Motion to repeal the effects of the announcement on setting the arrangement date in the arrangement approval procedure
Arrangement approval proceedings are currently the most popular restructuring proceedings. Its greatest advantage is the possibility of obtaining quick protection of the debtor’s assets and contracts to which he is a party. Obtaining protection depends solely on the announcement of the arrangement date in the National Register of Debtors.
Strong position of the debtor in the new PZU
Proceedings for approval of the arrangement, introduced in 2016, were intended to be quick proceedings in which the debtor independently collects votes in the voting on the arrangement. However, the proceedings were not popular due to the lack of protection of the debtor’s assets at the stage of collecting votes. The situation changed dramatically in 2020, when Shield 4.0 introduced the so-called simplified restructuring procedure (UPR).
The direct successor of the UPR is the new arrangement approval procedure (new PZU). The new PZU guarantees the debtor protection of assets from the date of the announcement of the arrangement date. The announcement is made by the supervisor of the arrangement in the National Register of Debtors. Thanks to this, the debtor does not have to wait for the court’s decision. Theoretically, it is possible to obtain protection on the same day on which the debtor made the decision to restructure. Protection is thus granted almost immediately.
Consequences of the announcement on setting the arrangement date
Protection of the debtor’s assets lasts for four months from the date of the notice on setting the arrangement date and consists of:
- protection of the debtor’s contractual relations, consisting in the inadmissibility of termination of, inter alia, lease or tenancy agreements for premises or real estate (where the enterprise is run), loan agreements, leasing agreements, property insurance agreements, bank account agreements, as well as other agreements of fundamental importance for running the debtor’s enterprise provision (a list of agreements of fundamental importance is prepared by the arrangement supervisor),
- suspension by operation of law of enforcement proceedings directed against the assets of the entering debtor, instituted before the date of the announcement.
This solution allows the debtor to focus on restructuring. He has only 3 months from the appointed date of the arrangement to collect creditors’ votes in the voting on the arrangement and to submit an application for approval of the arrangement. The mere suspension of the obligation to pay arrangement liabilities (arising before the arrangement date) constitutes an attractive statutory grace period for the debtor.
In order to offset the far-reaching effects of the announcement of the arrangement date, the legislator provided for the possibility of repealing the effects of the announcement of the arrangement date. The application may be submitted by a creditor, debtor or arrangement supervisor.
The court will overrule the effects of the announcement if:
- if it turns out that within the last ten years the debtor has conducted proceedings for approval of the arrangement, in which the announcement on setting the arrangement date was made, or within the last ten years restructuring proceedings against the debtor have been discontinued, except for the situation when the restructuring proceedings were discontinued with the consent of the creditors’ committee,
- they lead to the detriment of creditors.
While the first premise is formal, the second premise is a general clause. Revocation is justified in situations where, in a given factual situation, the mere granting of protection to the debtor will lead to creditors’ detriment.
Before issuing a decision, the court may question the debtor, creditor or arrangement supervisor (also by receiving a written statement). The decision on repealing the effects of the announcement may be appealed against. The final decision to repeal the effects of the announcement shall be announced.
Consequences of repealing the effects of the announcement on setting the arrangement date
The repeal of the effects of the announcement of the arrangement date does not affect the determination of the arrangement date itself and the possibility of concluding an arrangement with creditors. The debtor may therefore vote on the arrangement, and if successful, submit an application to the court for approval of the arrangement.
Proceedings for the approval of the arrangement gained popularity due to the granting of immediate protection resulting from the announcement of the arrangement date. In order to balance this situation, the legislator rightly provided for the possibility of repealing the effects of the announcement of the arrangement date. However, there is doubt as to whether the court will be able to decide on the application for repealing the effects of the notice before the protection period expires.