Restructuring and bankruptcy proceedings in March 2023 with a quarterly summary
Recent months have brought several widely commented records in the area of bankruptcy and restructuring. Continuing the analysis of data resulting from the announcements in the National Register of Debtors (KRZ), we present how the situation in these proceedings developed. The presentation of data for March 2023 is also an opportunity to summarize the first quarter and try to formulate comments on the dynamics of changes at the beginning of this year.
The set of analyzed data has not changed. So we looked at:
- the number of applications to initiate court restructuring proceedings and the number of announcements on setting the arrangement date in the arrangement approval procedure (PZU),
- the number of open court restructuring proceedings,
- the number of applications for bankruptcy and the number of declared bankruptcies,
- the difference between the statistics for the past first quarter of the current year in terms of the analyzed data.
Restructuring proceedings
In March 2023, it was announced that 50 applications for opening court restructuring proceedings had been received. This is 43% more compared to February (35 applications) and 19% (42 applications) compared to January. Compared to February 2023, there was an increase in the number of applications to open each type of restructuring proceedings.
Chart 1. Number of applications to initiate court restructuring proceedings submitted in the first quarter of 2023.
Source: Own elaboration based on data collected from KRZ.
In the audited period, 26 court restructuring proceedings were opened. The vast majority (17) were accelerated arrangement proceedings (PPU), followed by sanation proceedings (5) and arrangement proceedings (4). Compared to February, it is respectively: 65% more PPU, 19% more remediation and 15% more arrangement proceedings.
In the first months of the year, however, the interest in particular types of restructuring changes. Compared to February, there was a slight decrease in open PPUs (from 20 to 17), but this number is clearly higher than in January (8). Both in March and throughout the first quarter, it was the most frequently opened restructuring proceedings. On the other hand, the higher number of remedial proceedings observed in February fell in March to the lowest level this year. Arrangement proceedings, which enjoyed the least popularity in the first quarter, gained popularity in March.
Chart 2. Number of court restructuring proceedings opened in the first quarter of 2023.
Source: Own elaboration based on data collected from KRZ.
There is still a lot of interest in the arrangement approval procedure (PZU). In March, 370 debtors made an announcement about setting a settlement date1. This is 14% more than in February and 37% more than in January.
Chart 3. Number of opened PZU in the first quarter of 2023.
Source: Own elaboration based on data collected from KRZ.
In total, 396 restructuring proceedings were opened in March. Compared to February, this is an increase of 11%, and compared to January2, an increase of 37%.
Chart 4. Number of opened restructuring proceedings in the first quarter of 2023.
Source: Own elaboration based on data collected from KRZ.
Out of all restructuring proceedings, 26 were opened by the court and 370 by PZU. This is 6.6% and 93.4%, respectively. Compared to February, there was a 21.2% decrease in the number of open court restructuring proceedings (33 were opened in February), but an 11% increase in the number of initiated PZU (357 were opened in February). On the other hand, when comparing March data with January data, an increase was observed in both open restructuring proceedings (19 were opened in January) and PZU (290 were opened in January). In both cases, the increase was 37%.
Chart 5. Number of court and out-of-court restructuring proceedings opened in the first quarter of 2023.
Source: Own elaboration based on data collected from KRZ.
Bankruptcy proceedings
In March 2023, 2,381 debtors’ applications for bankruptcy were filed with restructuring and bankruptcy courts. Of these, 159 concerned commercial law companies and 2,222 natural persons3. This is 6.7% and 93.3%, respectively.
Comparing this number with the data for February (1,909 applications) and January (1,776 applications) this year, there was an increase of 25% and 34%, respectively. Separating data on commercial law companies and natural persons from these numbers, it can be indicated that, compared to February, there were 29% more applications from companies and 24% more applications from natural persons, and compared to January, 75% more applications from companies and 32% more more than individuals.
Chart 6. Number of bankruptcy applications filed in the first quarter of 2023.
Source: Own elaboration based on data collected from KRZ.
In March 2023, the courts issued 2,060 bankruptcy decisions. Of these, 25 provisions concerned commercial companies and 2,035 natural persons. This is 1.2% and 98.8%, respectively.
Compared to the data for February (1770) and January (1649), there was an increase of 16% and 25%, respectively, in the total number of bankruptcy decisions. In relation to February, there was a minimal decrease in decisions on declaring bankruptcy of commercial law companies. In this regard, there has actually been a return to the number of resolutions from the beginning of the year. In turn, in the case of bankruptcy decisions for natural persons, there was a 17% increase compared to February and 25% January data.
Chart 7. Number of bankruptcy decisions issued in the first quarter of 2023.
Source: Own elaboration based on data collected from KRZ.
Summary
In the first quarter of 2023, 127 applications for opening restructuring proceedings were submitted. Of these, 78 (61%) were approved. In the last three months, a total of 1,043 restructuring proceedings were opened, including 78 by court decision and 965 by announcement of the arrangement date in PZU. This represents 7.5% and 92.5%, respectively, which confirms the clear dominance of PZU among the selected procedures. Currently, the interest in this form of restructuring remains at a level similar to February (in March, compared to February, there was a 14% increase in notices on the arrangement date in PZU, and in February, compared to January, an increase of 16%). There is also an increase in interest in restructuring initiated by the court. This is evidenced by the number of applications submitted in March (43% more than in February and 19% more than in January). At the same time, compared to February, the number of court decisions on opening restructuring decreased by 21%, and this number was 37% higher than in January. In this category of proceedings PPU still dominates, while in March the number of remedial proceedings opened dropped significantly.
On the other hand, in the case of bankruptcy proceedings, there was a several dozen percent increase in the number of applications for bankruptcy (in March by 25% more than in February and by 34% more than in January) and the number of declared bankruptcies (in March by 16% more than in February and by 25% more than in January. Compared to the data quoted in the previous report, this is a very large increase. Well, earlier it was at the level of several percent (in February there was a 7% increase compared to January data in terms of filing bankruptcy applications and issued decisions in these cases). Therefore, the forecasts of systematic increases in bankruptcies come true.
The study was prepared by: Ph.D Ulyana Zaremba and Ph.D Maria Wąsicka-Sroczyńska and and Legal Counsel Maciej Woźniak.
1 As in previous reports, we would like to remind you that the indicated number does not reflect all commenced proceedings for approval of the arrangement, but only those in which the debtor decided to take advantage of the protection provided by the announcement in the KRZ.
2 Data from January 2023 to which we refer are available at the following link: https://orestrukturyzacji.pl/en/2023/02/28/restructuring-and-bankruptcy-proceedings-in-january-2023/, and data of February 2023: https://orestrukturyzacji.pl/en/2023/03/24/restructuring-and-bankruptcy-proceedings-in-february-2023/
3 By natural persons, we invariably mean both applications submitted by consumers and and by business owners.
