuring advisor is appointed as the arrangement supervisor, a list of claims, disputed claims, and a preliminary restructuring plan are prepared. The announcement of the arrangement date can then be published in the National Debt Register (KRZ), taking immediate effect.
From that moment, for at least four months, the debtor benefits from protection, including:
- Suspension of enforcement proceedings against the debtor’s assets.
- Prohibition of new enforcement actions or execution of security measures.
- Prohibition of terminating leases or rental agreements essential for business operations, as well as credit, leasing, property insurance, and bank account agreements.
- Potential annulment of enforcement seizures (e.g., bank accounts) made before the announcement.
PZU 2.0 and Creditors’ Interest
While these features benefit the debtor, they pose significant challenges for creditors.
The announcement’s effects last for four months, and if an application for arrangement approval is filed within this period, protection continues.
Defense Against Restructuring Initiated to the Detriment of Creditors – Annulment of the Announcement’s Effects
Unfortunately, the arrangement approval proceeding with an announcement is sometimes misused.
Some entities enter into agreements with restructuring advisors, swiftly make an announcement, and enjoy at least four months of protection without actual intent to restructure. Instead, their goal is to delay expected creditor actions, particularly enforcement.
This can also involve manipulating disputed claims by fabricating creditors to influence voting outcomes, thereby outvoting genuine creditors.
Similarly, initiating restructuring when a debtor’s financial condition is so dire that repayment is unlikely, or when a financially stable company simply seeks to reduce debt, is equally problematic.
To counteract such abuses, lawmakers introduced a safeguard mechanism: upon request by a creditor, the arrangement supervisor, or the debtor, the court may annul the announcement’s effects if it harms creditors. Importantly, at least two creditors must be affected for the request to be valid, as stated in Article 226f of the Restructuring Law.
However, restricting enforcement or enabling debt restructuring alone does not constitute harm. The court must assess the creditor’s legal position concerning the debtor’s insolvency or risk thereof, rather than merely their status as a creditor of a solvent debtor.
The application incurs a court fee of 30 PLN and can be submitted until the arrangement is finally approved or proceedings are discontinued.
A ruling is issued in a closed session, though the court may hear the debtor, creditor, or arrangement supervisor. The decision is subject to appeal.
Once the announcement’s effects are annulled, the restructuring process continues as a standard arrangement approval proceeding—without the announcement of an arrangement date—meaning the debtor loses the extensive protection originally granted.
Conclusion
The arrangement approval proceeding with an announcement meets business needs while incorporating mechanisms to prevent creditor harm.
However, in practice, the protection afforded to creditors is weakened by the time gap between filing an annulment request and its final resolution—a process that may take months.
