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10. ЗАРУБЕЖНАЯ ЮРИДИЧЕСКАЯ ПРАКТИКА
10.1. GROUNDS FOR OPENING RESTRUCTURING PROCEEDINGS IN POLAND
Rafai Adamus, Dr hab. Position: professor. Place of employment: University of Opole, Poland. Department: Faculty of Law and Administration, Economic, Commercial and Bankruptcy Law department. E-mail: [email protected]
1. Introductory remarks
The project of the new Polish Restructuring Law was submitted to the Parliament - as a government submission (print no. 2824) - on 9th October 2014. The lower chamber of the Parliament finally passed the bill, after consideration of the Senate's amendments, on 15th May 2015. The act came into force on 1st January 2016 (hereinafter "RL").1
Former Bankruptcy and Reorganization Law of 2003 introduced a single bankruptcy procedure designed both for restructuring or for liquidation. After the declaration of bankruptcy, the proceedings were conducted either in the course of proceedings involving the liquidation of the assets of the bankrupt or with the possibility of entering into an arrangement. The "transition" from one mode of bankruptcy proceedings to the other could take place theoretically several times, while the declaration of bankruptcy -despite changes in the procedures - took place only once. The proceedings concerning the change of the procedure resulted in its effects as of its issuance. Changing the course of proceedings was associated in practice with various complications. The justification for the draft of Bankruptcy and Reorganization Law criticized the former separation of bankruptcy and restructuring proceedings. Provisions from 1934 provided for a separate bankruptcy and arrangement procedure. It was pointed out that "with this solution, the creditors bear the negative consequences of the debtor's insolvency. At the same time, creditors are deprived of the opportunity to influence the initiation of arrangements proceedings. They cannot object even an erroneous ruling on the opening of arrangement proceedings. (...) this solution is of little use, if not harmful. First of all, it is abused by dishonest debtors to the detriment of creditors." Indeed, in practice there have been cases in which debtors filed applications for the opening of ar-
1 There is a work is in progress on a draft of a directive of the European Parliament and Council on a preventive framework for restructuring, a second chance policy and measures to increase the effectiveness of restructuring procedures, insolvency. In practice, this means unification of restructuring at the community level. The Restructuring Law will fall to the rank of an act implementing the directive. On 22th November 2016, the European Commission presented a proposal for a new directive that aims to put in place an effective framework for preventive restructuring across Europe to ensure that honest entrepreneurs get a second chance and improve their insolvency proceedings. http://ec.europa.eu/information_society/newsroom/image/document/201 6-48/proposal_40046.pdf. The main objective of the project is to introduce an effective preventive restructuring framework, "preventive" in the Member States. The aim of creating such a framework is to encourage entrepreneurs to early restructuring in order to maximize the value of satisfying creditors. The project met with a generally positive opinion, among others Of the European Central Bank of 7 June 2017 on the proposal for a directive of the European Parliament and of the Council on the legal framework for preventive restructuring, second chances and measures to increase the effectiveness of restructuring, bankruptcy and redemption proceedings and amending Directive 2012/30 / EU (CON / 2017 / 22).
rangement proceedings to obtain protection from bankruptcy, with no intention to execute the arrangement.
Renewed separately bankruptcy and the arrangement proceedings - by virtue of Reorganization Law Act - enforces legal safeguards against the above mentioned harmful practices. How should restructuring law deal with this problem? First, by introducing measures to accelerate the restructuring proceedings. Second, through the institution examining the grounds for opening restructuring proceedings. Indicate in this place on art. 8 sec. 1 RL, according to which the court is obliged to refuse to open a restructuring proceeding, if its opening would be aimed at harming the creditors. In addition, pursuant to art. 8 sec. 2 RL, the court refuses to open the arrangement or remedial proceedings, if the debtor's ability to settle the costs of the proceedings and liabilities arising after its opening have not been probable. Thirdly, by introducing the possibility of removing the debtor's own board and establishing the court supervisor in the accelerated arrangement proceedings and arrangement proceedings, by entrusting the management of administrator with the debtor's assets in the rehabilitation proceedings. Fourthly, through ongoing monitoring - through the institution of the monthly reports of the court supervisor - whether the debtor settles liabilities arising after the opening of the accelerated arrangement proceedings and composition proceedings (art. 31sec. 2 point 1 RL). In the case of the application for opening the arrangement proceedings and the application for opening the rehabilitation proceedings (and thus assuming the longest-lasting proceedings), the debtor is obliged to make his capacity to perform obligations after the opening day of proceedings (art. 284 sec. 1 RL) 4). Finally, through the institution of a simplified application for bankruptcy (art. 334 RL).
After more than a decade of validity of the new regulations of Bankruptcy and Reorganization Law of 2003, the legislator decides to completely change the structure of the regulations. Why? The law on bankruptcy and entrepreneurs 'restructuring is increasingly perceived as an important factor in encouraging economic development and investment, as well as a factor favoring entrepreneurs' activity and preservation of jobs (for example in the preamble of the United Nations Commission on International Trade Law and in the preamble of Resolution No. 65/24 General Assembly, in: UNCITRAL Legislative Guide on Insolvency Law, Part Three: Treatment of enterprises in insolvency, New York 2012, pp. 113 and 115). Substantive condition of bankruptcy and restructuring law has a very real impact on the economy. There is no doubt that a number of solutions adopted in the Bankruptcy and Reorganization Law of 2003 have been subject to serious criticism both in theory and in the practice of applying the law. The importance of bankruptcy and reorganization law should be underlined in the context of the effects of macroeconomic crises.
Regarding the economic reasons for the introduction of the Restructuring Law, the justification for the draft law stated that "Poland is ranked 37th in the Doing Business sub-banking of the World Bank, including analysis of bankruptcy proceedings. It indicates a relatively long duration of proceedings, high costs and low average satisfaction of creditors. The analysis of statistics allows us to indicate that in Poland the number of applications for bankruptcy is increasing, while the proceedings involving the liquidation of the enterprise prevail. Conducted examinations indicate the unsatisfactory ratios of satisfying creditors from the bankruptcy estate and a high rate of dismissal of applica-
tions for bankruptcy due to poverty of mass. The first of these circumstances leads to the so-called the domino effect associated with defaulting insolvency by subsequent unsuccessful creditors of the bankrupt. The analysis of global economic phenomena, as well as macroeconomic trends in Poland, indicates the growing number of entities that are real or potentially interested in effective restructuring due to the global recession. (...) Comparison of bankruptcy statistics in Poland with other EU member states also clearly indicates that bankruptcy proceedings in Poland are used relatively rarely, and insolvent entrepreneurs in most cases are removed from trading through informal liquidation. This situation is unfavorable for creditors and for the safety of trading, because in such cases, the bankruptcy mechanisms that protect them are not applied. "
It should be clearly pointed out that many European countries have recently also decided to modernize their own bankruptcy and restructuring laws. Significant changes in this regard took place in Germany, Spain, Austria, Switzerland, Italy, Greece, England, Slovakia, the Czech Republic, etc. The amendment of the law in Poland thus corresponds to a general European trend related to the global economic crisis that began at the end of the first decade XXI century.2
The issues of bankruptcy and restructuring are of interest to various centers with a global influence, which underlines the importance of effective legal regulation in this area. UNCITRAL has published important documents relating to the problem of insolvency law. First - UNICITRAL Legislative Guide on Insolvency Law - from 2005, consisting of two parts: Part One. Designing the Key Objectives and Structure of Effective and Efficient Insolvency Law, Part Two. Core Provisions for an Effective and Efficient Insolvency Law. The second document is the UNCITRAL Legislative Guide on Insolvency Law. Part three: Treatment of enterprise groups in insolvency, published in New York in 2012. UNCITRAL reserves that it is not its intention that recommendations regarding bankruptcy law included in the Legislative Guide become an element of individual legal orders. The Legislation Guide contains important issues that are recommended to consider when creating the norms of bankruptcy and restructuring law. What's more, UNCITRAL does not recommend only one solution, but points to various possibilities of solutions that may possibly be used by legislators, taking into account the local (national) legal context.
According to art. 2 RL the debtor's restructuring is carried out in the following four restructuring proceedings: (1) in the proceedings for the approval of the arrangement ("post^powanie o zatwierdzenie ukladu"), (2) in the accelerated arrangement proceedings ("przyspieszone post^powanie ukladowe", (3) in arrangement proceedings ("post^powanie ukladowe", (4) in the rehabilitation proceedings ("post^powanie sanacyjne").
The procedure for the approval of the arrangement makes it possible to conclude the arrangement as a result of the debtor's independent collection of votes without the participation of the court. The accelerated arrangement
2 See e.g. Insolvency reforms in Europe, Loan Market Association News, 2012, No. 7, p. 21, S. Braun, German Insolvency Act: Special Provisions of Consumer Insolvency, Proceedings and the Discharge of Residential Debts, German Law Journal 2005, Vol. V, No. 1, p. 59, G. Hoher, German for "Modernising Bankruptcy LaW', Eurofenix, 2012, No.
1, p. 16., A. Satava, M. Dancisin, New Czech Insovency Law on its Way, Butterwoths Journal of International Banking and Financial Law, 2006, No. 11, p. 450, A. Scarsso, Debt restructuring in the "neW Italian Insolvency Law, Studio Iuridica Toruniensia, vol. V, p. 7.
proceedings allow the debtor to enter into an arrangement with the creditors after preparing and approving the inventory of receivables in a simplified manner. The arrangement proceedings allow the debtor to conclude the agreement after preparing and approving the list of receivables. The rehabilitation proceedings enable the debtor to carry out the rehabilitation activities and conclude the agreement after preparing and approving the list of receivables.
The indications of the opening of a restructuring procedure can be understood as premises (referring to the so-called restructuring capacity - see Article 4 RL) and the objective premises. Objective premises can be divided into general premises and specific premises. General conditions are those that determine the initiation of restructuring proceedings. Among the general and specific premises, there are so-called positive and negative premises. Special conditions are the conditions for the admissibility of initiating a given type of restructuring proceedings.
2. General conditions for restructuring proceedings.
2.1. Introduction
The grounds of the opening of restructuring proceedings can be characterized as follows. First of all, the positive indicator is: (a) insolvency or (b) the threat of insolvency of the debtor (Article 6 RL). From a theoretical point of view, insolvency and the threat of insolvency are disjointed concepts. Secondly, the universal negative premise for the opening of restructuring proceedings is formulated in art. 8 sec. 1 RL. Pursuant to this provision, the restructuring court refuses to open restructuring proceedings if the proceedings would result in creditors' disadvantage. In other words, if it would be more advantageous for the majority of creditors to declare the debtor bankrupt, in particular when submitting a competitive application for bankruptcy the court should dismiss petition for restructuring. It should be remembered that according to art. 9a Bankruptcy Law (hereinafter "BL") it is not possible to declare the debtor bankrupt in the period between the opening of the restructuring proceeding to its completion or final dismissal. The provision of art. 8 sec. 1 RL is correlated with art. 325 sec. 1 point 1 RL. According to art. 325 sec. 1 point 1 RL the court discontinues the restructuring proceedings if the conduct of the proceedings would be aimed at harming the creditors.
2.2. Insolvency
The legislator maintained in the reformed Bankruptcy Act the existence of two grounds for the debtor's insolvency, which can be described as "loss of liquidity" and "over-indebtedness", which significantly modified their content in relation to the former legal status. Both grounds of insolvency are formally independent of each other.
The legislator has not decided to introduce instruments related to the control of the causes of the debt (whereby pursuant to art. 8 sec. 1 RL, the court refuses to open a restructuring proceeding if its opening would aim to harm the creditors). In other words, in proceedings regarding the opening of a restructuring proceeding, the payment morality of the debtor is not examined, unlike in the case of current consumer bankruptcy (art. 491 [4] BL) or the Law on arrangement proceedings of 1934.
2.2.1. Loss of liquidity
According to the amended art. 11 sec. 1 BL. "the debtor is insolvent if he has lost the ability to perform due cash obligations". In other words, the mere fact that the debtor does not fulfill financial obligations does not prejudge the state of insolvency. It is manifested only by the loss of the ability of the performance of these obligations. Debtor loses his payment ability if it is impossible to pay debts, according to rational and objective assessment, currently as well as in the near future.
The legislator introduces the condition of loss of ability to perform „monetary" (cash, pecuniary) obligations. Undoubtedly, with this construction of the provision, the debtor - analyzing his financial situation - will not have unambiguous certainty as to the date on which this premise arose. Nevertheless, on the basis of provisions from 1934. courts examining the premise of insolvency also had to make assessments (construction of short-term difficulties in settling liabilities). Loss of capacity to perform obligations may appear as an immediate phenomenon but also as an event that requires a longer unit of time in the financial history of the debtor.
If the debtor generates revenues seasonally (eg in the construction industry) or the cycle of obtaining remuneration for goods and services is long, the court should take into account such a circumstance. The debtor's situation will matter, taking into account the end of the fundraising cycle.
The ability to perform obligations should be estimated taking into account the amount of matured payables. If the debtor, on the basis of an agreement with the creditors, postponed the payment deadline, then such liabilities are not included in the assessment of his ability.
The supplement to the above provision is section 1a of art. 11 RL according to which, "it is presumed that the debtor is insolvent if the delay in the performance of pecuniary obligations exceeds three months." This presumption is a rebuttable presumption (praesumptio iuris tantum). The explanatory memorandum of the bill states that "it is assumed that a three-month delay in payment allows to conclude that the debtor's situation is so bad that in the absence of evidence the bankruptcy should be declared." Debtor (in the proceedings regarding the opening of the rehabilitation proceedings also the creditor ) can rebut this presumption by indicating that he has not lost his ability to perform his obligations despite a longer delay (eg when the longer delay concerns only small sums). The debtor (or creditor in the case of a request for the initiation of a rehabilitation proceeding) may also show that the loss of the ability to perform obligations took place before the end of the indicated three-month period.
In connection with the expression "loss of ability to perform pecuniary obligations" used by the legislator, it should be stated that the legislator introduced a regulation according to which the mere cessation of performing pecuniary liabilities does not mean that the basis for insolvency in the form of loss of liquidity has come true. The explanatory memorandum of the bill states that "the very fact of non-payment does not mean that the debtor is insolvent and, as a consequence, that bankruptcy proceedings should be initiated against him. A bad financial condition is necessary, making it impossible to settle financial obligations. From the creditors' point of view, it is not important whether the debtor has actually paid in time, but rather that he is not able to pay. "
If the debtor does not perform or improperly performs non-pecuniary obligations, then he does not become insolvent even (which is the rule) when such non-
performance or improper performance of a non-pecuniary obligation threatens the consequence of secondary monetary claims (eg compensation on general terms, claims under contractual penalties) e.t.c.). As a consequence, only when due cash liabilities arise as a result of the breach of the debtor's obligations in respect of non-pecuniary obligations, this fact may be significant from the point of view of art. 11 BL.
2.2.2. Excessive debt
According to art. 11 sec. 3 BL "a debtor who is a legal person or an organizational unit without legal personality, whose separate law grants legal capacity, is also insolvent when its monetary obligations exceed the value of its assets, and this state persists for a period exceeding twenty-four months." Additional condition of over-indebtedness is limited in such a way that the provisions referring to this condition do not apply to commercial partnerships where at least one partner in charge of the company's obligations without limiting his entire assets is a natural person (Art. 11 sec. 7 BL). In summary, the above premise applies to: (a) legal persons, (b) commercial partnerships in which none of the partners responsible for the company's obligations with all their assets is a natural person (c) other organizational units without personality which a separate act grants legal capacity.
However, art. 11 sec. 2 BL is clarified in art. 11 sec. 4 BL in this way that "assets (...) do not include components that do not enter into the bankruptcy estate." These include the sums accumulated on the company's social benefits fund and other funds created on the basis of separate regulations. The regulation referred to is logical, because, for example, funds created on the basis of regulations have a strictly decreed purpose for which they can be used.
The premise of over-indebtedness is not only subjectively limited, but also has only an essential substantive meaning. The explanatory memorandum of the bill states that "this condition is of secondary importance to the liquidity requirement. As a rule, it is not favorable for the entity and its business environment a long-term maintenance of the state in which the sum of liabilities exceeds the total value of the debtor's assets. It was decided that the twenty-four-month period is an adequate period. If in 2 full years the debtor's assets have a lower value than its liabilities, then it means that it should be subject to the bankruptcy act. "It should be assumed that even a temporary (temporary) increase in the debtor's assets" interrupts "the two-year period. The increase in the value of assets can be the result of only - correct - revaluation of the value of non-current assets.
Also in this case, the legislator used the rebuttable presumption, according to which "the debtor's monetary liabilities are assumed to exceed the value of his assets if, according to the balance of his liabilities, excluding reserves for liabilities and liabilities to related entities, they exceed the value of his assets, and this state is maintained for a period exceeding twenty-four months. "(art. 11 sec. 5 BL)
In addition, according to art. 11 para. 6 BL the court may dismiss the bankruptcy petition if there is no threat of the debtor's loss of the ability to perform his or her due financial obligations in a short time (which is of practical significance in the case of, for example, submission of a creditor's request for opening a rehabilitation proceeding). It is a kind of safety valve for business transactions. The premise of over-indebtedness is therefore not an absolute premise.
2.3. Threat of insolvency
According to art. 6 sec. 3 RL. the debtor at risk of insolvency should be understood as a debtor, whose economic situation indicates that in the near future may become insolvent.
It can be assumed that the debtor is at risk of insolvency if, despite the performance of his obligations and having the ability to perform them, according to a reasonable and objective assessment of his economic situation, it should be expected that he will become insolvent in the near future. The debtor may anticipate his insolvency due to the inability to perform pecuniary and non-pecuniary obligations, which may result in the accrual of contractual penalties or claims for damages.
Insolvency has - as mentioned above - two characters. On the one hand, it may be a loss of the ability to perform payable financial obligations, on the other hand, excessive indebtedness. The first of these grounds is common, the second is limited to the types of entities indicated in the Act. In a concrete case, both bases of insolvency can be combined. The risk of insolvency in terms of the commented provision refers - lege non distinguente - to excessive debt. The debtor referred to when constructing the conditions for over-indebtedness may be insolvent when his financial liabilities exceed the value of his assets, and this state persists for a period approaching 24 months.
3. Premises for opening a restructuring proceeding of a certain type
3.1. Introductory remarks
In addition to the substantive reasons (grounds) of the opening of the restructuring proceedings, the legislator specified (in the light of the multiplicity of possible restructuring proceedings) the objective grounds for conducting a specific type of restructuring proceedings.
The choice of the type of restructuring proceedings is, within the statutory limits, to the debtor (art. 7 sec. 1 RL).
3.2. Premises for the procedure for approval of the arrangement
The proceeding for the approval of the arrangement makes it possible to conclude the agreement as a result of the debtor's independent collection of votes without the participation of the court (art. 3 sec. 2 point 1 RL).
The procedure for approval of the arrangement may be conducted if the sum of disputable claims entitling to vote on the arrangement does not exceed 15% of the sum of claims entitling to vote on the arrangrement (art. 3 sec. 2 point 2 RL). This is a positive premise for the admissibility of proceedings in the subject of approval of the agreement. It is identical with the premise of conducting accelerated arrangement proceedings (art. 3 sec. 3 point 2 RL).
According to art. 65 sec. 4 RL. for creditors who are entitled to uncontested debts, creditors are deemed to have been indicated by the debtor in the list of creditors annexed to the restructuring application or whose claims are recorded in enforcement orders or included in the list of claims. In turn, pursuant to art. 65 sec. 5 RL claims that have been specified regarding the scope of the debtor's benefit and the factual basis and for which the debtor was summoned to perform the service, in particular claims on which the debtor was appealed, a lawsuit against the debtor was brought or a charge of deduction was raised initiated by the debtor or pending proceedings before an arbitration court.
At this point, please pay attention to the content of art. 218 sec. 1 RL. according to which the court supervisor informs the debtor in writing about the inability to conclude the arrangement in the mode provided for in this section immediately after finding that the sum of disputable claims entitling to vote on the agreement exceeds 15% of the sum of receivables entitling to vote on the arrangement
3.3. Premises to open accelerated arrangement proceedings
Accelerated arrangement proceedings allow the debtor to conclude the arrangement after preparing the inventory of claims in a simplified manner (art. 3 sec. 3 point 1 RL).
Accelerated arrangement proceedings - just like the proceedings for the approval of the arrangement - may be carried out if the sum of disputable claims entitling to vote on the arrangement does not exceed 15% of the sum of claims entitling to vote on the arrangement (art. 3 sec. 3 point 2 RL).
According to art. 326 sec. 1 RL the court discontinues the accelerated arrangement proceedings if it is determined that the sum of disputed claims entitling to vote on the agreement exceeds 15% of the sum of claims entitling to vote on the arrangement, taking into account art. 165 sec. 3 and 4 RL.
3.4. Premises for opening arrangement proceedings
The arrangement proceedings enable the debtor to conclude the agreement after preparing and approving the list of claims (art. 3 sec. 4 point 1 RL).
First of all, the arrangement proceedings may be conducted in the event that the sum of disputable claims entitling to vote on the agreement exceeds 15% of the sum of claims entitling to vote on the arrangement (art. 3 sec. 4 point 2 RL). In such a case, it may not conduct accelerated arrangement proceedings (or proceedings for approval of the arrangement) against the debtor.
Secondly, the restructuring court will refuse to open the arrangement proceedings when the debtor's ability to settle the costs of the proceedings and the obligations arising after its opening have not been probable (art. 8 sec. 2 RL). At the same time, the restructuring court discontinues open arrangement proceedings if the debtor has lost the ability to meet current costs of the proceedings and liabilities arising after its opening and liabilities that cannot be included in the arrangement. It is presumed that the debtor has lost the ability to meet obligations if the delay in their performance exceeds thirty days (art. 326 sec. 2 Rl).
3.5. Premises to open a rehabilitation proceeding
The rehabilitation proceedings enable the debtor to carry out the rehabilitation activities and conclude the agreement after preparing and approving the list of claims (art. 3 sec. 5 RL).
There are no specific positive reasons for initiating this type of proceedings. The reorganization proceedings may be opened as a result of the "initial" restructuring request or as a result of a simplified application for the opening of a rehabilitation proceedings submitted after the fiasco of the previous restructuring proceedings. However, the restructuring court will refuse to open a rehabilitation proceeding when the debtor's ability to settle the costs of the proceedings and liabilities arising after its opening have not been probable (art. 8 sec. 2 RL). With the regulation of art. 8 sec. 2 RL are connected the provisions of art. 326
sec. 2 RL and 3 RL. Pursuant to the latter provisions, the court discontinues the rehabilitation proceedings if the debtor has lost the ability to meet current costs of the proceedings and liabilities arising after its opening as well as obligations that cannot be covered by the arrangement. It is presumed that the debtor has lost the ability to meet obligations if the delay in their performance exceeds thirty days. In addition, the court discontinues the rehabilitation proceedings if there is no real possibility of restoring the debtor's ability to perform obligations.
4. Summary
This study presents in a small outline the issue of the subject of the opening of the restructuring proceedings under the Polish Reorganization Law. Importantly, the term 'insolvency' has been redefined since 1st January 2016. The previous definition of insolvency - in force in the Bankruptcy and Reorganization Law - was more restrictive, but restructuring proceedings can also be initiated in the event of threat of insolvency. The legislator left the debtor a relatively wide selection of restructuring proceedings, allowing the debtor to flexibly adapt the specific restructuring process to his situation.
