Restructuring and bankruptcy proceedings in April 2023

Restructuring and bankruptcy proceedings in April 2023

Continuing the observation of changes taking place within restructuring proceedings

and bankruptcy, we analyzed the announcements published in this regard in the National Register of Indebtedness (KRZ) in April 2023.

We constantly focused on analyzing the same variables:

  1. 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),
  2. the number of open court restructuring proceedings,
  3. the number of applications for bankruptcy and the number of declared bankruptcies,
  4. the difference between the statistics for the first four months of the current year in terms of the analyzed data.
Restructuring proceedings

In April 2023, it was announced that 37 applications for opening court restructuring proceedings had been received. This is the second lowest result this year. Fewer applications were recorded only in February (35). However, when compiling data from these months, it should be borne in mind that February is the shortest month of the year. In this case, a difference of a few days can make a big difference. Comparing the data for April to the remaining months, a 26% decrease in the number of applications compared to March (50 applications) and a 12% decrease in the number of applications compared to January (42 applications) can be observed.

Looking at the detailed data on the number of applications to open each type of restructuring proceedings, several conclusions come to mind. First of all, against the background of all available types of court proceedings, proceedings for approval of an arrangement are still the least popular. Since the beginning of the year, the number of applications for opening this type of restructuring has been at a similar, low level. Secondly, the most popular accelerated arrangement proceedings (PPU) so far has seen a significant decrease in popularity in the last month. Thirdly, the interest in opening remedial proceedings is sinusoidal.

Chart 1. Number of applications to initiate court restructuring proceedings submitted.

Source: Own elaboration based on data collected from KRZ.

In April, 16 court restructuring proceedings were opened. Least this year. Compared to other months, it is 16% less than in January (19 applications), as much as 52% less than in February (33 applications) and 38.5% less than in March (26 applications).

Out of these 16 proceedings opened last month: 11 were sanation proceedings, 4 accelerated arrangement proceedings (PPU) and 1 arrangement proceedings. Comparing these data with the data from the months analyzed so far, it can be stated that the number of open recovery and composition proceedings always fluctuates at a similar level. So far, PPU stood out the most against this background, but in April there was a clear decrease in the number of open proceedings of this type. And so, compared to March, it is a decrease by 76.5%, compared to February by 80%, and compared to January by 50%.

Chart 2. Number of court restructuring proceedings opened in the first four months of 2023.

Source: Own elaboration based on data collected from KRZ.

In April, there was also a decrease in the number of open proceedings for approval of the arrangement (PZU). Last month, 300 debtors made an announcement about setting the arrangement date1. This is 19% less than in March, 7% less than in February and 10% more than in January. Thus, it is clear that despite the continued high interest in PZU, the current upward trend in this area has been broken.

Chart 3. Number of PZU openings in the first four months of 2023.

Source: Own elaboration based on data collected from KRZ.

In total, 316 restructuring proceedings were opened in April. Compared to March, it is 20% less, compared to February by 11.5% less, and compared to January by 9% more2.

Chart 4. Number of opened restructuring proceedings in the first four months of 2023.

Source: Own elaboration based on data collected from KRZ.

Out of all restructuring proceedings, 16 were opened by the court and 300 by PZU. This is 5% and 95% respectively. Comparing the data for April with the data for the remaining three months of this year, we can see a decrease in the number of both instituted court restructuring proceedings and PZU.

Chart 5. Number of court and out-of-court restructuring proceedings opened in the first four months of 2023.

Source: Own elaboration based on data collected from KRZ.

 

Bankruptcy proceedings

In April 2023, 1,918 debtors’ applications for bankruptcy were filed with restructuring and bankruptcy courts. Of these, 114 concerned commercial law companies and 1,804 natural persons. This is 6% and 94% respectively.

Comparing these figures with data for March (2381 applications), February (1909 applications) and January (1776 applications) this year there was a decrease of 11.5%, and an increase of 0.5% and 8%. Extracting from these figures detailed data on commercial law companies, it can be seen that, compared to March, there was a 28% decrease in the number of bankruptcy applications. With regard to the remaining months, the differences range between 7% (difference of 9 applications less compared to February) or 25% (difference of 23 applications more compared to January). On the other hand, when analyzing the detailed data on natural persons, an 18% decrease in the number of bankruptcy filings can be seen compared to March data, and a 1% and 7% increase in the number of applications compared to February and January data.

Chart 6. Number of bankruptcy filings filed in the first four months of 2023.

Source: Own elaboration based on data collected from KRZ.

In April 2023, the courts issued 1,536 bankruptcy decisions. Of these, 24 provisions concerned commercial law companies and 1,512 natural persons. This is 1.5% and 98.5%, respectively.

Compared to the data for the previous months, April saw the lowest number of bankruptcy decisions. With regard to March (2060), February (1776) and January (1649), there was a decrease of 25.5%, 13.5% and 7% of the total number of bankruptcy decisions, respectively.

Focusing on the analysis of detailed data, it can be seen that the number of declared bankrupt companies remains at a similar level. On the other hand, in the case of decisions on the declaration of bankruptcy of natural persons, the increase so far has been halted. In April, 26%, 14% and 7% less were spent compared to March, February and January.

Chart 7. Number of bankruptcy decisions issued in the first four months of 2023.

Source: Own elaboration based on data collected from KRZ.

 

Summary

Data showing the number of restructuring and bankruptcy proceedings for April 2023 are very interesting. Last month, there were drops in virtually every analyzed category of data. Thus, with regard to court restructuring proceedings, there was a small number of requests to open them (37) and a small number of initiated restructurings (16). Against the backdrop of the first four months of this year, this represents, respectively, 22.5% and 17% of all submitted applications and all openings in these cases. For the first time this year, there was also a 20% drop in interest in PZU compared to March (370 announcements) and 11.5% compared to February (324 announcements) data. Despite this, the figures for last month showing the interest in the proceedings for approval of the arrangement account for nearly ¼ of all announcements on the arrangement date made this year. In the perspective of all available types of restructuring proceedings, PZU still has a visible advantage in popularity. In the past four months, a total of 1,359 restructuring proceedings were opened, including 94 court decisions and 1,265 announcements on the arrangement date at PZU. This is 7% and 93% respectively.

The upward trend in bankruptcy filings and decisions has so far been very clear. In April, that changed. With regard to the total number of submitted applications, an 11.5% decrease was observed compared to March (from 2,381 to 1,918 applications) and the numbers for April were closer to those for February and January (difference of several percent). A similar pattern was observed for applications submitted by individuals. There was an 18% decrease in such applications compared to March, while approaching the level from the first two months of the year (difference of several percent). On the other hand, applications submitted by representatives of commercial law companies oscillate at a similar level all the time. And exactly the same phenomenon is also visible in the number of decisions on the bankruptcy of companies. The opposite is the decrease in the number of bankruptcy decisions for natural persons. Compared to March (2035 applications), February (1741 applications) and January (1626 applications), this is a decrease by as much as 26%, 14% and 7%. This contradicts the announcements of systematic increases in consumer bankruptcy announced this year.

In the last sentence, it is worth noting that April saw a halt to the upward trend observed so far, both in terms of interest in judicial restructuring, the popularity of PZU and the number of consumer bankruptcies declared. This deserves special attention and we will certainly await the data for May with great curiosity and impatience.

 

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/, data from February 2023: https://orestrukturyzacji.pl/en/2023/03/24/restructuring-and-bankruptcy-proceedings-in-february-2023/, data from March: https://orestrukturyzacji.pl/en/2023/04/21/restructuring-and-bankruptcy-proceedings-in-march-2023-with-a-quarterly-summary/

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