If not a simplified restructuring procedure, then what?
Simplified Restructuring Procedure (UPR) is a response to the difficulties faced by entrepreneurs caused by the COVID-19 pandemic. It will not always be enough. The response to financial difficulties must be appropriate to their scale and complexity.
The popularity of UPR
The vast majority of new restructuring proceedings are UPR. This type of proceedings allows for quick and effective protection of the debtor’s assets. It is a tool enabling the conclusion of an arrangement with creditors by collecting votes independently.
As you learned in the previous newsletter, UPR will be replaced by the so-called new procedure for approval of the arrangement (new PZU). Its design will be basically similar to the solutions known from the UPR.
Is the UPR the only way?
Despite many advantages, UPR (and soon – the new PZU) will not always be the best choice of a debtor in the fight against financial difficulties, especially when the sources of the company’s financial problems are complex.
Fortunately, Restructuring Law offers other options. A wide range of restructuring proceedings also includes accelerated arrangement proceedings, arrangement proceedings and recovery proceedings. Of these, it is worth taking a closer look at the latter.
Sanacja is the answer to bigger problems
Improving the financial condition often requires deep changes in the functioning of the company. The company’s problems that make it difficult or even impossible to run a business are often the sum of many unfavorable factors (external and internal) that have occurred with varying intensity for a long time.
Irregularities, which would not normally have to result in financial difficulties, are now additionally exacerbated by the epidemiological situation. This unfavorable state of affairs means that less advanced restructuring proceedings may turn out to be insufficient.
Appropriate results can be ensured by the remedial procedure, the purpose of which is to enable far-reaching changes in the enterprise.
Possibilities of sanitation
Sanacja offers a wide range of remedial measures aimed at restoring the good financial condition of the enterprise. In the course of the proceedings, it is possible to restructure assets and employment. The law also allows for the withdrawal from unfavorable contracts concluded by the debtor.
Only after carrying out restructuring measures is an arrangement concluded, which determines the degree and method of satisfying the creditors. Remedial actions are carried out by an administrator appointed by the court with full protection of the debtor’s deliberation against enforcement carried out by creditors (including creditors secured in kind).
A difficult choice
Recovery proceedings are an effective response to the debtor’s significant financial problems. Due to the wide possibility of introducing changes and the guarantee of the protection of assets against creditors, it is, however, related to the restriction of the freedom of decision-making in favor of the administrator.
Sanitation is an expensive and lengthy process that requires considerable work of the debtor and the administrator. Nevertheless, a well-conducted remedial procedure allows the debtor a fresh start in the restructured enterprise.