A Kraków-based logistics company, facing a sudden loss of its largest contract, finds itself unable to service bank debt within 60 days. The board wants to restructure – but fears that filing will hand control of the business to an outside administrator. That fear is understandable. It is also, in most cases, misplaced.
Debtor-in-possession (DIP) restructuring under Polish law allows an insolvent or threatened-with-insolvency company to reorganise its debts while management retains day-to-day control. The Prawo restrukturyzacyjne (Restructuring Law, PR) provides four distinct procedures, of which the accelerated arrangement procedure and the arrangement procedure are the most commonly used DIP tracks. A supervised restructuring specialist is appointed, but the board continues to run the business throughout.
This guide walks through the four procedures step by step, maps the realistic timeline and costs, highlights the most common mistakes boards make, and presents three business scenarios to illustrate how the framework applies in practice. It also addresses the interaction between DIP restructuring and personal board liability – a connection that is frequently misunderstood and even more frequently exploited too late.
What does debtor-in-possession restructuring mean under Polish law?
Polish restructuring law distinguishes sharply between restructuring and insolvency. Restructuring is available when a company is insolvent or faces a realistic threat of insolvency. The board need not wait until the company is already unable to pay its debts. Early filing – before the 30-day insolvency deadline triggers under the Prawo upadłościowe (Bankruptcy Law) – is a strategic tool, not an admission of failure. The National Court Register (KRS) records the opening of proceedings, but management stays in place.
The PR offers four tracks. First, the approval-of-arrangement procedure (postępowanie o zatwierdzenie układu, PZU): entirely out-of-court, no judicial supervision until the creditor vote. Second, the accelerated arrangement procedure (przyspieszone postępowanie układowe, PPU): court-supervised, suitable when disputed claims are below 15 percent of total liabilities. Third, the arrangement procedure (postępowanie układowe, PU): for higher proportions of disputed claims, up to roughly 12 months. Fourth, remedial proceedings (postępowanie sanacyjne): the most intrusive track, allowing asset sales and employment contract termination, but also the most protective against enforcement action.
In all four tracks, the debtor retains possession. The difference lies in the degree of court oversight and the supervisor's powers. Under PZU, a licensed restructuring advisor (doradca restrukturyzacyjny) is appointed by the debtor itself, without court involvement at the opening stage. Under sanacja, a court-appointed administrator takes over asset management – making it the one track where "debtor-in-possession" is qualified rather than absolute.
- PZU – fastest, lowest cost, no automatic stay on enforcement
- PPU – automatic stay from court opening, ruling within 2 weeks
- PU – broader creditor protection, longer timeline
- Sanacja – maximum protection, partial loss of management autonomy
One concrete figure matters here: the automatic stay on creditor enforcement lasts up to 4 months from the opening of PPU or PU proceedings. That window is the core commercial reason most boards choose these two tracks over PZU.
How does the step-by-step procedure work in practice?
The accelerated arrangement procedure (PPU) is the most commonly chosen DIP track for mid-size Polish companies. The court must rule on the opening application within 2 weeks of filing. Once proceedings open, an automatic stay prevents secured and unsecured creditors from initiating or continuing enforcement – giving the board breathing room to negotiate. The restructuring supervisor (nadzorca sądowy) oversees the process but does not replace management.
Step one is preparation. Before filing, the board must assemble a preliminary restructuring plan, a list of creditors with claim amounts, and a balance sheet no older than 30 days. The plan need not be final – it is a working document. Errors at this stage, particularly underestimating disputed claims, are among the most common reasons courts reject opening applications. The Polish Financial Supervision Authority (KNF) is relevant where the debtor operates in a regulated sector: KNF consent may be required before certain asset disposals during proceedings.
Step two is the court opening. The district court (sąd rejonowy) – specifically its economic division – reviews the application. For PPU, the test is whether disputed claims fall below 15 percent of total liabilities. The court issues an opening ruling and appoints the nadzorca. This ruling is published in the Court and Business Monitor (Monitor Sądowy i Gospodarczy, MSiG) and the KRS.
Step three is creditor engagement. The nadzorca prepares the list of claims. The board negotiates with creditor groups – banks, trade creditors, public-law creditors including the Social Insurance Institution (Zakład Ubezpieczeń Społecznych, ZUS). A restructuring plan is formally submitted, typically within 3 months of opening. Public creditors such as ZUS and the tax authority can agree to haircuts, though their consent thresholds are stricter than those for private creditors.
Step four is the creditor vote. An arrangement is approved if creditors holding more than 50 percent of total voting claims vote in favour – and, within that majority, creditors in each voting group also approve. The court then confirms the arrangement. Implementation begins immediately. Failure to achieve the voting threshold does not automatically trigger insolvency; the debtor may convert to a different procedure or file separately.
What are the realistic costs and timeline?
Boards consistently underestimate both the cost and the calendar of DIP restructuring. The PPU track, from application to court confirmation of an arrangement, typically runs 6 to 12 months. The PU track adds 3 to 6 months. Sanacja can extend to 24 months. These are not statutory maximums – they reflect actual case flow in Warsaw and Kraków district courts as of late 2025.
Costs fall into three categories. Court fees for opening PPU or PU are fixed at PLN 1,000. The nadzorca's remuneration is calculated as a percentage of the debtor's total liabilities, subject to a statutory cap; for a company with PLN 20 million in debt, expect nadzorca fees in the range of PLN 80,000 to PLN 150,000. Legal advisory fees vary widely, but a mid-size restructuring with creditor negotiations typically requires PLN 50,000 to PLN 200,000 in external counsel costs.
We secured a successful arrangement confirmation for a manufacturing client in the Mazowieckie region (autumn 2025), reducing its total debt burden by over PLN 4 million and preserving 140 jobs. The PPU proceedings ran 9 months from filing to court confirmation.
A decision matrix helps boards choose the right track:
- Disputed claims below 15% + speed priority → PPU
- Disputed claims above 15% + complex creditor structure → PU
- Need to terminate employment contracts or sell assets quickly → Sanacja
- Strong creditor relationships + no enforcement pressure → PZU
One cost that boards often overlook is the working capital requirement during proceedings. Banks typically freeze new lending once restructuring opens. The company must fund operations from existing cash flow for the duration. This makes cash-flow modelling – before filing – a non-negotiable preparation step.
How does DIP restructuring interact with board liability?
The intersection of restructuring and personal board liability is where the lost-opportunity risk becomes concrete and irreversible. Under Polish corporate legislation, board members of a limited liability company (spółka z ograniczoną odpowiedzialnością, sp. z o.o.) face personal liability for the company's unsatisfied obligations if they fail to file for insolvency within 30 days of the company becoming insolvent. Restructuring proceedings, when opened in time, suspend that 30-day clock and provide a statutory defence against personal liability claims.
The key phrase is "in time." A board that opens PPU proceedings before the insolvency threshold is crossed – or within 30 days of crossing it – preserves the personal liability shield. A board that delays restructuring by even one month beyond that window forfeits the defence. The consequences are not theoretical: creditors and liquidators in Polish practice actively pursue board members personally for tax arrears and unsatisfied trade claims. For a detailed analysis of this mechanism, see our guide on board liability for tax arrears.
White-collar defence considerations also arise. Board members who continue trading while knowingly insolvent, without filing for either restructuring or bankruptcy, risk criminal exposure under the Penal Code for acting to the detriment of creditors. Opening DIP proceedings in good faith is the single most effective way to neutralise that risk. The timing of the board resolution to file – and the documentation supporting the decision – should be treated as legal evidence from day one.
Cross-border dimension: where the debtor has assets or creditors in multiple EU member states, the opening of Polish restructuring proceedings triggers the EU Insolvency Regulation. The centre of main interests (COMI) determines which jurisdiction's law governs. For a Polish company with a Slovak subsidiary, the interaction between Polish and Slovak proceedings requires careful coordination. Our analysis of cross-border insolvency involving Poland and Slovakia sets out the key conflict-of-law issues.
What are the three business scenarios and common mistakes to avoid?
Three scenarios illustrate how the DIP framework applies across different business types – and where boards most commonly go wrong.
Scenario one – manufacturing company: A Silesian steel fabricator loses a long-term supply contract. It has PLN 18 million in bank debt, no disputed creditor claims, and 200 employees. PPU is the correct track. The automatic stay prevents the bank from accelerating the loan during negotiations. The board retains full management authority. The most common mistake here is waiting too long: boards in manufacturing often defer filing until cash runs out, by which point the 30-day insolvency clock has already started running.
Scenario two – IT company: A Warsaw-based software firm has significant deferred revenue liabilities and disputed invoices from a former development partner. Disputed claims exceed 15 percent of total liabilities. PPU is unavailable. The correct track is PU. The board must anticipate a 12-to-18-month timeline and ensure key personnel contracts are stabilised before filing – employees may leave if restructuring becomes public without a clear communication strategy.
Scenario three – foreign investor: A German holding company owns a Polish subsidiary that is operationally insolvent. The German parent wants to inject equity but needs time to complete internal approvals – approximately 90 days. Opening PPU at the Polish subsidiary level provides the automatic stay and the time window. The parent's decision to proceed or withdraw can then be made without enforcement pressure. For foreign investors considering Polish market entry structures, our overview of UOKiK merger control thresholds and timeline is relevant where acquisitions are contemplated in parallel.
We obtained a pre-pack sale approval for a retail client in Małopolska (spring 2026), preserving the operating business and transferring it to a strategic buyer within 45 days of the restructuring opening – avoiding a liquidation that would have returned less than 20 percent of creditor claims.
Common mistakes across all three scenarios:
- Filing too late – after the 30-day insolvency deadline has expired
- Underestimating disputed claims, leading to PPU rejection and forced conversion to PU
- Failing to model cash flow for the duration of proceedings
- Inadequate creditor communication before filing, triggering enforcement races
- Treating the restructuring plan as a formality rather than a negotiating document
Each of these mistakes is avoidable with preparation. Each, left unaddressed, can convert a manageable restructuring into an insolvency filing – with all the personal liability consequences that follow.
The specific circumstances of your company determine which track is available, what the realistic creditor vote outcome will be, and whether personal board liability is already in play. Delaying that assessment forfeits options that cannot be recovered once the insolvency threshold is crossed.
To receive an expert assessment of your company's restructuring options and board liability exposure, contact info@kordeckipartners.com.
Frequently asked questions
Q: Can a company open DIP restructuring proceedings if it is already insolvent?
A: Yes. Polish restructuring law permits filing even when the company is already insolvent, provided the board has not allowed more than 30 days to pass since the insolvency threshold was crossed without taking action. Opening restructuring proceedings within that window provides a statutory defence against personal board liability. If the 30-day period has already expired, restructuring remains available as a procedural matter, but the personal liability defence is lost – meaning creditors can still pursue board members personally even if the restructuring succeeds.
Q: How long does the automatic stay on creditor enforcement last?
A: Under the accelerated arrangement procedure (PPU) and the arrangement procedure (PU), the automatic stay on enforcement actions lasts up to 4 months from the opening of proceedings. This stay covers both secured and unsecured creditors and prevents new enforcement proceedings from being initiated. It does not affect claims that arose after the opening of proceedings. For the approval-of-arrangement procedure (PZU), there is no automatic stay – protection depends on creditors voluntarily refraining from enforcement, which is why PZU is best suited to situations where the debtor has strong creditor relationships.
Q: What does a restructuring supervisor (nadzorca sądowy) actually do, and does the board lose control?
A: The nadzorca prepares and verifies the list of creditor claims, supervises the debtor's management decisions that exceed ordinary course of business, and reports to the court. The board retains day-to-day management authority. Transactions outside the ordinary course – asset sales, new borrowing, granting security – require the nadzorca's consent. This is a meaningful constraint, but it is not the same as losing control. In remedial proceedings (sanacja), the court appoints an administrator who takes over asset management, which is the one track where management authority is genuinely curtailed.
KORDECKI & Partners is a law firm based in Warsaw and Krakow, advising business clients across 30 jurisdictions. Our team combines expertise in Polish and international law with a practical approach to restructuring, insolvency, and white-collar defence. We work with Polish entrepreneurs, foreign investors, and in-house legal teams. To discuss your situation, contact info@kordeckipartners.com.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. KORDECKI & Partners assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@kordeckipartners.com.