Entity supervising the debtor in the course of restructuring proceedings

Entity supervising the debtor in the course of restructuring proceedings

In the course of restructuring proceedings, the Court appoints an entity which will directly supervise activities undertaken by the debtor. Depending on the type of conducted restructuring proceedings, this entity will be determined in different ways and will have different rights.

Arrangement supervisor

In the procedure for arrangement approval proceedings, the body supervising the debtor’s operations is the arrangement supervisor. He performs his function from the date of concluding an agreement with the debtor until the date of issuing a decision on the approval of the composition agreement. As part of the supervision exercised, the system supervisor controls the debtor’s activities concerning its assets, including its enterprise. The arrangement supervisor also verifies whether the debtor’s property, which is not a component of the enterprise, is sufficiently protected against loss or destruction (Article 37(1) of Restructuring Law). It should be emphasized that pursuant to Article 36(1) of Restructuring Law, the debtor is not restricted in managing his assets, and the arrangement supervisor does not perform actions for the debtor. It also does not agree to activities undertaken by the debtor. After the Court issues a decision on the approval of the arrangement until the date on which it becomes legally binding, the supervisor of the arrangement shall exercise the rights of the court supervisor (Article 224 of of Restructuring Law). The debtor of the aforementioned period will be obliged to obtain the consent of the supervisor to take actions exceeding the ordinary management board.

Court supervisor

Restructuring court opening an accelerated arrangement proceedings or arrangement proceedings appoints a court supervisor to supervise the debtor’s activities (Article 233(1)(2) of Restructuring Law and Article 271(1) of Restructuring Law). As part of his function, the court supervisor controls the debtor’s activities undertaken in connection with the management of the company. The debtor in the course of the aforementioned restructuring proceedings may only take actions within the framework of ordinary management. In order to carry out activities exceeding the normal management, the debtor needs the consent of the court supervisor.

Lack of the court supervisor’s consent for activities exceeding ordinary management is connected with the sanction of its invalidity (Article 39(1) of Restructuring Law). In a situation where the debtor has violated the law in the scope of management (as a result of harming the creditors), does not guarantee the performance of the composition agreement or does not follow the orders of a judge-commissioner or court supervisor, the Court may appoint an administrator. The administrator takes over all the debtor’s assets and performs the duties of a court supervisor. It should be emphasized that an administrator appointed in the course of accelerated arrangement proceedings or arrangement proceedings appoints does not have the same powers as an administrator in remedial proceedings.

ADMINISTRATOR In remedial proceedings,

In remedial proceedings, the authority responsible for supervising the debtor’s actions, if the debtor is left with ordinary management, is the administrator. In such a situation, the debtor manages the undertaking to an extent not exceeding the normal management (Article 288(3) of Restructuring Law). The fact that the Court leaves the management of an ordinary debtor does not limit the administrator’s right to perform activities within its scope. The administrator is responsible for the restructuring process and must therefore be able to change the decision taken by the debtor. This does not mean, however, that the administrator can cancel or render ineffective an act of the debtor performed under ordinary management. However, the administrator has the right to withdraw from the agreement or terminate it either on the basis of its provisions or on the basis of the applicable provisions of law. Actions exceeding the ordinary management shall be performed by the administrator. A debtor may not perform activities exceeding ordinary management without the authorisation of the administrator. The effect of such action by the debtor is its invalidity.



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