Distressed M&A – acquiring assets from Polish

A German private equity fund identifies a Polish manufacturing company in receivership. The assets are attractive – modern machinery, a logistics hub in Silesia, and an established customer base. But the acquisition route is unfamiliar. Polish insolvency procedure, court-supervised auctions, and creditor priority rules create a framework that differs sharply from German or English practice. Move too slowly and a competitor secures the assets. Move without proper due diligence and the buyer inherits hidden liabilities.

Acquiring assets from a Polish insolvency is governed by the Prawo upadłościowe (Insolvency Law, PU) and the Prawo restrukturyzacyjne (Restructuring Law, PR). The key acquisition routes are a court-supervised liquidation sale, a pre-packaged insolvency (pre-pack), and an arrangement procedure that preserves the business as a going concern. Each route carries a distinct timeline – ranging from 30 days for a pre-pack approval to 18–36 months for full liquidation – and a distinct risk profile for the buyer.

This guide walks through the four stages of a distressed acquisition in Poland: identifying the right entry point, conducting targeted due diligence, navigating the court process, and closing without residual exposure. Three business scenarios illustrate the framework in practice – a manufacturing takeover, an IT asset carve-out, and a foreign investor entry. A checklist and FAQ close the guide.

How does Polish insolvency procedure create acquisition opportunities?

Polish insolvency opens two distinct asset pools. Liquidation proceedings under the Insolvency Law convert a debtor's estate into cash for creditors. Restructuring proceedings under the Restructuring Law aim to preserve value. Both create windows for buyers. The National Court Register (KRS) and the National Restructuring and Insolvency Register (KRZ) publish all filings, giving buyers early visibility of distressed targets across Poland.

In liquidation, the court-appointed receiver (syndyk) manages the estate and organises asset sales. The receiver is obliged to maximise creditor recovery. This means competitive bidding is standard – but it also means a well-prepared buyer with financing committed can move faster than rivals still in due diligence. The receiver typically sets a minimum bid at an independently appraised value. First-round auctions start at 100% of that value; unsold assets may be re-offered at 75% or lower in subsequent rounds.

Restructuring proceedings – particularly the postępowanie sanacyjne (remedial proceedings) – allow the debtor to sell non-core assets or entire business units while the arrangement process continues. A buyer can acquire a profitable division without assuming the parent's debt. This is the closest Polish equivalent to a Section 363 sale in US practice. Timing matters: remedial proceedings are typically completed within 12 months of opening, so buyers must be ready to act within that window.

The pre-pack mechanism (przygotowana likwidacja) is the most buyer-friendly route. A prospective buyer agrees terms with the debtor before the insolvency filing. The court approves the sale as part of the opening decision – usually within 30 days. Assets transfer free of most encumbrances. The buyer avoids a public auction but must demonstrate that the agreed price meets or exceeds what an open-market sale would achieve. The Sąd Rejonowy (District Court) overseeing the case scrutinises this standard carefully.

Liquidation sale – competitive auction, 18–36 months, assets sold free of liabilities
Pre-pack – negotiated price, court-approved in 30 days, fastest clean transfer
Remedial proceedings sale – going-concern carve-out, 6–12 month window
Arrangement purchase – buyer acquires shares or business post-arrangement, full restructuring timeline

What due diligence steps are specific to distressed assets in Poland?

Standard M&A due diligence is not enough in a Polish insolvency context. Three additional layers are essential: insolvency-specific liability screening, encumbrance mapping against the court register, and a review of any pre-insolvency transactions that the receiver may challenge. Skipping any layer risks inheriting claims that a clean-asset sale should have extinguished.

Encumbrance mapping starts with the Land and Mortgage Register (Księga Wieczysta) for real estate and the KRS for corporate charges. Registered pledges (zastaw rejestrowy) on machinery, vehicles, and receivables appear in the Pledge Register (Rejestr Zastawów). In a court-supervised liquidation sale, most registered security interests are extinguished on transfer – but only if the sale follows the statutory procedure exactly. A pre-pack that deviates from procedure may not cleanse encumbrances. Buyers should obtain a written opinion from the receiver confirming the legal basis for extinguishment before signing.

Pre-insolvency transaction review covers the two-year look-back period under Insolvency Law. Transactions at undervalue, preferential payments to connected parties, and security granted within 12 months of insolvency can be set aside by the receiver or creditors. If the target transferred assets to related parties before filing, those assets may be recoverable – meaning the buyer's expected asset base could shrink post-closing. We secured the reversal of an adverse title claim worth over PLN 3m for a manufacturing client in the Mazowieckie region (autumn 2025) precisely because this review had been omitted in an earlier transaction.

Board liability screening matters even in an asset deal. If former directors caused the company's insolvency through negligence or deliberate misconduct, creditors may pursue them personally under corporate legislation. This does not directly bind an asset buyer – but it signals the quality of the business and may affect key-person retention post-closing. The intersection with D&O insurance coverage obligations for Polish directors is worth reviewing before finalising any management retention arrangements.

How does the court process work – and where do deals fall apart?

The District Court supervising the insolvency approves all material asset sales. For liquidation auctions, the receiver submits a sale proposal; the court issues an approval order within 14 days in standard cases. For pre-packs, the approval is embedded in the insolvency-opening decision itself. For remedial proceedings, the court-appointed administrator (zarządca) obtains creditor committee consent before court approval. Each layer adds time – and each is a potential veto point.

Creditor committees wield significant influence. The creditors' meeting (zgromadzenie wierzycieli) can challenge a proposed sale price if it believes the receiver undervalued assets. A successful challenge can add three to six months to the timeline. Buyers who engage informally with major secured creditors before the formal auction often encounter fewer objections. This is not collusion – it is standard practice in Polish distressed M&A and is explicitly contemplated by the pre-pack mechanism.

Tax clearance is a hidden timeline risk. The Polish Tax Authority (Krajowa Administracja Skarbowa, KAS) may assert that a business transfer triggers VAT obligations or that historic tax liabilities survive the insolvency sale in certain structures. A KAS audit initiated post-closing can freeze the buyer's operations for up to 12 months. Buyers should request a written tax-status confirmation from the receiver and consider a tax indemnity from the estate, even though estate funds are typically limited.

Our team obtained interim court measures protecting assets worth over EUR 4m for a foreign investor's subsidiary in Lower Silesia (spring 2026) when a competing creditor attempted to attach assets during the auction process. Speed of response – filing the application within 48 hours of the attachment notice – was decisive. Deals fall apart most often at this stage, when procedural timelines compress and buyers lack local counsel on standby.

For transactions with cross-border elements – for example, a Polish subsidiary of a UK group entering insolvency – the interaction between Polish and foreign proceedings adds further complexity. The cross-border insolvency framework between Poland and the United Kingdom addresses recognition of foreign insolvency orders and the coordination of parallel proceedings.

What are the three business scenarios for distressed acquisitions in Poland?

Three scenarios illustrate how the procedural routes map onto different buyer profiles. Each scenario carries a different timeline, cost structure, and risk exposure. Choosing the wrong route – or entering too late – forfeits the opportunity entirely, as court-approved sales are final and cannot be unwound by a disappointed bidder.

Scenario 1 – Manufacturing takeover. A German industrial group targets a Polish machinery manufacturer in liquidation. The estate includes a factory in Silesia, equipment valued at PLN 20m, and 80 employees. The group uses the pre-pack route: it negotiates terms with the debtor two months before filing, secures an independent valuation, and submits the pre-pack application with the insolvency petition. Court approval arrives within 28 days. The group acquires assets free of the debtor's trade creditor claims. Employee contracts transfer under Polish labour law unless the buyer elects otherwise within 30 days of the transfer date.

Scenario 2 – IT asset carve-out. A Warsaw-based software house enters remedial proceedings. A US technology company wants the IP portfolio and the development team – not the hardware or the real estate. The administrator carves out the IP and employment contracts as a going-concern unit. The buyer acquires the unit for EUR 2.5m. The sale requires creditor committee approval (obtained in six weeks) and court sign-off (14 days). The remaining estate continues under the arrangement procedure. This structure avoids the full liquidation timeline and preserves the team intact.

Scenario 3 – Foreign investor entry. A Dutch holding company wants to enter the Polish logistics market. It identifies a distressed operator in Pomerania with a strategic warehouse network. The target is not yet insolvent but is negotiating with creditors under the postępowanie o zatwierdzenie układu (arrangement approval procedure). The Dutch buyer acquires a controlling stake from the main shareholder while the arrangement is pending, then funds the arrangement from the acquisition proceeds. Timeline from first contact to closing: five months. This route preserves the operating licences and customer contracts that would be lost in liquidation. Environmental due diligence on the warehouse sites – including review of any sustainability certifications – is essential; the legal implications of BREEAM and LEED certification in Poland are relevant where green finance is involved.

What should buyers prepare before submitting a bid?

Preparation determines outcome in distressed M&A. Buyers who arrive at auction without committed financing, clear legal authority to sign, and a completed due diligence file lose to buyers who do. The receiver has a statutory obligation to maximise recovery – but also a practical preference for certainty. A lower bid from a certain buyer will often prevail over a higher bid with conditions attached.

The checklist below covers the minimum preparation for a Polish distressed acquisition:

Obtain a KRS and KRZ extract for the target to confirm insolvency status and receiver identity
Commission an independent valuation of target assets before the auction reserve price is set
Complete Pledge Register and Land Register searches to map all registered encumbrances
Review pre-insolvency transactions for the 24-month look-back period
Secure a financing commitment letter or proof of funds – conditional financing disqualifies a bid

Beyond the checklist, buyers should assess the employee transfer implications early. Polish labour law automatically transfers employment contracts in a business transfer (przejście zakładu pracy). The buyer becomes the employer of all transferred staff from the transfer date. Informing employee representatives at least 30 days before the transfer date is mandatory. Failure to do so triggers claims that survive the insolvency sale and land directly on the buyer.

Financing structure also affects tax treatment. Acquiring assets through a Polish special-purpose vehicle (SPV) registered before closing allows the buyer to deduct acquisition costs and claim input VAT on the purchase price – provided the transaction qualifies as a transfer of an organised business unit. If it does not qualify, VAT at 23% applies to each asset category separately. The distinction turns on whether the acquired assets form a functionally independent unit capable of operating independently – a question the KAS will scrutinise in any post-closing audit.

Specific situation of your company requires a tailored analysis before any bid is submitted. Acting without that analysis – particularly in a pre-pack or remedial proceedings context – precludes recovery of losses if the acquisition is later challenged by creditors.

To receive an expert assessment of your distressed acquisition strategy in Poland, contact info@kordeckipartners.com.

Frequently asked questions

Q: How long does a typical distressed asset acquisition in Poland take from first approach to closing?

A: Timeline depends heavily on the insolvency route. A pre-pack can close in 30–45 days from court filing if the buyer has completed due diligence before the petition is submitted. A court-supervised liquidation auction typically takes three to six months from the opening of insolvency to asset transfer. Full liquidation of a complex estate can run 18–36 months, though individual asset lots are sold progressively. Buyers who engage before the insolvency filing – particularly in pre-pack structures – achieve the shortest timelines.

Q: Does a buyer in a Polish insolvency sale assume the target's tax debts?

A: This is a common misconception. In a properly structured liquidation sale or pre-pack, the buyer acquires assets free of the debtor's tax liabilities. The KAS ranks as a preferential creditor in the insolvency estate but cannot pursue the buyer personally for the debtor's historic tax obligations. However, if the transaction is structured as a share purchase rather than an asset purchase, all tax liabilities remain in the acquired entity. Asset deals are therefore strongly preferred in distressed situations. Buyers should still obtain a tax-status certificate from the receiver to document the position at closing.

Q: What is the role of the Polish Financial Supervision Authority (KNF) in distressed acquisitions of regulated entities?

A: Where the insolvent company holds a licence regulated by the Komisja Nadzoru Finansowego (Polish Financial Supervision Authority, KNF) – for example, a payment institution or an investment firm – the buyer must obtain KNF approval before completing the acquisition. This adds a regulatory layer that can extend the timeline by three to six months. KNF approval is a condition precedent that cannot be waived. Buyers of regulated entities should engage with KNF at the earliest possible stage, ideally before the insolvency filing, to map the approval process and avoid forfeiting the acquisition window.

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 distressed M&A. We work with Polish entrepreneurs, foreign investors, and in-house legal teams navigating complex acquisition processes. To discuss your situation, contact info@kordeckipartners.com.