New restructuring law: what changed in 2024?

Electronic processing in KRZ – end of paper applications

The biggest change that realistically hit the desks of company owners in March 2024 is the full transition to the National Debtors Register (KRZ). Now every restructuring application must go through the online system. For someone who ran a transport company on paper invoices for 12 years, this is a huge leap. The system can be capricious – statistics from the first three months show that 23% of applications were rejected only due to technical errors or lack of a proper qualified signature. There is no more room for errors in columns because the system will not let the form move forward.

Handling the KRZ now requires an entrepreneur to have a trusted profile or an electronic signature, which for some owners of smaller workshops was an impassable barrier without an accountant's help. At Wisła Restructuring House, we saw cases where just setting up an account and correctly assigning a representative took 4 business days. This is crucial because in restructuring, time counts in hours, especially when the bailiff knocks on the door. Digitalization was supposed to speed up procedures, but for now, it requires huge patience and precision from all of us in filling out digital fields.

It is worth adding that system errors can suspend a case for 13 days before a judge even looks at the substantive content of the application. That's exactly why in our daily work in Warsaw we place such emphasis on auditing documentation before clicking 'send'. Hey, a small note: before you start filling out the form, make sure your browser is updated, because older versions can wipe all content when trying to save a draft.

The KRZ system does not forgive mistakes – one missing attachment can halt protection from a bailiff for 13 long days.

Arrangement Approval Proceeding – the hit of 2024

The regulations that came into force established the position of the Arrangement Approval Proceeding (PZU) as the most frequently chosen path. Last year, as many as 87% of our clients chose this mode. Why? Because it allows for concluding an arrangement with creditors almost without court participation in the first phase. The entrepreneur chooses the arrangement supervisor themselves, and protection from enforcement starts at the moment of public announcement in the register. This gives 4 months of breath, during which you can calmly count the money and prepare repayment proposals that can actually be handled.

In June 2024, a clarification regarding protection against termination of key agreements was introduced. If you rent a production hall in Piaseczno and have arrears, the owner cannot throw you out during the PZU procedure, provided you pay the current rents. This is a huge facilitation for companies that have a 'healthy core' but fell into a spiral because of one unpaid contract for an amount above 45,000 PLN. This protection also covers lease agreements and revolving loans, which allows for keeping machines needed for earning money for debt repayment.

However, one must remember that this path is not for everyone. If your disputed debt exceeds 15%, the PZU can be undermined. Then other solutions must be sought, such as the accelerated arrangement proceeding. At WRH, we analyze the debt structure to the penny so as not to pack a client into a process that will be interrupted by the court after 6 weeks of fighting. Conversations with the bank are our daily reality, and in 2024 they became more specific – banks now prefer to recover 67% of debt in 3 years than 5% after a bailiff auction.

New voting thresholds and the supervisor's role

Another significant change is the clarification of the method for counting creditor votes. For an arrangement to pass, it must be supported by a majority of creditors holding a total of at least 2/3 of the amount of claims. This sounds simple, but in practice the devil is in the details concerning secured creditors, e.g., banks with a mortgage. In 2024, courts began to more strictly check whether the debtor does not favor smaller suppliers at the expense of large institutions. The rules are clear: the action plan must be fair to everyone waiting for money.

The arrangement supervisor has become a key figure. This is no longer just a 'person for papers', but a mediator who must personally go to the wholesaler or bank and explain why it's worth waiting for installments. Last quarter, our specialists held 42 such field meetings. It often happens that one creditor, to whom you owe 12,400 PLN, can block the entire process. Then the supervisor's role is to find an argument that convinces them to change their mind – usually showing in black and white that in the case of bankruptcy, they will get zero PLN.

Supervisor costs have also been more regulated, which is good news for small companies. There is no longer arbitrary setting of rates that could ruin a restructuring budget at the start. Now the remuneration is often linked to the effects and the size of the company. This is a fair way of putting the matter – we earn when you save your business. For a company employing 8 people, the cost of such care is now predictable and can be entered into the costs of doing business, which slightly reduces the financial pain of the entire process.

Protection of the owner's personal assets

Many people ask us in the Marszałkowska office: 'will they take my house?'. The year 2024 brought better mechanisms protecting the private assets of board members in limited liability companies, provided the restructuring is opened at the right moment. The key is 30 days from the moment of the state of insolvency. If this deadline is met, the company president can sleep more peacefully, because the risk of personal liability for company debts drops by nearly 74%. This is the strongest argument for not waiting until the last moment.

The problem appears in sole proprietorships, where company and private assets are one and the same. Here, restructuring in 2024 puts more emphasis on setting aside components necessary for the debtor's family life. Judges more often favor applications to leave the debtor a car worth up to 18,000 PLN if it is necessary for commuting to clients. This is a human approach to business that was missing in previous years, when bailiffs took everything that had any wheels.

Remember, however, that protection does not work retroactively. If you transferred the apartment to your wife two weeks before filing for restructuring, creditors can use the Pauline action. Honesty in the process is fundamental. We save what you have been building for years, but we do it according to the letter of the law. In 2024, financial transparency is checked by KRZ algorithms faster than ever, so every attempt to hide assets usually comes to light within 19 days of filing the first financial report.

Filing for restructuring within 30 days of losing liquidity is the cheapest insurance for your private assets.

Schedule of actions – what does it look like in practice?

The real time from the first coffee in our office to obtaining protection from a bailiff is currently about 11 business days. The first 3 days are document analysis: bank statements, a list of the 15-20 largest creditors, and a summary of fixed assets. Then we prepare a contract with the supervisor and make an announcement in the KRZ. From that moment, calls from debt collectors should stop, and you gain time for breath and reorganization of work in the company. This is the moment when we take the burden off your shoulders and take over contact with banks.

The next 3 months are time for collecting votes. Sending arrangement proposals to 47 contractors usually takes us a week. Then negotiations begin. We often hear from clients that the most stressful thing is waiting for a response from the Tax Office or Social Security (ZUS). In 2024, these institutions became somewhat more flexible, but they still require impeccable documentation. If you have overdue CIT-8 or errors in the Standard Audit File (JPK), we must straighten this out before we ask them for 48 installments.

The last stage is court approval of the arrangement. Despite digitalization, judges in Warsaw usually take from 5 to 9 weeks for this. During this time, the company must function normally and settle current obligations arising after the day the proceeding was opened. This is the biggest trap – restructuring does not mean that you stop paying for electricity or employee salaries. You must have funds for this, otherwise the proceeding will be discontinued after 2 months due to a lack of ability to finance current operations. P.S. We always advise keeping a cash reserve at the level of at least 14% of monthly fixed costs before starting the process.