Examples of projects

Description of sample cases with our participation

Over the course of more than a dozen years, we have successfully completed many complex and precedent-setting restructuring projects in Poland. Below is a description of some of the cases we have handled.

Case study I:

Company – authorized car dealer in Silesia (District Court in Gliwice, XII Economic Department, ref. act: X GRz 1/18)

  1. A liquidation arrangement providing for the takeover of the entire enterprise by one of the creditors;
  2. The use in a single proceeding of institutions from the Restructuring Law – liquidation arrangement and from the Companies Act – dissolution of a limited liability company without liquidation.
  3. It was important in the case to demonstrate to the court the safeguarding of creditors’ equitable rights – to this end, the arrangement proposals had to provide for the obligation to satisfy creditors not covered by the arrangement, as well as the institution described in Article 285 of the Companies Act of depositing sums in court to satisfy disputed creditors.
  4. Arrangement proposals may provide for the dissolution of the debtor company.
  5. The catalog of grounds for dissolution of the company is open. Article 270(4) of the CCC indicates that other reasons provided by law may also be a reason for the dissolution of the company. This applies not only to the reasons in the CCC, but throughout the legal system, including PR.
  6. Arrangement proposals should protect the interests of both the Debtor and its partners (i.e., such proposals should not be made against their will, e.g., by creditors). It is possible that the Debtor’s partners still want to maintain the company after the liquidation of its assets.
  7. The debtor should express a desire to end the legal existence.
  8. The debtor was removed from the National Court Register based on the solution provided in the arrangement proposals.

Case study II:

The company was founded in 1846. In the 19th century, the company was famous for producing steam engines. In the 20th century, the production of diesel-powered machines was developed. Today, it is a globally recognized company offering technologically advanced products in many industries, such as energy, transportation, gas and petrochemicals, environmental engineering and the manufacture of steel structures (District Court Poznań – Stare Miasto in Poznań XI Economic Department for Bankruptcy and Restructuring, Ref: XI GRz 132/21)

  1. Recommendation of a simplified restructuring procedure, as a fast and possibly non-invasive restructuring procedure, using the institution of a partial arrangement – that is, involving only selected, most relevant creditors of the debtor (the choice of the UPR allowed the restructuring to be carried out efficiently and avoided causing anxiety to the debtor’s counterparties);
  2. Use of the institution of conversion of receivables into debtor’s shares – also with regard to public receivables, where public creditors voted in favor of the arrangement (to our knowledge for the first time in Poland);
  3. Conviction of creditors (6 creditors and PLN 73.4 million of debt covered by the arrangement) regarding the advisability of restructuring in the chosen course of action;
  4. Acceptance by the restructuring court of the permissibility of dividing creditors into groups in a partial arrangement;
  5. The pioneering argumentation in the determination of the date of validity of the arrangement approval proceedings, which led to the prompt entry of the share capital increase in the National Court Register – the issue of the validity of the arrangement approval order in the context of the jurisdiction of Polish courts was described in more detail in the academic article in the quarterly Restructuring Advisor No. 27 [1/2022];

Case study III:

Developer company from Krakow (District Court for Krakow – Śródmieście in Krakow, VIII Economic Department for bankruptcy and restructuring cases, file no: VIII GRz 1/19).

  1. One of the first liquidation arrangements under the PzU involving the sale by the debtor of more than a dozen units through an open bidding competition conducted by the debtor during the execution stage of the arrangement, under the supervision of the execution supervisor;
  2. Prior to the vote on the deal, mortgage creditors (including a foreign bank) submitted promises of consent to remove the mortgages encumbering the units being sold – subject to their sale under the terms of the deal;
  3. Mortgage creditors’ statements of consent to the cancellation of mortgages were either given to the debtor or placed in escrow before the sale of the property;
  4. The arrangement was implemented within 14 months of the determination of its validity;

Case study IV:

Natural person – entrepreneur in the field of manufacturing, trade and distribution of foodstuffs (VIII GRz 5/20, District Court for Krakow – Śródmieście in Krakow, VIII Economic Department for bankruptcy and restructuring cases)

  1. Liquidation arrangement of the debtor’s enterprise involving the sale of land and movable property and satisfaction of creditors from the sums obtained from the sale;
  2. The properties were sold in open competitions held by the debtor, organized by the debtor under the supervision of the supervisor of the execution of the arrangement;
  3. The secured creditor – the bank, prior to the vote on the arrangement, issued a promise of consent to remove the mortgages established on the properties being sold – the bank’s consents to remove the mortgages were issued each time before the conclusion of the agreement for the sale of each property;
  4. What was new in the case was that the supervisor of the execution of the arrangement was entrusted with carrying out and coordinating the entire process of selling the property. Also, the funds obtained from the sale of the debtor’s property were deposited into a dedicated bank account of the supervisor of the execution of the arrangement, from which the supervisor then made payment of the arrangement installments to creditors, as well as satisfied the debtor’s public receivables (VAT) from the sale;
  5. The above made the entire process fully transparent and credible to creditors (including the mortgage-secured bank) and buyers;
  6. Also new was the satisfaction of one creditor by seizing the debtor’s movable property under the arrangement;
  7. The arrangement was implemented within nine months of its becoming final;

Case study V:

Company in the construction industry – contractor of communication investments in the construction and modernization of roads, bridges and associated infrastructure (VIII GRz 91/21/S, District Court for Krakow – Śródmieście in Krakow, VIII Economic Department for bankruptcy and restructuring cases)

  1. An arrangement providing for the sale of one of the debtor’s properties (redundant from the point of view of the business) and satisfaction of creditors from the price obtained;
  2. What was new in the case was that the process of selecting a buyer for the property began while the restructuring proceedings were still underway – the debtor obtained preliminary offers to purchase the property through informal negotiations.
  3. The designated bidders were invited by the debtor to participate in a closed bidding competition, which allowed the selection of the buyer offering the most favorable terms for the sale of the property from the point of view of performing the arrangement;
  4. The mortgagor deposited with the notary a statement of consent to the deletion of the mortgage;
  5. The preliminary agreement with the selected buyer was concluded even before the court’s final approval of the arrangement, which made it possible to sell the property and distribute the price to the creditors within 2 weeks of the validity of the order approving the arrangement;
  6. Acceptance by the restructuring court of the permissibility of dividing creditors into groups in a partial arrangement

Case study VI:

Holding company conducting operations through subsidiaries (file reference in I Instance XVIII GRz 190/21, District Court for the Capital City of Warsaw in Warsaw, XVIII Commercial Department for Bankruptcy and Restructuring, file reference in II Instance XXIII Gz 1428/21, District Court in Warsaw, XXIII Commercial Department for Appeal and Public Procurement)

  1. The Debtor did not conduct operations on its own, but acted as a holding company, while the actual operations were conducted in subsidiaries. At the same time, the Debtor provided financing to the subsidiaries;
  2. Proceedings for approval of the arrangement were carried out due to a corporate dispute between shareholders, resulting in the failure of one shareholder to approve a capital increase to cover liabilities (the Debtor’s Articles of Association indicated that the approval of all shareholders was required for a capital increase), as well as the failure of the board of directors to approve a loan to pay liabilities. The continuing corporate dispute would in prospect lead to the Debtor’s insolvency;
  3. The novelty of the case was the use of the tools of restructuring law, the conversion arrangement, to overcome the corporate impasse;
  4. The choice of the appropriate restructuring procedure – the procedure for approval of an arrangement – as enabling a rapid and non-invasive, for the business, restructuring, as well as due to the small number of creditors (3 creditors);
  5. Confirmation by the Second Instance Court:
    1. The permissibility of a forked share capital increase,
    2. lack of participant status in the restructuring proceedings by the Debtor’s non-creditor partners,
    3. The admissibility of casting a vote on the deal bearing a qualified electronic signature,
    4. The permissibility of restructuring the Debtor (which is a joint stock company) not actually conducting business,
    5. harm to the shareholders (or more broadly the interests of the shareholders) of the Debtor is not a premise for refusing to approve the arrangement,
    6. The possibility of using the instruments offered by restructuring law to overcome corporate disputes, in order to save the debtor from bankruptcy.

Case study VII:

PzU as an example of successful restructuring of the liabilities of a multinational group of companies using a partial arrangement as part of an arrangement approval procedure (ZG1E/GRz/10/2023).

  1. The case involved the restructuring of liabilities of an international e-commerce group.
  2. The most important element was to carry out the restructuring of the Polish company in the formula of proceedings for approval of a composition agreement with a notice in the National Debt Register, using the institution of a partial composition agreement, which covered only banks lending to the company’s activities and contingent creditors under guarantees or sureties granted, including Bank Gospodarstwa Krajowego. It should be emphasized that the final composition proposals proposed by the company were supported by all banks covered by the agreement.
  3. The arrangement proposals in this draft included not only installment, partial reduction of debts, but also a cash sweep mechanism – providing for faster repayments if certain conditions are met.
  4. Also new was the restructuring in the arrangement of the Polish company’s sureties granted for its obligations by its German sister company, which in effect avoided declaring its bankruptcy or initiating formal restructuring under German law. The arrangement also provides, among other things, for the group companies to provide additional security for its performance.
  5. The amount of restructured receivables is more than PLN 152 million.
  6. Thanks to the effective cooperation of all involved, the entire project was able to close within 6 months.
  7. It should be emphasized that from the very first days after the initiation of the proceedings, the financial creditors included in the arrangement (banks) actively and constructively cooperated with the company and the supervisor of the arrangement, in particular, they participated in the negotiations of the arrangement proposals presented by the debtor, which already 3 months after the initiation of the proceedings made it possible to accept them and submit an application to the court for approval of the arrangement. The restructuring court approved the arrangement under 2.5 months after the application was filed, so (adding the time needed for the order to become final) the entire restructuring process closed in 6 months. Such a short time is unattainable in the case of initiating judicial restructuring proceedings.
  8. The restructuring tool chosen by the company, in the form of an out-of-court procedure for approval of an arrangement, proved in practice to be quick, effective and least interfering with the company’s day-to-day commercial activities.

Case study VIII:

Advising and representing a company operating in the labor distribution segment in two, simultaneous accelerated composition proceedings (PPU) with partial arrangement.

  1. Consulting in the first stage included a strategic diagnosis of the Client’s situation, as well as the possibilities of its judicial and extrajudicial restructuring. The result of the diagnosis was the development of a strategy for the Client to complement its out-of-court restructuring with the concept of implementing a PPU with partial arrangement, as the most optimal form of proceeding, in case of failure of out-of-court restructuring.
  2. The Law Firm’s prior preparation of a strategy for dealing with the crisis situation, together with drafts of the relevant motions, allowed for an immediate response when a sanitation petition and bankruptcy petition were filed against the company. As a result of the quick response, the first PPU (so-called PPU 1) was opened against the company within 7 days of the filing. The rapid opening of PPU 1 protected the company’s business from operational disorganization that could have been caused by the opening of sanitation proceedings or the prolonged processing of the bankruptcy petition.
  3. The correct strategic diagnosis resulting in the selection of the PPU with partial arrangement allowed, at a later stage of the proceedings, to flexibly adapt the restructuring concept to changing economic conditions by basing the restructuring on the involvement of an external investor (PKN Orlen S.A.) and expanding the group of creditors covered by the arrangement by opening a second PPU with partial arrangement (the so-called PPU 2).
  4. PPU 1 and PPU 2 were formally separate restructuring proceedings, which were conducted against the company in parallel. This was the first restructuring of this type in Poland, which required the Law Firm to face a number of previously unsolved legal problems concerning, among other things, the issue of parallel functioning of the dual bodies of the proceedings (Judge-Commissioner, Court Supervisor, Council of Creditors, Meeting of Creditors) or the issue of the construction of two partial arrangements, functionally related to each other and executed in parallel.
  5. In the course of both proceedings, the Law Firm also had to face an unfavorable decision by the District Court, which in the first instance decided to refuse to approve the partial arrangements adopted in PPU 1 and PPU 2. However, as a result of the complaints prepared by the Law Firm, the District Court decided to amend the appealed orders and approve the partial arrangements adopted by the creditors in PPU 1 and PPU 2.

SERVICES

Our offer includes:

Services for restructuring and bankruptcy courts

At the request of bankruptcy and restructuring courts, we also perform the functions of non-judicial bodies of bankruptcy and restructuring proceedings, in particular, the functions of receiver, court supervisor, administrator.

Liability of board members

We represent members of boards of directors in proceedings initiated against them in connection with their functions in the bodies of companies.

Handling the process of liquidation of companies

We conduct legal audits before filing for consumer bankruptcy. We also have experience in conducting niche consumer arrangement proceedings, which can be an interesting alternative to declaring consumer bankruptcy.

Consumer bankruptcy, consumer arrangement

We also advise receivers, administrators or court supervisors in the course of their proceedings.

Analyses/legal opinions

We prepare expert analyses or legal opinions, especially as to the state of insolvency or other legal issues occurring in the course of restructuring or bankruptcy proceedings.

Investments in distressed assets

We advise investors and represent them in asset acquisition transactions in bankruptcy or restructuring proceedings, particularly from receivers or as part of a liquidation arrangement.

Bankruptcy, including prepared liquidation (pre-pack)

We offer professional preparation of bankruptcy petitions, taking care of the legal security of executives. We advise all participants in bankruptcy proceedings. We represent clients before the interim court supervisor, trustee, bankruptcy court. We also have extensive experience in preparing applications for prepared liquidation.

Restructuring, including liquidation arrangement

We develop strategies for clients for restructuring – judicial and extrajudicial. We provide professional advice in all available restructuring proceedings. We support Clients in negotiations with key creditors. We also propose unconventional solutions – such as a liquidation arrangement combined with deletion of the entity from the National Court Register.