Execution of the arrangement and coronavirus outbreak
The coronavirus epidemic in Poland has a huge impact on the business activity of many entrepreneurs. The worsening situation on the market causes a drop in their income, which in the long run will lead to their total or partial loss of liquidity. Entrepreneurs whose troubles began with the arrival of the coronavirus pandemic can take advantage of the solutions offered by the restructuring procedure, i.e. submit a restructuring application and enter into an arrangement with their creditors in order to save the company. However, a question arises about the situation of those business people who have already concluded an agreement with their creditors, the implementation of which is threatened due to the epidemic.
PURPOSE OF THE RESTRUCTURING PROCEDURE
The aim of each of the restructuring proceedings is, as a matter of principle, to conclude an arrangement, which brings many benefits to the restructured entity. Among other things, as of the date on which the decision approving the arrangement becomes final, the security and enforcement proceedings conducted against the debtor in order to satisfy the claims covered by the arrangement are cancelled by law. Most importantly, the arrangement binds not only the debtor but also its creditors.
MODIFICATION OF AN APPROVED ARRANGEMENT
However, the restructuring law allows for the amendment of the arrangement in certain circumstances. This solution is contained in Article 174 of the Restructuring Law, which stipulates that ‘if, after approval of the agreement, there is a lasting increase or decrease in income from the debtor company, the debtor, the supervisor of the implementation of the agreement, another person who is entitled by virtue of the agreement to perform or supervise the implementation of the agreement and the creditor may request an amendment of the agreement’.
In times of coronavirus crisis, it is the reduction of income from the debtor’s company that will be the reason for applying for a change of the agreement. This change may consist in, for example, a further reduction of the restructured entity’s liabilities or submission of other types of arrangement proposals.
PROCEDURE FOR AMENDING AN APPROVED AGREEMENT
The procedure initiated by an application to change the arrangement is similar to the examination of an application to open an accelerated arrangement procedure, i.e. the court, taking into account such an application, issues a decision to open the procedure to change the arrangement, and appoints a court supervisor.
The creditors must vote in favour of the amended agreement. They shall vote with the amount of the claim they voted for at the meeting of creditors at which the agreement was adopted, minus the amounts received as part of the implementation of the agreement or as a result of satisfying the claim in other ways. The agreement adopted by the meeting of creditors shall be approved by the court, including the text of the agreement in its operative part.