A Mazowieckie-based manufacturing company was losing contracts faster than its management could renegotiate supplier terms. Cash reserves covered roughly six weeks of operations. The board faced a stark choice: enter full liquidation and watch the workforce dissolve, or find a mechanism that preserved the business as a going concern while satisfying creditors. A pre-pack sale offered that path.
A pre-pack sale in Poland is a court-supervised procedure under Polish restructuring and insolvency law that allows a distressed business to be sold as a going concern before formal insolvency proceedings are opened. The buyer is identified and the sale terms are agreed in advance, then ratified by the district court within a single hearing. The entire process – from filing to court approval – typically completes within two to four months.
This case study walks through the background, the strategic choices made, the procedural steps taken, and the lessons that apply to any company considering a pre-pack in Poland. It is structured to help boards, investors, and advisers understand what the procedure demands and where it can fail.
What was the background and why did the pre-pack make sense?
The company operated three production lines in the Mazowieckie region, employed just under 80 people, and held long-term supply agreements with two automotive sector buyers. Its liabilities exceeded assets by approximately PLN 4.2m. Management had already attempted an informal standstill with the main creditor bank – without success. Two months of missed payments had triggered cross-default clauses across the remaining credit facilities.
Full bankruptcy would have terminated the supply agreements automatically. That outcome was commercially unacceptable to the automotive buyers, who were prepared to continue purchasing but only from a solvent counterparty. The pre-pack structure allowed the buyer – a strategic investor identified through a brief competitive process – to acquire the production assets and assume the supply contracts. Employees transferred under Polish employment law provisions governing business transfers.
The board's liability exposure also shaped the decision. Under Polish insolvency law, directors who fail to file within 30 days of the company becoming insolvent risk personal liability for creditor losses. The pre-pack filing satisfied the filing obligation and protected the board from that exposure. This point is frequently overlooked when management first considers the procedure.
- Liabilities exceeded assets by PLN 4.2m at the time of filing
- Two automotive supply contracts worth retaining as going-concern value
- Board exposure under the 30-day insolvency filing deadline
- One strategic buyer identified before the court application was lodged
How does the Polish pre-pack procedure work in practice?
Polish restructuring law provides a specific mechanism – the przygotowana likwidacja (pre-pack sale) – within insolvency proceedings. The debtor or a creditor files an application to the district court (Sąd Rejonowy) together with a proposed sale agreement and an independent valuation of the assets. The National Court Register (KRS) records the insolvency opening. The court appoints a temporary supervisor to verify the valuation and the proposed buyer's offer.
In this matter, the application was filed in early autumn 2024. The court scheduled a hearing within six weeks of filing – a timeline consistent with district court practice in Warsaw. The temporary supervisor's report confirmed that the proposed purchase price exceeded the estimated liquidation value of the assets by approximately 18 percent. That differential is the core legal test: the pre-pack price must be at least equal to, and ideally above, what a piecemeal liquidation would realise.
We secured court approval of the pre-pack sale for the client within nine weeks of filing, protecting employment for 74 workers and recovering over PLN 3.1m for creditors in the Mazowieckie region (autumn 2024). The speed of execution was possible because the sale agreement, valuation report, and buyer due diligence had all been completed before the application was lodged. Preparation is the single biggest determinant of timeline.
For cross-border matters involving foreign creditors or assets in multiple jurisdictions, the procedural picture is more complex. Our analysis of cross-border insolvency involving Poland and Switzerland sets out how Polish proceedings interact with foreign insolvency regimes.
What are the critical pitfalls and how were they avoided?
The most common failure point in Polish pre-pack proceedings is an inadequate valuation. Courts have rejected applications where the independent valuer lacked recognised credentials or where the methodology did not account for going-concern premiums. In this case, a certified restructuring adviser (doradca restrukturyzacyjny) licensed by the Ministry of Justice produced the valuation. That credential is mandatory under Polish law. Using an unlicensed valuer is a ground for outright rejection.
A second risk is employee transfer. Polish employment law – implementing the EU Acquired Rights Directive – requires that employees transfer automatically to the buyer on existing terms. Buyers who attempt to renegotiate terms before the transfer is complete expose themselves to claims before the National Labour Inspectorate (PIP). In this matter, the buyer was advised to complete the transfer first and negotiate any restructuring of employment terms only afterwards, within the statutory consultation framework.
Board liability remained a live issue throughout. Directors who take actions that favour one creditor over others in the period before filing can face white-collar defence exposure under Polish criminal law. The 30-day filing window is therefore both a deadline and a boundary: actions taken outside that window, or in bad faith within it, carry personal consequences. For matters where employment terms intersect with restructuring obligations, the interaction with non-compete clauses in Poland can also become relevant when key personnel are part of the transaction.
What lessons does this case offer for future pre-pack transactions?
Three transferable points emerge. First, preparation before filing determines speed after filing. Every week spent negotiating the sale agreement and commissioning the valuation before lodging the application reduces court timeline risk. Courts do not extend deadlines for incomplete submissions. Second, the buyer's identity matters to creditors and to the court. A buyer with no connection to the distressed company – and no prior relationship with its management – faces fewer objections than an insider buyer. Insider transactions attract heightened scrutiny and can be challenged by creditors within the proceedings.
Third, the pre-pack is not a device for avoiding creditor obligations. It is a mechanism for maximising creditor recovery while preserving going-concern value. Boards that approach the procedure with that framing – rather than as an escape route – are far more likely to obtain court approval and avoid post-transaction litigation. The Polish Financial Supervision Authority (KNF) may also be relevant where the distressed entity holds regulated licences that transfer with the business.
For transactions involving Lithuanian counterparties or assets, the jurisdictional overlay adds further complexity. Our separate analysis of cross-border insolvency involving Poland and Lithuania addresses recognition of Polish insolvency proceedings in Lithuanian courts and the timing of asset freezes.
- Complete the sale agreement and valuation before filing
- Use a licensed restructuring adviser for the valuation report
- Confirm employee transfer obligations with employment counsel before signing
- Document the board's 30-day filing decision with a formal board resolution
A specific figure worth retaining: courts in Warsaw have approved pre-pack applications in as few as five weeks where documentation was complete on filing day. That benchmark is achievable. It requires discipline, not speed.
Every pre-pack situation carries facts that can shift the outcome. The board's specific exposure, the buyer's profile, and the asset composition all affect how the court will weigh the application. Early advice – ideally before the 30-day insolvency filing deadline begins to run – preserves the most options.
To discuss how the pre-pack procedure applies to your company's situation, contact info@kordeckipartners.com.
Frequently asked questions
Q: How long does a pre-pack sale in Poland typically take from filing to completion?
A: The process typically takes between six and fourteen weeks from the date of filing, depending on the completeness of the application and the court's schedule. In Warsaw district courts, hearings are generally listed within four to eight weeks of a complete filing. Preparation of the sale agreement and valuation before filing is the single most effective way to shorten the timeline.
Q: Can the buyer in a pre-pack be a company connected to the debtor's management?
A: Polish insolvency law does not prohibit insider buyers, but connected-party transactions attract closer court scrutiny. Creditors have standing to challenge the sale terms, and courts apply a stricter equivalence test to confirm that the price reflects genuine market value. Independent valuation and a documented competitive process significantly reduce the risk of a successful creditor challenge.
Q: Does a pre-pack sale extinguish the debtor company's outstanding tax liabilities?
A: The buyer acquires the assets free of most pre-existing liabilities, including tax debts of the debtor entity, provided the sale is structured as an asset purchase within the insolvency proceedings rather than a share transfer. Tax liabilities remain with the insolvent entity, which is then subject to standard insolvency distribution rules. Specific tax structuring advice is essential before the sale agreement is finalised, as the distinction between asset and share transfer has material consequences under Polish tax law.
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 proceedings, and pre-pack transactions. 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.