A Mazowieckie-based distribution company misses a single large payment. Within weeks, creditors begin calling. The board debates whether to file for bankruptcy or try to restructure. Most directors do not know that Polish law offers a third option – one that can freeze enforcement actions within days and produce a binding arrangement in under four months.

Simplified arrangement proceedings (postępowanie o zatwierdzenie układu, PAU) are the fastest restructuring track available under the Prawo restrukturyzacyjne (Restructuring Law, PrR). A debtor company may initiate the procedure independently, without a court opening decision, provided that claims covered by the arrangement do not exceed 15 percent of total liabilities. Once a licensed restructuring adviser (doradca restrukturyzacyjny) is appointed and the arrangement day is set, an automatic stay of enforcement applies for up to four months. The National Court Register (KRS) records the adviser's appointment, making the procedure publicly visible from day one.

This guide walks through each stage of the process – from eligibility assessment and adviser appointment, through creditor voting, to court approval. It also identifies the three most common mistakes that derail PAU proceedings and explains how the procedure interacts with board liability exposure. Three business scenarios illustrate how the rules apply in practice.

What makes simplified arrangement proceedings different from other restructuring tracks?

PAU stands apart because it is debtor-driven from the outset. The debtor, not the court, sets the arrangement day and appoints the restructuring adviser. No court hearing is required to open the procedure. That saves weeks. In contrast, sanation proceedings or accelerated arrangement proceedings require a formal court order before any stay of enforcement takes effect.

The eligibility threshold is the key filter. If claims that would be covered by the arrangement – generally unsecured and partially secured creditors – represent more than 15 percent of total liabilities, PAU is unavailable. The debtor must then choose a different restructuring track, most likely accelerated arrangement proceedings, which require a court opening order but offer a broader scope. Knowing this threshold before engaging an adviser avoids wasted preparation costs.

PAU also differs in its enforcement protection mechanism. Once the restructuring adviser publishes a notice in the Monitor Sądowy i Gospodarczy (Court and Commercial Gazette, MSiG), enforcement proceedings against assets needed for the business are stayed. That stay lasts for the duration of the proceedings but cannot exceed four months from the arrangement day. The Polish Financial Supervision Authority (KNF) plays no direct role in standard commercial PAU cases, but regulated entities – banks, insurers, investment firms – face additional notification requirements.

One practical distinction matters for cross-border situations. PAU produces a binding arrangement that Polish courts recognise, but its interaction with foreign enforcement depends on EU Regulation 2015/848 on insolvency proceedings. Where a debtor has assets or creditors in multiple EU jurisdictions, the centre of main interests (COMI) analysis determines whether the Polish PAU qualifies as main or secondary proceedings. For Poland-Netherlands cross-border scenarios, see our analysis of cross-border insolvency involving Poland and the Netherlands.

How does the step-by-step timeline work in practice?

The procedure has five identifiable stages. Each has a hard deadline attached. Missing any deadline does not merely slow the process – it can terminate the stay of enforcement and expose directors to personal liability for obligations incurred during the protected period. Understanding the sequence is therefore essential before the first document is signed.

Stage 1 – Eligibility and adviser appointment (days 1–14). The board commissions a preliminary liability analysis. If the 15 percent threshold is satisfied, the company enters a services agreement with a licensed restructuring adviser. The adviser's licence is issued by the Ministry of Justice and the adviser must be listed in the public register maintained by the KRS. Adviser fees are negotiated privately; market rates for a mid-size company typically range from PLN 30,000 to PLN 120,000 for the full procedure.

Stage 2 – Setting the arrangement day and publishing the notice (days 14–30). The arrangement day is a specific calendar date chosen by the debtor and adviser jointly. On that date, the adviser publishes a notice in the MSiG. That publication triggers the enforcement stay. From this point, creditors holding claims subject to the arrangement cannot initiate new enforcement or continue existing enforcement against assets covered by the stay.

Stage 3 – Preparing the arrangement proposal and creditor list (days 30–60). The adviser prepares a list of claims and a proposed arrangement. The arrangement may include debt haircuts, payment deferrals up to five years, conversion of debt to equity, or combinations of these instruments. Secured creditors are covered only to the extent their security is insufficient – a distinction that often surprises foreign creditors encountering Polish restructuring law for the first time.

Stage 4 – Creditor voting (days 60–90). Voting takes place without a court-supervised meeting. Creditors cast votes in writing or electronically. The arrangement is adopted if creditors holding more than half of the total claims covered vote in favour. That majority is calculated by value, not by number of creditors. A single large creditor can therefore block the arrangement – a risk the adviser must map early.

Stage 5 – Court approval (days 90–120). Once the arrangement is adopted by vote, the adviser submits the file to the district court (sąd rejonowy) supervising restructuring proceedings. The court reviews legality, not commercial merit. If the arrangement does not prejudice creditors' rights beyond what the law permits, the court approves it. Approval converts the arrangement into a binding obligation enforceable against all creditors in the covered group – including those who voted against it.

What are the most common mistakes that derail PAU proceedings?

Simplified proceedings are straightforward in structure. They are not simple in execution. Three errors account for the majority of PAU failures in Polish practice. Each is avoidable with proper preparation.

Mistake 1 – Miscalculating the 15 percent threshold. The threshold applies to claims that will be covered by the arrangement, not to all liabilities. Directors who include all trade payables in the numerator but exclude secured debt from the denominator produce a misleading ratio. The correct calculation requires a full liability mapping: secured claims, public-law obligations excluded by statute, and contingent liabilities must each be categorised correctly before the threshold is tested. Getting this wrong at the start means the court will refuse to approve the arrangement at the end – after four months of protected status have been consumed.

We assisted a manufacturing client in the Silesia region (winter 2025) in recalculating its threshold after an initial adviser had overstated coverable claims by PLN 4.2m. The corrected calculation confirmed PAU eligibility and allowed the client to proceed without switching to a more expensive track.

Mistake 2 – Failing to manage key creditors before the vote. The voting majority is measured by claim value. A creditor holding 51 percent of covered claims can unilaterally block the arrangement. Directors sometimes assume that a legally sound proposal will secure approval on its merits. It will not. Creditor engagement – explaining the financial projections, addressing security concerns, discussing alternative scenarios including bankruptcy – must begin before the arrangement proposal is finalised. An arrangement that fails at the vote stage forfeits the four-month enforcement stay and leaves the company in a worse position than before the procedure began.

Mistake 3 – Ignoring public-law obligations. Tax liabilities, ZUS (Social Insurance Institution) contributions, and customs duties cannot be restructured through PAU without the relevant authority's consent. Directors who design an arrangement that implicitly assumes public-law debt reduction – without obtaining that consent – present creditors with a financially unsound proposal. The adviser must identify all public-law claims at Stage 1 and initiate parallel negotiations with the tax office and ZUS before the arrangement proposal is drafted.

How does PAU interact with board liability and white-collar risk?

Board liability is the hidden dimension of every restructuring decision. Under Polish corporate legislation, directors of a limited liability company (spółka z ograniczoną odpowiedzialnością, sp. z o.o.) may be held personally liable for company debts if they fail to file for insolvency within 30 days of the company becoming insolvent. PAU, if properly initiated, interrupts that countdown. The enforcement stay and the formal restructuring framework are evidence that the board acted promptly and in good faith.

The interaction with white-collar defence is less obvious but equally important. A director who continues to incur obligations – purchasing goods on credit, taking new loans – after the point of insolvency, without initiating restructuring, risks criminal exposure under the Penal Code provisions on acting to the detriment of creditors. PAU creates a documented record of the board's response. That record is valuable in any subsequent investigation or civil claim.

There is one trap. If the PAU proceedings fail – because the arrangement is not adopted or the court refuses approval – the board must reassess its insolvency filing obligation immediately. The 30-day clock resumes. Directors who assume that a failed PAU gives them additional time are mistaken. Personal liability for obligations incurred during the failed proceedings may also arise if the court finds the proceedings were initiated in bad faith or without realistic prospects of success.

For companies with complex ownership structures – particularly those involving family foundations or holding companies – the interaction between restructuring and asset-protection arrangements requires separate analysis. Our article on family foundation vs holding company structures addresses the ownership-planning dimension that often runs parallel to restructuring decisions.

We obtained interim measures protecting assets worth over EUR 3m for a technology client in the Małopolska region (spring 2026), allowing PAU proceedings to proceed without disruption from a secured creditor pursuing enforcement in parallel. The interim measures application was filed simultaneously with the arrangement day notice.

Which business scenarios is PAU best suited for?

PAU is not the right tool for every distressed company. Three scenarios illustrate where it works well and where it does not.

Scenario A – Manufacturing company with trade creditor concentration. A mid-size manufacturer in Wielkopolska has 40 trade creditors. Its largest creditor holds 18 percent of total covered claims. The company is current on its bank debt (secured, therefore excluded from covered claims). PAU is available because covered claims are below 15 percent of total liabilities. The concentrated creditor base makes pre-vote engagement manageable. The adviser negotiates a 36-month payment deferral with a 10 percent haircut. The arrangement passes with 68 percent of covered claims voting in favour. Total procedure time: 97 days.

Scenario B – IT services company with a single dominant creditor. A Warsaw-based IT firm owes 60 percent of its covered claims to one software licensor. That creditor has threatened enforcement. PAU is technically available, but the single-creditor dynamic creates a blocking risk. The adviser maps two scenarios: PAU with intensive creditor negotiation, or pre-pack insolvency (przygotowana likwidacja), which transfers the business to a new entity while leaving the debt behind. The pre-pack route is chosen because the licensor will not accept a haircut. For cross-border pre-pack considerations involving Ukrainian counterparties, see our guide on cross-border insolvency involving Poland and Ukraine.

Scenario C – Foreign investor's Polish subsidiary. A German investor holds a Polish subsidiary that has accumulated EUR 2.4m in trade payables following a supply chain disruption. The parent company is solvent. PAU is used to restructure the subsidiary's covered claims while the parent provides a liquidity bridge. The arrangement includes a 24-month payment schedule with no haircut – preserving supplier relationships. The court approves the arrangement in 88 days. The parent's cross-border exposure is limited because the subsidiary's COMI is clearly in Poland.

What should a board prepare before initiating PAU?

Preparation quality determines whether PAU moves smoothly or stalls at the court approval stage. Directors should treat the pre-filing phase as a due diligence exercise on their own company. The following checklist covers the minimum preparation required.

  • Full liability mapping: separate secured, unsecured, public-law, and contingent claims with exact amounts as of the intended arrangement day
  • 15 percent threshold calculation: coverable claims divided by total liabilities, verified by the restructuring adviser before any public notice is filed
  • Cash flow projection: 12-month forecast demonstrating that the proposed arrangement terms are financially achievable, with a base case and a stress scenario
  • Creditor engagement plan: identify creditors holding more than 20 percent of covered claims and schedule pre-vote meetings before the arrangement proposal is finalised
  • Public-law debt status: obtain written confirmation from the tax office and ZUS of current balances and discuss instalment arrangements in parallel with the PAU process

Directors of companies with assets or creditors in multiple jurisdictions should also prepare a COMI analysis. If the company's centre of main interests is disputed, the cross-border effect of the Polish PAU may be limited. That analysis should be completed before the arrangement day is set – not after creditors in other jurisdictions begin challenging the stay.

The cost of preparation is modest relative to the cost of a failed procedure. Adviser fees, court filing fees (currently PLN 1,000 for the approval application), and legal counsel fees for the full procedure typically total between PLN 50,000 and PLN 200,000 for a mid-size company. A failed PAU that forces a switch to sanation proceedings can cost three to five times more and extend the timeline by six to twelve months.

Specific circumstances of each company require individual assessment. Acting without a full liability map or without pre-vote creditor engagement precludes the arrangement from passing – and forfeits the enforcement stay that makes PAU valuable in the first place. To receive an expert assessment of your company's restructuring options, contact info@kordeckipartners.com.

Frequently asked questions

Q: Can PAU be used if the company is already facing enforcement proceedings from multiple creditors?

A: Yes. The publication of the arrangement day notice in the Court and Commercial Gazette triggers an automatic stay of enforcement against assets covered by the arrangement. Existing enforcement proceedings are suspended from the date of publication. New enforcement proceedings cannot be initiated during the protected period. However, enforcement relating to claims excluded from the arrangement – such as certain secured claims or public-law obligations – continues unless separately addressed. Directors should confirm with their adviser which enforcement proceedings fall within the stay before relying on it.

Q: How long does PAU actually take, and what does it cost?

A: The statutory maximum duration is four months from the arrangement day. In practice, well-prepared cases complete in 90 to 110 days. The court approval stage typically takes two to four weeks from the adviser's submission. Total costs depend on company size and creditor complexity: adviser fees range from PLN 30,000 to PLN 120,000, legal counsel fees add PLN 20,000 to PLN 80,000, and the court filing fee for the approval application is PLN 1,000. A common misconception is that PAU is free because no court opening order is required – the absence of a court fee at the start does not mean the procedure is inexpensive overall.

Q: What happens if the arrangement is not adopted by creditors?

A: If the required majority – creditors holding more than half of covered claims by value – does not vote in favour, the arrangement fails. The enforcement stay lapses immediately. The board must reassess its insolvency filing obligation within 30 days under corporate legislation. Directors who do not act promptly face personal liability for obligations incurred after the point of insolvency. A failed PAU does not automatically convert into another restructuring track – a new application must be filed, which resets the timeline and incurs additional costs. This is why creditor mapping and pre-vote engagement are not optional steps.

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 navigating distressed situations. 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.