SIMPLIFIED RESTRUCTURING

Restructuring is a procedure that can be initiated by an entrepreneur who is insolvent or at risk of insolvency. Its purpose is to agree with the creditors on new favorable terms for the repayment of debts, such as by postponing payment dates or spreading the debt into smaller installments or extending the term of the loan, and in some cases even writing off part of the obligation. These arrangements, favorable to an entrepreneur in crisis, are included in a so-called agreement, which, if accepted by creditors, goes into effect.
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Simplified restructuring is the term for the restructuring procedure introduced by Shield 4.0, which was an ideal solution to the financial problems of companies, not least due to the effects of the COVID-19 pandemic, as it enabled a quick and broad protection of the assets of an entrepreneur wishing to restructure his debts. Today, simplified restructuring can no longer be initiated, however, its greatest advantages have been transferred to one of the statutory restructuring procedures, namely the procedure for approval of an arrangement (so-called P.Z.U. 2.0).

It is best to think about restructuring well in advance, that is, when the entrepreneur is only at risk of insolvency. This is the moment when financial problems are only anticipated or when the first problems with timely payment of obligations have appeared. Of course, when a state of insolvency has already arisen, i.e. when arrears exceed 3 months, restructuring is also worth considering.

A timely response has the value of preventing financial problems from compounding, on the one hand, and, on the other hand, may allow those responsible for the debts of a capital company to be relieved of liability for the company’s obligations, if the opening of restructuring proceedings takes place within 30 days of the insolvency condition.

Restructuring, already in the form of proceedings for approval of arrangement 2.0, gives a number of advantages to an entrepreneur in temporary financial difficulties. These are:

• Obtaining protection for the entrepreneur for the duration of the proceedings, consisting of:
  • Suspension, by law, of enforcement proceedings directed against the entrepreneur’s assets included in the composition mass,
  • The possibility of rescinding a bailiff’s seizure made prior to the date on which the notice fixing the day of arrangement was made,
  • the inadmissibility of directing execution to the property of the entrepreneur that is part of the composition mass, as well as the execution of the order to secure the claim or the order to secure the claim on this property,
  • inadmissibility of termination by the counterparty of the restructuring entrepreneur of contracts of fundamental importance for the conduct of the enterprise, including the lease or rental agreement of the premises or real estate where the enterprise is conducted, and credit agreements to the extent of funds placed at the disposal of the borrower before the date of opening of the proceedings, leasing, property insurance, bank account agreements, surety agreements, agreements covering licenses granted to the debtor, and guarantees or letters of credit issued before the date of announcement of the establishment of the day of arrangement,
• Restructuring of debt through an arrangement with creditors, which may consist of:
  • postponement of the date of performance of the obligation;
  • spreading the repayment in installments;
  • reduction of the amount of the liability;
  • Conversion of debts into shares or stocks;
  • modification, conversion or abrogation of the law securing a specific claim.
• The possibility of avoiding bankruptcy of the entrepreneur.

To start restructuring, it is best to contact a specialist – a restructuring advisor. He will help you choose the right restructuring procedure, from among the four existing types of restructuring. In addition, in order to initiate the currently most popular procedure for approval of an arrangement 2.0, you must conclude a contract with a restructuring advisor to act as an arrangement supervisor. Depending on the chosen restructuring procedure, the advisor will help gather the relevant documents.

The procedure itself, which ends with the voting and approval of the arrangement, takes several months. Importantly, already from the opening of the proceedings, or from the date of the announcement of the determination of the day of arrangement in the procedure for approval of the arrangement 2.0, the entrepreneur obtains protection of his assets. On the other hand, the proceedings as a whole, when an arrangement has been made with the creditors, continue until the arrangement is executed. The execution of the arrangement, on the other hand, may take several years, if that is how many years the creditors have agreed to spread out their receivables.

It is advisable to initiate restructuring proceedings by consulting a restructuring advisor, who will advise on the selection of an adequate restructuring procedure option. Choosing the appropriate restructuring procedure on your own, without the help of a restructuring advisor, is difficult to imagine. Moreover, in the case of proceedings for approval of an arrangement, the participation of a restructuring advisor is necessary at the very beginning of the proceedings, as the entrepreneur initiates them by concluding an agreement with a restructuring advisor to act as a supervisor of the arrangement.