Restructuring measures, concerning changes in fixed assets
In our last post on restructuring measures, we focused on changes to the functioning of the company. The next measure we will look at in more detail is the changes made to the debtor’s fixed assets. This is the assets that the company uses for more than 12 months. The tools to carry out restructuring in this area are best provided by the sanitation procedure.
Change in the form of use of fixed assets
The restructuring measures applied in this area are aimed at reorganising the structure of the debtor’s fixed assets. There are several possible ways by which this can be achieved. The first of these is to change the form of use of fixed assets. At the time of restructuring, it is worth examining in detail the alternatives to ownership that will enable the use of the fixed asset. First of all, attention should be paid to lease and rent. An interesting solution is also leasing movable or immovable property.
Termination of contracts for the use of fixed assets
This is another tool worth considering. Termination of a contract may result, for example, from a decision to reduce office or warehouse space. It may also relate to the use of production machinery (as a result of the company’s organisational changes).
There is also another solution besides termination of the agreement or its termination by mutual agreement of the parties. Article 298 (1) of the Act – Restructuring Law provides that the administrator may withdraw from a mutual agreement. This is possible if it has not been executed in whole or in part before the date of opening of the sanitation proceedings. It may be withdrawn with the consent of the judge-commissioner if the other party’s performance under the agreement is indivisible. Withdrawal from the agreement under this procedure is very beneficial for the debtor. It allows the debtor to reduce the costs of withdrawal and, above all, protects him from contractual penalties.
Sale of redundant assets
The last tool is the sale of redundant assets. This can be an asset not used in the current business, such as a neighbouring property for a future expansion of a production hall. A redundant asset can also be an asset that is used in the business. It can be sold e.g. in connection with a planned change of the place of business, liquidation of a branch.
Pursuant to Article 323 (1) of the Act – Restructuring Law, property belonging to the debtor and forming part of the sanitation mass may be sold by the administrator. The same is true of the assets transferred to the sanation mass in connection with the ineffectiveness of a legal transaction. The sale may be conducted with the consent of the judge-commissioner, who determines its conditions. A sale under this procedure has the so-called enforcement sale effect. This solution is extremely beneficial from the perspective of potential buyers of the asset.
Among representatives of science and practice, there is a discussion whether the sale of a debtor’s entire enterprise is possible under this procedure. Without going into the details of this discussion, one should support the position that such a solution is permissible. The sale of the entire enterprise may, for example, be a starting point to start a completely new business.