A Kraków-based manufacturing company misses two consecutive loan covenants. The bank accelerates. Trade creditors begin threatening enforcement. The board has perhaps 30 days before insolvency filing becomes mandatory – and every day of inaction increases the personal exposure of each director. At that moment, the question is not whether to act but which restructuring path preserves management control while the company negotiates with creditors.

Debtor-in-possession (DIP) restructuring under Polish law allows a company to restructure its debts while the existing board retains operational control – no court-appointed administrator displaces management. The Prawo restrukturyzacyjne (Restructuring Law, PR) provides four distinct procedures, of which the accelerated arrangement procedure and the arrangement procedure are most commonly used as DIP mechanisms. A court-approved arrangement binds all creditors in a given class, including those who voted against it, provided the statutory majority thresholds are met.

This guide walks through the step-by-step procedure, key deadlines, cost structure, and the three most common board mistakes. It also covers three business scenarios – manufacturing, IT services, and a foreign investor's subsidiary – to illustrate how the procedure operates across different fact patterns. A short FAQ addresses the questions clients ask most often in the first meeting.

What does debtor-in-possession restructuring mean under Polish law?

Polish restructuring law distinguishes sharply between restructuring and insolvency. Restructuring preserves the going concern. Insolvency leads to liquidation or, at best, a sale of assets. Under the Restructuring Law, a debtor who opens a restructuring procedure retains possession of its assets and continues trading. That is the core of the DIP concept. The National Court Register (KRS) records the opening of proceedings, which creates a public marker visible to counterparties and banks.

Four procedures exist on a spectrum of court involvement. The approval-of-arrangement procedure (postępowanie o zatwierdzenie układu, PZU) requires almost no court involvement – the debtor collects creditor votes privately and then applies for judicial approval. The accelerated arrangement procedure (przyspieszone postępowanie układowe, PPU) opens formally at court but moves quickly, typically within three to four months. The standard arrangement procedure (postępowanie układowe) suits complex debt structures. Remedial proceedings (postępowanie sanacyjne) give the court-supervised administrator broader powers to terminate contracts and shed liabilities – but the board loses some operational autonomy in that track.

The choice of procedure depends on two threshold questions. First, is more than 15 percent of total claims disputed? If yes, the PZU is unavailable and the debtor must use one of the court-supervised routes. Second, how much time does the company realistically have? The PPU is the preferred DIP vehicle for most mid-market companies because it offers a statutory stay on enforcement from the moment of opening, while keeping the board in place.

The Polish Financial Supervision Authority (KNF) becomes relevant when the debtor is a regulated entity – a payment institution or an insurer, for example. The District Court (Sąd Rejonowy) with commercial jurisdiction handles the formal opening. Getting the court right matters: filing in the wrong district wastes weeks and signals disorganisation to creditors.

How does the step-by-step procedure work, and what are the key deadlines?

The PPU timetable is tight. The court must rule on the opening application within one week of filing. Once opened, the debtor has roughly two weeks to submit a list of creditors and a preliminary restructuring plan. The arrangement vote must take place within three to four months of opening. If the vote succeeds, the court confirms the arrangement within approximately two weeks. Total elapsed time from filing to confirmed arrangement: four to five months in an uncontested case.

Step one is preparation, which starts before any court filing. The restructuring adviser (licencjonowany doradca restrukturyzacyjny) – a licensed insolvency practitioner recognised by the Ministry of Justice – prepares the restructuring plan, the creditor list, and the draft arrangement proposals. Quality at this stage determines the outcome. We secured approval of an arrangement restructuring over PLN 18m in debt for a logistics operator in Małopolska (winter 2025) precisely because the preliminary plan addressed cash-flow projections with monthly granularity, not annual summaries.

  • Prepare restructuring plan and cash-flow model (weeks 1–4 before filing)
  • Classify creditors into groups and draft arrangement proposals per group
  • File the opening application with the competent District Court
  • Await court ruling (up to seven days); enforcement stay activates on opening
  • Submit creditor list and preliminary plan within 14 days of opening

Step two is the creditor vote. The court-appointed supervisor (nadzorca sądowy) oversees but does not manage the business. The debtor presents the arrangement proposals at a creditors' meeting or by correspondence. The required majority is two-thirds of total claims voting in favour, with at least half of all creditors in each group voting yes. Missing this threshold by even one creditor group forces the debtor back to negotiations or into a more intrusive procedure – an irreversible setback that forfeits the enforcement stay.

Step three is court confirmation. The court reviews legality, not commercial merit. It confirms the arrangement unless a creditor objects on grounds of material harm. Confirmed arrangements bind dissenting creditors in each class. The debtor then implements the arrangement – typically over three to five years – under the supervision of an arrangement supervisor.

What are the costs, and who bears personal liability if restructuring fails?

Cost is the first practical question every board asks. Court fees for opening a PPU are modest – a few thousand PLN. The dominant cost is the restructuring adviser's fee, which ranges from PLN 30,000 to PLN 150,000 for a mid-market case, depending on debt complexity and the number of creditor groups. Arrangement supervisor fees during implementation add a further PLN 2,000 to PLN 5,000 per month. For a company with PLN 10m in restructured debt, total professional fees over the full procedure rarely exceed PLN 200,000 – a fraction of the value preserved.

Board liability is the sharper concern. Under Polish corporate legislation, board members of a spółka z ograniczoną odpowiedzialnością (private limited company, sp. z o.o.) face personal liability for company debts if they fail to file for insolvency within 30 days of the company becoming insolvent. Opening a restructuring procedure within that window suspends the insolvency filing obligation – but only if the procedure is opened, not merely applied for. A pending application does not protect the board. This distinction precludes the common assumption that submitting paperwork is enough. Personal liability attaches the moment the 30-day window closes without either a filed insolvency petition or an opened restructuring procedure.

White-collar defence becomes relevant when creditors or prosecutors allege that management continued trading while knowing the company was insolvent, or that assets were moved to related parties before restructuring. Early legal advice on both the restructuring track and potential criminal exposure is not optional in these situations. For cross-border groups, the interaction between Polish restructuring proceedings and foreign enforcement actions adds another layer – our analysis of cross-border insolvency involving Poland and Italy illustrates how coordination between jurisdictions can protect asset value.

One often-overlooked cost is the environmental liability attached to real property. A manufacturing debtor that owns contaminated land carries a contingent liability that creditors will price into their arrangement vote. Addressing this before filing – through an environmental assessment – strengthens the restructuring plan and reduces the risk of creditor objection at confirmation. This intersects directly with the due-diligence work described in our guide on environmental due diligence for Polish real estate.

A specific bridge: the company's situation at the point of filing is irreversible in one respect – the opening date fixes the inventory of protected assets and the scope of the enforcement stay. Acting two weeks earlier or later can determine whether a key piece of equipment or a bank account remains inside or outside that protection. To receive an expert assessment of your company's restructuring window and personal liability exposure, contact info@kordeckipartners.com.

How do three business scenarios illustrate the procedure in practice?

Scenario one: manufacturing. A Silesian metal-processing company carries PLN 8m in bank debt and PLN 3m in trade payables. The bank holds a registered pledge over the production line. Under the PPU, the bank is placed in a secured-creditor group and offered a 24-month payment deferral plus a modest haircut. Trade creditors receive full repayment over 36 months. The production line pledge is frozen by the enforcement stay. The board continues operations, fulfils existing orders, and preserves the workforce. Outcome: arrangement confirmed in month five, 74 employees retained.

Scenario two: IT services. A Warsaw-based software house has no fixed assets but carries EUR 2m in deferred revenue obligations and a disputed claim from a former development partner. The disputed claim exceeds 15 percent of total liabilities, so the PZU is unavailable. The company uses the standard arrangement procedure. The court appoints a supervisor. The disputed claim is subject to a parallel valuation process. The arrangement is structured around the undisputed creditors first, with the disputed amount held in reserve. The board retains full operational control throughout. Client contracts – the company's real asset – are not terminated by the opening of proceedings.

Scenario three: foreign investor's subsidiary. A German group's Polish subsidiary in Lower Silesia faces insolvency after the parent withdraws inter-company funding. The parent wants to pre-pack the subsidiary's assets into a newco before formal insolvency. Polish restructuring law permits a sale of the enterprise within remedial proceedings, but the board must be careful: a pre-pack that disadvantages Polish creditors can be challenged, and the parent company's conduct may attract scrutiny under both Polish insolvency law and EU cross-border rules. Our analysis of cross-border insolvency involving Poland and Ukraine highlights comparable structural tensions for non-EU parent groups. We obtained interim measures protecting assets worth over EUR 4m for a German investor's subsidiary in Wielkopolska (spring 2026) by filing the restructuring application before the parent's enforcement actions crystallised.

All three scenarios share one common feature: the decisive factor was timing. Boards that engage a restructuring adviser at the first sign of covenant breach – not after the bank has accelerated – preserve far more options. Waiting until enforcement has begun forfeits the negotiating position and, in the worst case, forfeits the 30-day insolvency window entirely.

What are the most common mistakes, and what should you prepare?

Mistake one: confusing financial distress with insolvency. Polish law defines insolvency as either a cash-flow test (inability to pay debts as they fall due for more than three months) or a balance-sheet test (liabilities exceeding assets for more than 24 months). A company that fails the cash-flow test but passes the balance-sheet test may still open restructuring proceedings – but the board must document its analysis. Undocumented assumptions become evidence in later liability proceedings.

Mistake two: selecting the wrong procedure. Choosing the PZU when more than 15 percent of claims are disputed means the court will reject the arrangement approval application. The company then loses weeks and, more critically, the enforcement stay that the PZU does not provide automatically. The PPU, by contrast, activates a stay on the day the court opens the procedure.

Mistake three: underestimating creditor group dynamics. Secured creditors, tax authorities, and trade creditors have different legal priorities and different voting incentives. A restructuring plan that treats all creditors identically will be rejected. The plan must propose terms that each group finds preferable to the alternative – which is liquidation. This requires a credible liquidation analysis, not just a cash-flow projection.

What to prepare before filing:

  • Audited or management accounts for the last two financial years
  • Full creditor list with claim amounts, security, and dispute status
  • Cash-flow forecast for the next 18 months under the proposed arrangement
  • Copies of all security documents (pledges, mortgages, guarantees)
  • Any pending enforcement, tax audit, or litigation files

Preparation quality signals credibility to the court and to creditors. A supervisor who opens the case file and finds complete, well-organised documentation is far more likely to support the debtor's proposals at the creditors' meeting. The converse is equally true: gaps in documentation create doubt about management competence and reduce the probability of a successful vote.

The specific situation of your company at the moment of filing is not reversible. Opening the wrong procedure, or opening the right procedure with incomplete documentation, triggers consequences that cannot be undone within the same proceedings. For a tailored strategy on selecting and preparing a DIP restructuring procedure, reach out to info@kordeckipartners.com.

Frequently asked questions

Q: How long does debtor-in-possession restructuring typically take in Poland?

A: The accelerated arrangement procedure (PPU) takes four to five months from filing to a confirmed arrangement in an uncontested case. The standard arrangement procedure takes six to twelve months. Remedial proceedings can extend to 18 months or longer if the asset sale is complex. Implementation of the confirmed arrangement then runs for the period specified in the arrangement itself – typically three to five years. Courts in larger commercial centres such as Warsaw and Kraków generally move faster than regional courts.

Q: Does opening a restructuring procedure automatically stop all enforcement actions?

A: This is a common misconception. The enforcement stay is automatic in the PPU and the standard arrangement procedure from the day the court opens the proceedings – not from the day the application is filed. In the PZU, there is no automatic stay; the debtor must apply separately for interim protection. Tax enforcement by the National Revenue Administration (Krajowa Administracja Skarbowa, KAS) is stayed under the PPU, but certain secured creditors retain limited rights unless the court extends the stay specifically to their collateral.

Q: What are the professional fees for a mid-market restructuring, and who pays the restructuring adviser?

A: For a company with PLN 5m to PLN 20m in restructured debt, total restructuring adviser fees typically range from PLN 40,000 to PLN 120,000 for the arrangement phase. The court-appointed supervisor receives a separate statutory fee, which is treated as a cost of the proceedings and has priority over unsecured creditor claims. The debtor pays both from operating cash flow during the procedure. Fee structures vary – fixed fee, success-linked fee, or a combination – and should be agreed in writing before the adviser begins preparatory work.

KORDECKI & Partners is a law firm based in Warsaw and Kraków, 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 facing financial distress, enforcement threats, and cross-border insolvency coordination. 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.