When can you announce the arrangement date in the procedure for approval of the arrangement?

Introduction

Proceedings for approval of an arrangement (hereinafter also referred to as: “PZU”) is the simplest and also the most frequently chosen type of restructuring proceedings in Poland. An important element of this procedure is to determine the arrangement date.

In PZU, the restructuring court does not issue a decision to open restructuring proceedings. Instead, immediately after the arrangement supervisor begins to perform its functions, the debtor sets the arrangement date.

Determination of the arrangement date (Art. 211 p.r.)

The arrangement date should be set on a day not earlier than three months and not later than one day before the date of submission of the application for approval of the arrangement. The status of the debtor’s liabilities as at that date is of key importance for the entire arrangement approval procedure.

The facts as at the arrangement date are the basis for determining whether the debtor’s creditor is entitled to a disputed claim, whether he has the right to vote on the arrangement, and what is the amount of his claim. In addition, according to the state of the arrangement date, the relationship between the sum of disputed claims and other claims is determined, and whether this sum exceeds the threshold of 15% of all claims entitling to vote on the arrangement.

In the course of one arrangement approval procedure, the agreed arrangement date cannot be changed. Claims arising after the arrangement date are not covered by the arrangement, and therefore the debtor will be obliged to satisfy the creditor on general terms.

Announcement on setting the arrangement date

The arrangement day determines the debtor, while the arrangement supervisor may announce the determination of the arrangement day in the ICT system – the National Register of Debtors. The announcement on setting the arrangement date is not mandatory, however, it is of particular importance due to the related effects in the form of granting the debtor protection against enforcement and termination of certain contracts.

After the list of receivables, the list of disputed receivables and the preliminary restructuring plan have been drawn up, the arrangement supervisor may announce that the arrangement date has been set (Art. 226a(1) of the p.r.). In a situation where the supervisor of the arrangement finds that there are premises preventing the initiation of proceedings for approval of the arrangement or premises excluding the possibility of making an announcement in these proceedings about setting the arrangement date, then he should inform the debtor and refuse to make the announcement (Art., 226b of the p.r.).

An announcement of the arrangement date may be made by the arrangement supervisor if the following requirements are met jointly:

1. an agreement was concluded between the debtor and a restructuring advisor (supervisor of the arrangement) for supervision in the proceedings for approval of the arrangement;
2. arrangement date has been set;
3. a list of debts, a list of disputed debts and a preliminary restructuring plan were prepared.

However, the notice is excluded if, within 10 years:

1. proceedings for approval of the arrangement were conducted against the debtor, in which the announcement on setting the arrangement date was made, or
2. the debtor’s restructuring proceedings were discontinued, except when the restructuring proceedings were discontinued with the consent of the creditors’ committee.

The provisions of the Act do not require the arrangement date to be set before the date of the announcement, but only that the arrangement date should fall not earlier than three months and not later than one day before the date of submission of the application for approval of the arrangement (Art. 211(2) of the p.r.).

Summary

The use of the possibility of announcing the determination of the arrangement date entails a number of consequences for the debtor’s functioning in economic transactions, in particular, it provides protection against enforcement and termination of key contracts.

The provisions of the restructuring law do not set a specific date for the announcement, but only indicate the time range for setting the arrangement date. They also indicate a number of situations in which the arrangement supervisor should refuse to announce the arrangement date and list the documents that must be prepared.