Projected changes regarding the appointment of a trustee/court supervisor/administrator
The draft act amending the restructuring law and the bankruptcy law (a draft implementing the EU directive on restructuring frameworks) introduced new solutions regarding the rules for selecting receivers and supervisors/managers in court restructuring and bankruptcy proceedings. Below is a brief overview of the most important of the projected solutions.
Judicial list of restructuring advisors:
At each bankruptcy and restructuring court, a judicial list of restructuring advisors will be created – the rules for their creation and updating will be specified in the regulation issued by the Minister, but it was decided that the lists will be kept in the ICT system (I wonder if they will be public). At first glance, it seems that there will be two lists – one for bankruptcy and one for restructuring, which can be entered independently.
Amendments to the Act on the Restructuring Advisor License:
- A person holding a restructuring advisor license will be required to indicate 3 bankruptcy courts or 3 restructuring courts in which he will act as a body. This also applies to commercial companies in which the partners/members of the management board hold a restructuring advisor license. That is, 3 bankruptcy courts and 3 restructuring courts per company.
- A natural person holding a restructuring advisor license may remain a partner in a commercial company whose partners are liable for the company’s obligations without limitation with all their assets, or a member of the management board representing the company in no more than one company acting as a temporary court supervisor, compulsory administrator, receiver or body, to which the provisions on the bankruptcy trustee apply accordingly. Interestingly, this provision applies only to functions in the bankruptcy law, does it mean that under the restructuring law it will be possible to be in more than one company?
In practice, the introduced solutions will exclude the current business model of restructuring advisors who conducted proceedings throughout the country, in all the largest bankruptcy and restructuring courts. At the same time, this may increase the burden on insolvency practitioners who choose to work with “smaller” bankruptcy courts, especially in the field of consumer bankruptcy. The question arises, what if there are no people willing to enter the lists at smaller courts that only handle individual bankruptcy/restructuring cases.
In restructuring proceedings:
- Supervisors and administrators will be appointed in the order specified on the court list of restructuring advisors in a given category of cases. It will be possible to deviate from this rule only in justified cases: due to the specificity of a given case and the qualifications of a specific restructuring advisor (1) or if he was previously appointed a temporary court supervisor (2).
- The list of cases requiring the title of qualified restructuring advisor will be significantly expanded (including separate proceedings concerning bond issuers or developers).
In bankruptcy proceedings:
- Similarly to the rules for appointing supervisors and administrators in the restructuring law, the appointment of receivers in bankruptcy proceedings is to take place – also in this case, the judicial review of restructuring advisers is to be decisive – as a rule, receivers are to be appointed according to the order specified on the court list of advisers in a given category of cases with the possibility of waiving it in the case of temporary court supervisors (1) and due to the specificity of the case and the qualification of the adviser (2).
- Also in bankruptcy proceedings, the number of cases in which the title of qualified restructuring advisor will be required will be extended (including proceedings of developers, banks, credit unions, insurance companies, reinsurance companies, housing cooperatives, bond issuers).
- A new institution of “meeting of creditors to vote on changing or dismissing the trustee” will be introduced to the bankruptcy law – according to the new regulations, within two months from the date of appointing the trustee, at least three creditors or a creditor or creditors having a total of at least one fifth of the sum claims may be submitted by a person who meets the requirements referred to in Art. 157 sec. 1 or 2, and who agreed to act as receiver in these proceedings. Within one month from the date of submission of the application, the judge-commissioner convenes a meeting of creditors to vote on a resolution to change the trustee. The creditors’ resolution to change the receiver’s name is passed if the majority of voting creditors, who cast a valid vote, who have a total of at least two-thirds of the sum of claims, vote for it.
The proposed changes constitute the most fundamental remodeling of the restructuring advisor profession since the introduction of the restructuring law and the act on the license of a restructuring advisor. To a large extent, they focus on zoning and limiting the possibility of conducting business in a dozen or so courts throughout the country. They are also intended to increase the transparency of assigning cases to individual advisers, but as a result they may “shake” the existing business models based on accepting cases (e.g. consumer cases) from all over the country.