Remuneration of the arrangement supervisor in the arrangement approval procedure

Remuneration of the arrangement supervisor in the arrangement approval procedure

The Restructuring Law provides for four variants of restructuring: arrangement proceedings, accelerated arrangement proceedings, remedial proceedings and arrangement approval proceedings. In the first three types of proceedings, the remuneration of the court supervisor and administrator, respectively, is determined by the court. The issue of the arrangement supervisor’s remuneration in the arrangement approval procedure – currently the most popular restructuring model in Poland – was shaped completely differently.

General rules for determining the remuneration of the arrangement supervisor

Unlike other restructuring proceedings, in proceedings for approval of the arrangement, the choice of the arrangement supervisor is a free decision of the debtor. Neither the court nor creditors have any influence on this choice – it is not subject to verification, it does not require any approval. The debtor independently selects the arrangement supervisor from among all natural persons and companies authorized to perform this function.

The supervisor of the arrangement performs his activities on the basis of a civil law contract concluded with the debtor. Therefore, the basis for the operation of the arrangement supervisor is not an act of a public law nature (appointment by court decision). As indicated in the doctrine, it is a contract of mandate – it concerns the performance of legal actions for the commissioning party. The agreement should specify the scope of the order, with the key provision being that it concerns the performance of the arrangement supervisor’s activities.

An obligatory element of the contract between the debtor and the arrangement supervisor is the determination of his remuneration. How to shape the salary? How to regulate this issue? The parties have full freedom here, unless the debtor is a micro-entrepreneur (this limitation will be discussed later in the entry). It can be set at any amount agreed between the parties, it can be a lump-sum fee, a one-time fee for the entire procedure, it can also be a fee payable monthly – for each month of performing the function. There are no obstacles to increase the previously indicated possibilities by the so-called success fee: then the supervisor of the arrangement is expected to receive a basic remuneration and an additional remuneration for success in the form of a final approval of the arrangement. It is also possible to determine in the agreement with the arrangement supervisor also the issue of reimbursement of expenses.

Debtor-micro-entrepreneur

The provisions introduce a certain restriction on the freedom to determine the remuneration of the arrangement supervisor – the restrictions apply to situations where the debtor is a micro-entrepreneur. What criteria must the debtor meet to be subject to such a qualification? The answer to this question can be found in the Entrepreneurs’ Law: it is an entrepreneur who in the last two financial years met the following guidelines:

  • employed no more than 10 employees on average per year,
  • its annual net turnover from the sale of goods and services or any financial operations did not exceed EUR 2 million,
  • total assets of the final balance sheet do not exceed EUR 2 million.

If the arrangement approval procedure concerns a micro-entrepreneur, the remuneration of the arrangement supervisor may not be higher than 15% of the level of creditors’ satisfaction in accordance with the provisions of the arrangement, and moreover, if the level of creditors’ satisfaction in accordance with the provisions of the arrangement exceeds PLN 100,000, the remuneration exceeding PLN 100,000 may not exceed PLN 100,000. exceed the equivalent of 3% of creditors’ satisfaction, and if it exceeds PLN 500,000 – the remuneration from the level exceeding PLN 500,000 may not exceed the equivalent of 1% of creditors’ satisfaction.

The provision sounds quite enigmatic, the following example should make it easier to understand how the remuneration is calculated:

 

The amount allocated to the creditors according to the arrangement in the proceedings for approval of the arrangement against the debtor-micro-entrepreneur: PLN 800,000.00

15% × PLN 100,000.00 = PLN 15,000.00

3% × (PLN 500,000.00 – PLN 100,000.01) = PLN 11,999.99,

1% × (PLN 800,000.00 – PLN 500,000.01) = PLN 2,999.99

The maximum remuneration is PLN 29,999.98.

On the other hand, in the event of a final refusal to approve the arrangement or a final discontinuation of the proceedings against a micro-entrepreneur, the remuneration of the arrangement supervisor provided for in the agreement may not exceed twice the average monthly remuneration in the enterprise sector without the payment of bonuses from profit in the third quarter of the previous year, as announced by the President of the Central Statistical Office. This means that in 2023 this rate may not exceed PLN 13,473.20.

Summary
In the proceedings for approval of the arrangement, the legislator left the debtor interested in restructuring a lot of freedom, which is manifested, among others, in the possibility of the ability to determine the amount of the arrangement supervisor’s remuneration. The described freedom has basically one limitation concerning micro-entrepreneurs. Specifying the maximum remuneration ceiling is to protect debtors with lower financial potential from concluding agreements with restructuring advisors that may significantly hinder the execution of the arrangement.

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