Poland: A Restructuring/Insolvency Overview

Introduction

Polish law offers a number of proceedings for businesses and individuals in distress. They span business insolvency proceedings, consumer bankruptcy as well as four restructuring proceedings. These solutions aid debtors but also create either opportunities or risks for creditors. Note that opportunities will arise as a rule for active creditors.

Restructuring proceedings are as follows:

• arrangement approval proceedings (including a track with an announcement in the National Debtors Register (Krajowy Rejestr Zadłużonych, KRZ) and a more private track, without an announcement);
• accelerated arrangement proceedings;
• arrangement proceedings; and
• remedial proceedings.

With regard to insolvency proceedings, in Poland there are regular insolvency proceedings, regulated under the Insolvency Law, as well as consumer bankruptcy, which can sometimes be a useful tool for highly indebted former entrepreneurs or members of management boards.

Insolvency proceedings may be accompanied by a prepack sale application.

Legal Grounds for Opening Proceedings

Legal grounds for opening restructuring proceedings are the fact of insolvency or threat of insolvency. Insolvency is defined under the Insolvency Law as a state where the debtor has lost its ability to satisfy its mature pecuniary liabilities.

Another basis (legal grounds – specified in the Insolvency Law) for insolvency is over-indebtedness – a situation where the assets are worth less than the liabilities and this state has lasted for more than 24 months.

Statistics

In 2025, 426 companies were declared insolvent, while 894 bankruptcy petitions were dismissed, mainly because of insufficient funds to conduct the proceedings. The numbers of restructuring proceedings are as follows:

• 4,787 arrangement approval proceedings;
• 194 accelerated arrangement proceedings;
• 22 arrangement proceedings; and
• 94 remedial proceedings.

In Poland, as numbers are growing, arrangement approval proceedings are most popular, making up over 92% of all restructuring proceedings. This popularity is mainly due to the simplicity and out-of-court nature of arrangement approval proceedings.

Electronic Proceedings

The National Debtors Register (KRZ) has operated in Poland since December 2021, and all kinds of proceedings must be conducted and carried out within the system – at least with regard to companies.

Unfortunately, the KRZ system is only in Polish. The system is currently undergoing improvement with the aim of enhancing and facilitating the method of conducting proceedings, which presently slows it down considerably.

Future Developments

Poland is ahead of important changes in the EU restructuring and insolvency framework, with the EU Restructuring Directive (also known as the “Second Chance Directive”) quite recently introduced to the Polish legal landscape.

Issues that need to be addressed in this regard include automatic stay of enforcement, cross-class cram-down issues, as well as treatment of secured creditors.

Moreover, in December 2022, the European Commission published the Proposal for a Directive of the European Parliament and of the Council harmonising certain aspects of insolvency law, opening discussions on some of the potential changes into national laws, together with remarks and positions towards the Proposal.

In total, 49 entities issued their positions within this legislative process, and the European Commission is now analysing these documents, with the aim of proposing a Directive in the near future.

According to Article 1.1, the Proposal covers the following areas:

• avoidance actions;
• the tracing of assets belonging to the insolvency estate;
• prepack proceedings;
• the duty of directors to submit a request for the opening of insolvency proceedings;
• simplified winding-up proceedings for micro-enterprises;
• creditors’ committees; and
• the drawing-up of a key information factsheet by member states on certain elements of their national law on insolvency proceedings.

Within the EU as a whole, the level of coherence on the above-mentioned issues is relatively low and many member states are now facing the need to assess what changes are required and what amendments to the law are necessary.

Prepack amendments

The proposed amendments regarding prepared liquidation (prepack) merit special attention.

In the section on prepack, the Proposal provides, among other things, for the appointment of a special, independent body (the so-called monitor) to evaluate the prepack procedure and the benefits to creditors. It is envisaged that this body may be a bankruptcy trustee and at the same time a party to the prepack transaction concluded with the investor. In Poland, the temporary court supervisor could successfully perform this function, as later on they become the trustee of the bankruptcy estate.

Test of best satisfaction of creditors

The Proposal of the Directive also provides for the preparation of a test of the best satisfaction of creditors, as a basis for evaluating the price proposed by the investor.

Such a test is also postulated in the EU Restructuring Directive, and could be standardised, for example, in the practice of drafters, so as to serve the broadest and most reliable knowledge to creditors as parties in insolvency proceedings.

Possible auction

The Directive provides for an auction procedure, either with the involvement of an insolvency practitioner (IP) or without it. Where the court decides to appoint an IP, a public auction is not required. Where the court refuses to appoint an IP, however, the public auction procedure is obligatory.

Polish insolvency law creates certain risks for an investor who decides to invest in the preparation of the prepack procedure, however. The investor makes a substantial financial contribution as they need to carry out the required audits and due diligence reports. Should they lose the bid, all this financial involvement is wasted and the investor stands to recover nothing. Whereas the other participant, who may have offered EUR1 more in the bidding process and then won the auction, not only collects the assets (free from any collateral, with the execution sale effect) but also without any financial input whatsoever on their part in the preparation of the prepack procedure.

This is why the popularity of the prepack procedure in Poland collapsed after this rule was introduced in March 2020.

How to remedy the situation?

The solution is included in the proposed Directive as it envisages the possibility to get the investor’s ancillary costs of preparing the prepack reimbursed. This is an excellent example of how EU law can enormously improve national law.

The Proposal of the Directive emphasises the efficiency of the procedure, but also mentions the need to ensure its transparency. These values must always be properly balanced, as must the often-conflicting interests of different categories of participants in the proceedings. 

Preserving value for creditors

It is expedient to emphasise that the prepack significantly increases the preservation of the value of the debtor’s enterprise from the point of view of its creditors. It is also of considerable importance from the point of view of preserving the enterprise itself, as well as jobs and the principle of a smooth transition between ownership entities.

Changes to Contracts and Preemptive Rights

The Proposal provides for changes to contracts entered into by the debtor, by allowing them to pass to a new buyer, even without the consent of the other party. It would also be desirable to clarify what happens to the right of first refusal in the case of a sale in a prepack liquidation proceedings.