Effectiveness of restructuring proceedings from economic and legal perspective

Abstract

The Restructuring Law of 15 May 2015 introduced four types of restructuring proceedings that indebted companies may use to reach an arrangement with creditors and overcome financial difficulties. The aim of the research was to analyse the effectiveness of restructuring proceedings in Poland – from both legal and economic perspectives. The study covered all court-ordered restructuring proceedings initiated between 2016 and 2022 by companies operating under commercial law. Proceedings for the approval of an arrangement, where the court’s involvement is limited to approving or refusing to approve the arrangement, were not the subject of this study. To verify the status of restructuring proceedings, an analysis was conducted of all announcements published in the Court and Commercial Gazette or the National Register of Debtors. The research indicates that, regardless of the type of proceedings, approximately half (51%) of initiated restructuring proceedings are dismissed by the court. Bankruptcies and liquidations after unsuccessful attempts to restructure debts account for a similar percentage (51%). The share of arrangements approved by the court in total restructurings stood at 44%, of which 57% are under implementation, 27% were revoked by the court, and 16% were fully implemented. The average time to execute an arrangement in restructuring proceedings is 3 years and the time from approval of the arrangement to the court’s decision to revoke it is 2 years. Additionally, an analysis of the effectiveness of restructuring proceedings across various industries was conducted, with a particular focus on the construction, retail and manufacturing sectors.