What are restructuring proceedings and how are they conducted?
Restructuring proceedings of a company are conducted in order to avoid declaration of debtor’s bankruptcy through restructuring by way of an arrangement made with creditors. In the case of the sanative procedure also by way of sanative actions, securing legitimate rights of creditors.
Restructuring proceedings vs types of debtors
Restructuring proceedings may be conducted towards a debtor who is insolvent or threatened by insolvency.
An insolvent debtor means:
- The insolvent debtor in the meaning of the Bankruptcy Law,
- A debtor whose economic situation indicates that he/she may become insolvent shortly.
Types of restructuring proceedings
Restructuring proceedings are initiated based on a restructuring petition filed by the debtor. The restructuring petition means a petition for opening restructuring proceedings and a petition for approving the arrangement made in the course of arrangement approval proceedings.
In the case of submission of a restructuring petition and a bankruptcy petition, the restructuring petition is examined first.
Restructuring is carried out as part of the following restructuring proceedings:
- arrangement approval proceedings,
- accelerated arrangement proceedings,
- arrangement proceedings,
- sanative procedure.
Additionally, due to the COVID-19 pandemic new restructuring proceedings have been introduced which in the assumptions made to the greatest extent resemble arrangement approval proceedings.
The restructuring court is the district court – commercial court having jurisdiction over the main centre of debtor’s core activity. After the restructuring proceedings have been opened, judicial actions are performed by the judge-commissioner, except for actions for which the court is competent. The judge-commissioner manages the course of the restructuring proceedings, oversees the actions of the court supervisor and administrator, specifies actions which cannot be performed by the court supervisor and administrator without his permission or without permission of the board pf creditors, as well as points to the defaults on their part.
Junior Associate TGC Corporate Lawyers
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