Restructuring and insolvency law in Poland

1. What is the primary legislation governing insolvency and restructuring proceedings in your jurisdiction?

The primary legislation governing insolvency-related restructuring proceedings is the Restructuring Act dated 15 May 2015 (the “Restructuring Act”), which governs four types of (mostly) pre-insolvency restructuring proceedings. 

Recently, however, because of the COVID-19 outbreak, an additional type of restructuring proceedings was introduced by legislation known as Shield 4.0, i.e. the Act of 19 June 2020 on interest rate subsidies for bank loans granted to provide liquidity to businesses affected by the impact of COVID-19 and on simplified proceedings for the approval of arrangements in connection with COVID-19. This legislation (which applies to proceedings initiated on or before 31 June 2021) temporarily introduces a simple and accessible restructuring tool enabling the debtor to conduct what are known as “simplified restructuring proceedings” with limited supervision by the courts.

Bankruptcy proceedings, i.e. proceedings aimed at the liquidation of an insolvent debtor’s assets, are governed by the Bankruptcy Act dated 28 February 2003 (the “Bankruptcy Act”). 

Furthermore, in an international context the EU Regulation on Insolvency Proceedings (Regulation no. 848/2015, the “EIR”) is applicable; however, as of July 2020, the EIR is not applicable to simplified restructuring proceedings.

2. How are insolvency proceedings or restructuring proceedings initiated?

Generally, restructuring and bankruptcy proceedings need to be opened by a court. As a rule, except for remedial proceedings (see point 4 below), restructuring proceedings are initiated only upon the debtor’s motion. Remedial and bankruptcy proceedings, however, may be opened upon the motion of either the debtor or its creditor. Simplified arrangement proceedings, on the other hand, require that the debtor enters into a restructuring agreement with the restructuring advisor, and the debtor subsequently publishes an announcement on the initiation of simplified arrangement proceedings.

The opening of:

  • restructuring proceedings requires the debtor to be either insolvent or threatened with insolvency (see point 3 below)
  • bankruptcy proceedings requires the debtor to be insolvent.

The debtor becomes insolvent if either of the following criteria are met:

  • the debtor is unable to pay its overdue debts (liquidity test) or 
  • the debtor becomes over-indebted (balance sheet test).   

Liquidity test

The liquidity test is met if the debtor loses the ability to meet its due pecuniary obligations. In this case, insolvency will be presumed if the delay in payment exceeds three months.

Balance sheet test

The balance sheet test is met if the debtor’s pecuniary obligations, excluding:

  • future and contingent liabilities and 
  • certain liabilities towards shareholders/stemming from loans and similar transactions, 

exceed the value of the debtor’s assets (subject to liquidation), and if this continues uninterruptedly for longer than 24 months. The balance sheet test only applies to corporations and/or certain partnerships (as well as certain other non-relevant entities). It is presumed that the balance sheet test is met if, according to the debtor’s balance sheet, its obligations, excluding balance-sheet provisions for obligations and liabilities towards affiliates, exceed the value of its assets and if this continues for longer than 24 months.

Furthermore, imminent insolvency, which is a condition for opening restructuring proceedings, occurs if the debtor’s economic situation shows that it could soon become insolvent.

4. Which different types of restructuring / insolvency proceedings exist and what are their characteristics?

Currently, there are five different types of restructuring proceedings and one type of bankruptcy proceedings (liquidation). 


General information

The different restructuring proceedings allow for a varying degree of protection against creditors, and provide different limitations to the debtor’s powers:

  • Arrangement approval proceedings (“postępowanie o zatwierdzenie układu”)
  • Fast-track arrangement proceedings (“przyspieszone postępowanie układowe”)
  • Simplified arrangement proceedings (“uproszczone postępowanie restrukturyzacyjne”)
  • Ordinary arrangement proceedings (“postępowanie układowe”)
  • Remedial (“sanation”) proceedings (“postępowanie sanacyjne”).

The structure of these proceedings is designed to reflect the rule of “gradation”, whereby the scope of protection afforded to the debtor and the restructuring instruments available in the relevant proceedings correspond to the scope of managerial powers that the debtor needs to give up, as further described below.

General comments in relation to restructuring proceedings

Restructuring proceedings are designed to facilitate reaching an arrangement with creditors, not only offering debtors restructuring tools but also placing them in a relatively safe position during the distressed period in order to let them work out a solution and conduct the arrangement. 

In order to further facilitate the chances of a successful restructuring, the Restructuring Act has priority over the Bankruptcy Act, which is reflected in the general rule that the Bankruptcy Court must suspend processing of the bankruptcy petition until the restructuring petition is finally resolved.

Debtor’s powers

As a rule, most restructuring proceedings are debtor-in-possession, except for remedial proceedings, where generally an administrator is appointed (under certain conditions the debtor may, however, retain the right to manage its assets subject to the proceedings). However, in this case the debtor must generally obtain the approval of a supervisor (appointed by a court) to perform certain actions exceeding the scope of day-to-day management (so-called “ordinary management”). In fast-track and ordinary arrangement proceedings, if – broadly speaking – the debtor does not fulfil its obligations related to the restructuring process, it is possible that the debtor will be deprived of its powers and an administrator (“zarządca”) may be appointed to take over full management. 

Voting rights

With minor exceptions, the following categories of creditors are entitled to vote: 

  • Creditors whose debts are covered by the arrangement by operation of the law (i.e. in practice, unsecured creditors)
  • Secured creditors in the scope not covered by the value of the security interest
  • In rare cases – secured creditors who agreed to be bound by the arrangement.
Arrangement concerning only certain groups of creditors

The Restructuring Act introduces the possibility to enter into an arrangement with only some creditors (in fast-track and ordinary arrangement approval proceedings). This legal instrument is mainly intended for large and very large enterprises, where the most effective method of restructuring is an arrangement with a specific group of creditors, singled out on the basis of objective and economically reasonable criteria (e.g. with banks). A special feature is that even though creditors benefiting from security interests (e.g. mortgage, pledge, registered pledge) are generally (within the scope not covered by the value of the security interest) not bound by an arrangement by operation of the law, it is possible to force such creditors to be bound by such a “group specific” arrangement (i.e. if the relevant voting majority approves such an arrangement proposal). This is the case if the debtor proves that the arrangement provides for a similar level of satisfaction of such creditor’s debt to that provided under the contract from which such debt resulted (even if previously terminated or expired) or, more importantly, if enforced in enforcement proceedings against an encumbered asset.

  • Arrangement approval proceedings

Conditions for opening

Proceedings for the approval of an arrangement are considered the least formal type of restructuring proceedings. Minimum involvement of the courts means that the burden of carrying out these proceedings lies firmly with the debtor. These proceedings are available to either insolvent debtors or debtors threatened with insolvency who can reach an agreement with the majority of creditors. As a condition for initiating these proceedings, it must be demonstrated that the total sum of disputed liabilities does not exceed 15% of all the receivables whose holders are entitled to vote on the arrangement.

Specific issues regarding the course of proceedings

The debtor remains in possession of its business. However, the due maintenance of assets is overseen by an arrangement supervisor (“nadzorca układu”, a licensed insolvency professional) engaged by the debtor on a contractual basis. The arrangement supervisor acts as a restructuring advisor to the debtor, assisting the debtor in preparing restructuring plans, arrangement proposals etc. Once the debtor and its creditors have reached an agreement on the arrangement, the debtor will file a motion with the court seeking approval of the arrangement. The restructuring court must then either approve or reject this motion.


The proceedings are formally less complicated and more flexible for the creditors and the debtor as they are mostly conducted out of court. These proceedings typically move relatively swiftly due to the imposition of certain time limits, e.g. the filing of the arrangement should occur within three months from the appointment of the supervisor and the court should decide within two weeks from the date of the application. This option is also attractive to debtors as it makes it possible to avoid damage to the debtor’s reputation as a result of its financial difficulties. On the other hand, no protection against enforcement is granted (no suspension of enforcement proceedings or revocation of bank account seizures until the arrangement is approved). 

  • Fast-track arrangement proceedings    

Conditions for opening

Fast-track arrangement proceedings can be initiated if the sum of contested liabilities does not exceed 15% of total liabilities. As a simplified type of proceedings, fast-track arrangement proceedings allow the arrangement and its approval to be achieved relatively quickly (in practice, often within three months).

Specific issues regarding the course of proceedings

Fast-track arrangement proceedings are opened upon the debtor’s motion after the court has examined the documents provided. A positive decision leads to the court appointing a supervisor (“nadzorca sądowy”). The supervisor prepares and submits a restructuring plan, a list of receivables and a list of disputed receivables (no list of inventories is made) to the judge-commissioner (who oversees the proceedings) within two weeks from the date proceedings are opened. 
Once the documents have been submitted, a creditors’ meeting is held to vote on acceptance of the arrangement. 


Enforcement proceedings carried out against a debtor regarding the debt subject to an arrangement (in practice: debt not secured by a security interest) are suspended. Furthermore, a judge-commissioner may revoke seizures made in enforcement proceedings that commenced before the date the restructuring proceedings were opened. With regard to the enforcement of debt not covered by an arrangement (i.e. mostly secured debt, within the scope covered by the value of the secured asset) a stay of enforcement of claims not covered by an arrangement may be ordered for up to three months if an asset is necessary for running the enterprise.

  • Simplified arrangement proceedings

Conditions for opening

Any debtor who is subject to regular restructuring proceedings may commence simplified arrangement proceedings if the debtor: 

  • concludes a restructuring agreement with the restructuring advisor, and subsequently 
  • publishes an official notification on the initiation of simplified arrangement proceedings. 

As of now, this instrument is available until 30 June 2021.

Specific issues regarding the course of proceedings

Simplified arrangement proceedings are initiated by a notification published in the official gazette (“Monitor sądowy i gospodarczy”). Once commenced, either the debtor collects votes on the proposed arrangement, or the restructuring advisor, acting as arrangement supervisor, convenes a creditors’ meeting to vote on the arrangement.
Simplified arrangement proceedings are discontinued if no motion for approval of the arrangement is filed with the court within four months from the date of the notification.


Simplified arrangement proceedings provide a flexible solution to the debtor, allowing it to restructure most types of debt. The potential arrangement covers both unsecured and – under certain conditions – secured debt. Similarly to an arrangement concerning only certain groups of creditors, simplified arrangement provides for the possibility of forcing secured creditors to be bound by the arrangement (i.e. if the relevant voting majority approves such an arrangement proposal). This is the case if the debtor proves that the arrangement provides for a similar level of satisfaction of such creditor’s debt to that provided under the contract from which the debt resulted (even if previously terminated or expired) or, more importantly, if enforced in enforcement proceedings against an encumbered asset. 

Additionally, once the official notification is made, enforcement proceedings concerning secured and (under the above conditions) unsecured debt are stayed and the commencement of new enforcement proceedings concerning such debt is prohibited.

  • Ordinary arrangement proceedings

Conditions for opening

Ordinary arrangement proceedings are available to debtors whose sum of disputable claims exceeds 15% of their total debt. Commencement of proceedings is conditional upon the debtor substantiating the ability to meet the costs of the proceedings and liabilities arising after the proceedings are initiated. For this purpose, the debtor must demonstrate that it has the means to cover these expenses or that it is or will be able to generate enough revenues. Regardless of the formalities, these proceedings are similar to fast-track arrangement proceedings in terms of their impact on the debtor’s management rights and protection from creditors.

Specific issues regarding the course of proceedings

Ordinary arrangement proceedings are opened upon the debtor’s motion. Unlike in fast-track arrangement proceedings, the debtor’s assets may, however, be subject to certain protection against its creditors even prior to the opening of proceedings. A motion to initiate ordinary arrangement proceedings empowers the court to:

  • appoint a temporary court supervisor (“tymczasowy nadzorca sądowy”), which limits the debtor’s powers to perform certain actions outside the scope of day-to-day management (in practice, the disposal of significant assets), and further
  •  the court may suspend enforcement proceedings conducted against the debtor and revoke seizures of its bank accounts if the enforcement relates to debt subject to an arrangement (in practice, debt not secured by a security interest).


In principle, unlike in remedial proceedings the debtor is not deprived of the possibility of conducting its business; creditors have a greater influence on the proceedings of the creditors’ committee and can challenge the list of claims in place. In practice, however, there are significantly fewer restructuring options available than in remedial proceedings.

  • Remedial (“sanation”) proceedings   

Conditions for opening

Remedial proceedings are intended to enable deep economic restructuring of the debtor’s assets and obligations and may be initiated by a motion to the court filed by the debtor (if it is either insolvent or threatened with insolvency) or its creditors (if the debtor is insolvent). As in the case of ordinary arrangement proceedings, the opening of remedial proceedings is conditional upon the debtor substantiating the ability to meet the costs of the proceedings and liabilities arising after the proceedings are initiated. The specific characteristics of remedial proceedings are: 

  • Multiple restructuring options (including restructuring of employment contracts)
  • Maximum protection of the debtor’s assets against creditors 
  • Appointment of an administrator (the debtor is typically deprived of its management rights). 

Specific issues regarding the course of proceedings

After the initiation of proceedings, the debtor’s estate becomes a “remedial estate” (“masa sanacyjna”) and the debtor is, in principle, deprived of its managerial powers. Even if the court decides that the debtor should retain the power to manage its assets, the debtor is only entitled to do so within the scope of day-to-day management (ordinary management).

Remedial proceedings should, in principle, take 12 months until the decision to approve or refuse to approve the arrangement becomes final, during which time, due to implementation of the arrangement with the creditors, the debtor should regain the ability to fulfil its obligations and be able to bear the costs of the arrangement.


Remedial proceedings offer certain restructuring options that have a significant impact on the achievement of the restructuring objectives, which include: 

  • The possibility to withdraw from certain contracts (“cherry-picking right” of the administrator), even if withdrawal is not possible under the terms of such contract 
  • The option to adjust the employment level to the needs of the reorganised business
  • Expiration of powers of attorney and commercial proxies (“prokura”) by operation of law 
  • Ineffectiveness of the debtor’s acts (claw-back) regarding the remedial estate under certain circumstances, e.g. certain disposals at undervalue and security interests established by the debtor not in direct connection with the receipt of performance by the debtor; provided, however, that such transactions were made within one year before the date of filing the application to open remedial proceedings, and
  • The possibility of disposing of redundant assets free of encumbrances (e.g. security interests).

All these remedial powers are under restrictive supervision exercised by the judge-commissioner and the creditors.


Conditions for opening

Bankruptcy proceedings can only be initiated in relation to a debtor who has become insolvent (i.e. not threatened with insolvency).

Specific issues regarding the course of proceedings

Following the submission of a bankruptcy petition, the debtor’s assets may be secured by a court decision (acting on its own or upon the applicant’s request). Such security may consist in particular in:

  • Appointment of an interim court supervisor (“tymczasowy nadzorca sądowy”) limiting the debtor’s powers to e.g. dispose of its assets (outside the scope of day-to-day management) if no approval of the interim court supervisor is obtained, or 
  • Depriving the debtors of its powers and appointing an administrator. 

Moreover, under certain conditions the court may suspend enforcement proceedings and revoke the seizure of a bank account.

Once bankruptcy proceedings are opened: 

  • The bankrupt loses the right to manage and the possibility to use and dispose of the property included in the bankruptcy estate. The bankrupt’s legal transactions regarding property included in the bankruptcy estate are invalid
  • The debtor’s assets cannot be encumbered with any security interest to secure a claim arising before the declaration of bankruptcy
  • Creditors may submit claims in the course of the proceedings for the purposes of establishing a list of claims.
    Furthermore, as a consequence of bankruptcy, certain transactions are subject to bankruptcy claw-back (avoidance actions), including in particular:
  • Transactions at undervalue
  • Certain security interests
  • Transactions with certain affiliates (broadly speaking) if such transactions were made within a certain time before the day of submission of the bankruptcy petition (i.e. the hardening periods have not lapsed).

Bankruptcy proceedings (“postępowanie upadłościowe”) are aimed at liquidating (compulsory sale) the bankrupt’s assets. The management of the enterprise is taken over by a bankruptcy receiver (“syndyk”), who will seek to sell the entire enterprise. If this is not possible, assets may be sold in a piecemeal sale. Once the assets have been sold and the amounts recovered, the bankruptcy receiver will distribute such amounts to the creditors in the order of statutory preference. As is typical in bankruptcy legislation, creditors benefiting from a security interest enjoy priority in satisfaction to the extent covered by the secured assets. In practice, this often leads to a scenario where the majority of the liquidation proceeds (up to 90%) from the bankruptcy sale of an asset (or the debtor’s business as a whole) are used to satisfy secured creditors. 

5. Are there several types of creditors and what is the effect of a difference?

In practice, in both restructuring and bankruptcy scenarios the most significant difference between the different types of creditors is whether they benefit from a security interest. 

In a restructuring scenario, with certain exceptions: 

  • Secured creditors are not bound by the arrangement within the scope not covered by the value of the security interests
  • Secured claims are not subject to a stay of enforcement (see “Restructuring proceedings” under point 4 for details). 

In a bankruptcy scenario, such creditors enjoy significant priority in satisfaction and obtain most of the liquidation proceeds. They enjoy satisfaction to the extent the value of the underlying assets suffices to cover the value of their claims (see “Bankruptcy proceedings” under point 4 for details).

Furthermore, certain affiliated creditors are excluded from either voting on an arrangement or certain debts owed to such creditors are subordinated in bankruptcy if they result from e.g. shareholder loans and/or similar transactions made within five years prior to the declaration of bankruptcy.

In a bankruptcy scenario, if the claims resulted in particular from transactions made with the bankruptcy receiver or are a result of certain transactions made during an earlier restructuring attempt, creditors having such claims enjoy priority in satisfaction. Such claims will be satisfied in full from the bankruptcy estate (unless the estate is not sufficient to cover all preferential claims).

6. Is there any obligation to initiate restructuring / insolvency proceedings? For whom does this obligation exist and under what conditions? What are the consequences if this obligation is violated?

The debtor (its directors) is obliged to file a bankruptcy petition within 30 days of fulfilment of either of the insolvency tests and may be held liable for a failure to do so. However, for the duration of the COVID-19 pandemic the above-mentioned deadline is suspended if insolvency has occurred – broadly speaking – during and as a consequence of the pandemic.

Directors are responsible for any damage caused as a result of their failure to file a petition within the applicable time limit, unless they are not at fault. Additionally, they may be liable to pay a fine, or be penalised with restriction of freedom or imprisonment for up to one year. Members of the management board may also be subject to quasi-criminal liability consisting of a prohibition on holding managerial positions or conducting business activity for a period of 1 to 10 years in the case of, inter alia, a wilful failure to file for bankruptcy in the event of the company’s insolvency. 

Members of a limited liability company’s management board may be required to pay some of the company’s debts in certain circumstances, primarily in the event enforcement against the company proves ineffective. One of the circumstances where such personal liability would be exempted is where proof is provided that a petition for bankruptcy was filed in time. The debts may include tax arrears, social security payments and commercial claims of private creditors. 

7. What are the main duties of the representative bodies in connection with restructuring / insolvency proceedings?

The representative bodies of a company have the duty to monitor the situation for the existence of grounds for insolvency to ensure that a petition to instigate insolvency proceedings is filed in due time (see point 6 above). The representative bodies of a company must also perform certain cooperation duties, and in particular, cooperate with the official bodies (court and/or insolvency practitioner) in the course of bankruptcy or restructuring proceedings.

In a restructuring scenario, if the debtor is not deprived of its management rights its representative bodies have to continue running the debtor’s business. Additionally, the debtor’s representative bodies must cooperate with the restructuring court and the court-appointed supervisor and/or administrator specifically in the performance of duties relating to the restructuring itself.

In a bankruptcy scenario, the debtor (its representatives) has to cooperate with the bankruptcy receiver and the court, specifically in terms of duties of disclosure and cooperation in order to assist the insolvency administrator with the fulfilment of its duties.

9. What are the main duties of shareholders in connection with restructuring / insolvency proceedings?

Shareholders as such are under no direct obligation in connection with either restructuring or bankruptcy proceedings.

10. Are the shareholders of a company involved in restructuring / insolvency proceedings?

No. However, in certain cases their involvement may help to facilitate the outcome of the restructuring proceedings.

11. Is a solvent liquidation of the company an alternative to regular insolvency proceedings?

No. In fact, even if solvent liquidation of a company is conducted, the liquidator is obliged to file for bankruptcy if the liquidated company becomes insolvent.

Yes, all existing types of restructuring proceedings – i.e. arrangement approval proceedings, fast-track arrangement proceedings, simplified arrangement proceedings, ordinary arrangement proceedings and remedial proceedings (see point 4 for details) – are in fact preventive in nature.

13. What is the average success rate after completed restructuring / insolvency proceedings?

It depends on the type of restructuring proceedings. In practice, it seems that arrangement approval proceedings have the most significant “success rate” (in the period 2016 to 2019, approximately 85%), followed by fast-track arrangement proceedings (success rate of 53%), followed by ordinary arrangement proceedings and remedial proceedings.

In general, the success rate of bankruptcy proceedings in practice depends on the type of business conducted. Bankruptcy of a large debtor from e.g. heavy industry, who has liquidable tangible assets (shipyards, steel mills and certain construction companies), enables a much higher recovery rate, especially compared to service providers etc., for example.

Portrait of Michał  Mężykowski
Michał Mężykowski
Portrait of Piotr Stenko
Piotr Stenko
Senior Associate