Sanation in practise
I would like to share a few thoughts, after more than a year of observation and work in a law firm specialising in restructuring proceedings. My comments are not made from the point of view of the lawyer, whom I am not, but rather from the point of view of the practice of financial institutions and the observer of the economic situation. Most of the considerations relate to the rehabilitation procedure, which contains the broadest range of restructuring instruments.
Deadline for application
The main observation, which may be important for economic entities undergoing “difficult times”, is that they decide too late to contact professionals, who can help in managing the difficult situation and indicate the best way of restructuring proceedings. Starting such activities, when all assets of the company are burdened to the limits of possibilities (or even beyond these borders), the cash register is empty, contractors are doing everything to end the cooperation “squeezing out” the company as much as possible, and employees are thinking only about changing their employer – is senseless.
Brutally, no restructuring can be said to be successful if there is no money for it. This is mainly due to the requirement that the liabilities of the entity being sanitized, arising after the opening of proceedings, should be settled on an ongoing basis. Additionally, at the initial stage of proceedings, one should take into account increased expenses on legal services. In our proceedings, I observe how many ambiguities there are in the application of the regulations and how much determination creditors have in filing justified or unjustified claims that require a quick and professional response. It takes a long time to “arrange” proper relations with financial institutions – banks, leasing companies (here there are particularly many problems with property rights reservations and their interpretation in the light of restructuring regulations), institutions representing the State Treasury. Lack of professional legal support may lead to paralysis of proceedings already in its initial period.
Selection of the restructuring advisor
Another important factor in the success of the procedure is the selection of a restructuring advisor. With a large scale of activity of the sanitized company, with full conviction I can state that an effective advisor must have his own or her own facilities or those obtained from the market in various economic or financial fields. Providing support to such professionals, of course, requires a continuous financial commitment. Costs to be assumed in the initial period of restructuring proceedings also include costs of rationalising staff (severance pay), costs of withdrawing from unprofitable or redundant contracts, etc.
To sum up my considerations, I encourage entrepreneurs to undertake restructuring measures as soon as they say ‘something goes wrong’. Extending your business on a “maybe somehow it will be” basis usually has a lamentable effect and may force you to take advantage of the provisions of a completely different law.