Restructuring proceedings

What are restructuring proceedings?

Restructuring proceedings are formal legal procedures designed to help a financially distressed business avoid bankruptcy liquidation and restore its ability to operate. In Poland, they are regulated primarily by the Restructuring Law Act of 15 May 2015. Their purpose is to enable an arrangement with creditors, protect the debtor’s enterprise, and create conditions for improving liquidity, reducing debt pressure, and preserving business value.

In practice, restructuring proceedings allow a business to address overdue liabilities, renegotiate repayment terms, and introduce operational or financial recovery measures under a legal framework. Depending on the type of proceeding, the debtor may retain a greater or lesser degree of control over its assets and ongoing business activity, while a court, court supervisor, or administrator may also play a role in overseeing the process.

Restructuring is not limited to debt deferral. It may include partial debt write-downs, installment arrangements, protection against enforcement, approval of a restructuring plan, and measures aimed at restoring long-term viability. For many businesses, it is a tool for stabilising operations before loss of liquidity develops into insolvency.

What do restructuring proceedings involve?

Polish law provides four types of restructuring proceedings. Their selection depends on the debtor’s financial condition, the scale of creditor disputes, and the urgency of protective measures. The available models include arrangement approval proceedings, accelerated arrangement proceedings, arrangement proceedings, and remedial proceedings. Each differs in procedural complexity, court involvement, and the extent of protection available to the debtor.

A central element of restructuring proceedings is the arrangement with creditors. This may cover, among other things, postponement of payment deadlines, division of liabilities into installments, reduction of debt, or conversion of debt into shares if legally and commercially feasible. The proceedings are usually supported by a restructuring plan that sets out the causes of financial difficulty, proposed corrective measures, projected revenues and costs, and the anticipated ability to perform the arrangement.

Depending on the procedure, restructuring may also affect pending enforcement actions, contractual relations, employment issues, and the management of the debtor’s estate. In some cases, the law provides a temporary shield against enforcement, which can be critical for preserving cash flow and business continuity. At the same time, the debtor must comply with statutory duties, act fairly toward creditors, and observe procedural deadlines and voting requirements.

When is it worth seeking legal support in restructuring proceedings?

Legal support is often necessary as soon as a business experiences serious payment difficulties, mounting creditor pressure, or a risk of insolvency. Waiting too long may significantly reduce the available legal options. Early assessment can help determine whether the business meets the conditions for restructuring, which procedure is most appropriate, and how to prepare the required documents and restructuring assumptions.

Restructuring proceedings may be relevant for companies facing temporary liquidity disruption, excessive debt, disputes with key creditors, failed investments, supply chain problems, or declining profitability. They are also important where the management board must consider its duties related to insolvency risk and potential liability for delayed action. In cross-functional terms, restructuring often requires coordination between legal, financial, tax, and operational advisors.

For creditors, legal advice may also be important. A creditor involved in restructuring proceedings should assess the legal and economic consequences of the proposed arrangement, voting strategy, security position, and the likelihood of greater recovery through restructuring than through bankruptcy. In some situations, creditors may challenge certain acts, object to arrangement proposals, or seek stronger protection of their claims.

A prompt consultation with a lawyer may help avoid procedural mistakes, ineffective filings, missed deadlines, unnecessary disputes, management liability, or financial loss. It may also improve the chances of choosing a restructuring path that offers real protection while remaining credible to creditors and the court.

Support in restructuring proceedings

Law firm support in the area of restructuring proceedings may include in particular:

assessment of insolvency risk and eligibility for restructuring;
selection of the appropriate restructuring procedure;
preparation and review of restructuring documentation and strategy;
drafting arrangement proposals and restructuring plans;
representation in restructuring proceedings;
support in negotiations with creditors, investors, and key counterparties;
advice to management boards on statutory duties and liability risks;
analysis of the impact of restructuring on contracts, security, and enforcement;
assistance to creditors participating in restructuring cases;
coordination of restructuring issues with corporate, employment, tax, and dispute-related matters.

If you need support in restructuring proceedings, contact us.

Restructuring proceedings