A Kraków-based manufacturing company misses two consecutive loan covenants. The bank demands early repayment. The board has weeks – not months – to act before insolvency becomes unavoidable and personal liability crystallises. Polish restructuring law offers a direct path out of that corner: debtor-in-possession (DIP) restructuring, where management retains control of the business while a court-supervised arrangement with creditors is negotiated. The window to use it, however, is narrow.
Debtor-in-possession restructuring under Polish law is governed by the Prawo restrukturyzacyjne (Restructuring Law, PR), which provides four distinct procedures allowing an insolvent or threatened-with-insolvency debtor to reorganise while retaining management control. The most widely used DIP track – arrangement approval proceedings (postępowanie o zatwierdzenie układu, PZU) – can be opened without a court order and completed in as few as four months. Filing a restructuring application suspends enforcement actions and protects the debtor from a forced insolvency declaration by creditors for the duration of the proceedings.
This page explains how each DIP procedure works, what triggers board liability, where foreign investors encounter friction, and what documents you need before the first creditor meeting. The structure follows a practical sequence: regulatory framework first, then procedure selection, then cross-border issues, then a self-assessment checklist.
What does the Polish Restructuring Law actually provide?
The Restructuring Law, in force since 2016 and significantly amended in 2022 to implement the EU Preventive Restructuring Directive, gives Polish debtors four procedural tracks. Each balances creditor protection against management continuity differently. Choosing the wrong track costs time and money – and in distressed situations, both are scarce.
The four procedures are: (1) arrangement approval proceedings (PZU), (2) accelerated arrangement proceedings (przyspieszone postępowanie układowe), (3) arrangement proceedings (postępowanie układowe), and (4) remedial proceedings (postępowanie sanacyjne). PZU is the lightest track. Remedial proceedings are the heaviest – they permit asset sales and employment restructuring that other tracks do not allow. The National Court Register (Krajowy Rejestr Sądowy, KRS) records the opening of each procedure.
A debtor qualifies for restructuring when it is either insolvent or threatened with insolvency. Threatened-with-insolvency is the preferred entry point: it preserves more negotiating leverage with creditors and reduces the risk that the restructuring supervisor appointed by the court will override management decisions. The Polish Financial Supervision Authority (Komisja Nadzoru Finansowego, KNF) monitors restructurings in regulated sectors such as banking and insurance, adding a regulatory layer that pure commercial debtors do not face.
One concrete figure matters here: a debtor loses the right to open PZU if disputed claims exceed 15% of total claims. Above that threshold, the debtor must use accelerated arrangement proceedings or arrangement proceedings instead, both of which require a formal court opening order and take longer – typically six to twelve months rather than four.
How do the four DIP procedures compare?
Selecting a procedure is a strategic decision, not a formality. Each track has a different cost structure, timeline, and degree of court involvement. Getting this wrong at the outset can force a mid-process switch – which courts treat with scepticism and creditors treat as a warning sign.
PZU is self-executing. The debtor appoints a licensed restructuring adviser (doradca restrukturyzacyjny) without waiting for a court order. The adviser supervises the vote on the arrangement proposal. If creditors approve the arrangement, the debtor applies to the district court (sąd rejonowy) for approval within three months of opening. Total elapsed time: typically three to five months. Court fees are low – around PLN 1,000 for the approval application.
Accelerated arrangement proceedings and arrangement proceedings both require a court opening order. The distinction between them turns on that 15% disputed-claims threshold. Accelerated proceedings are designed for situations where the claim structure is relatively clean; the court issues an opening order within two weeks of the application. Standard arrangement proceedings allow a longer preparation phase but take six to twelve months to complete. Both suspend individual enforcement actions from the moment the court issues its order.
Remedial proceedings are the deepest intervention. They give the administrator (zarządca) – not the debtor's own management – control over the estate. Management is displaced, not removed entirely, but operational decisions require administrator consent. This track is suited to situations where asset disposals, mass redundancies, or lease terminations are needed to make the arrangement viable. We assisted a distressed logistics operator in Silesia (autumn 2024) in transitioning from a failed PZU attempt to remedial proceedings, preserving over PLN 8m in secured creditor claims while keeping 140 jobs intact.
- PZU: no court order needed; 15% disputed-claims cap; 3–5 months; lowest cost
- Accelerated arrangement proceedings: court order within 2 weeks; 6–12 months
- Arrangement proceedings: court order; longer preparation; 6–12 months
- Remedial proceedings: administrator control; asset sales permitted; 12–24 months
For a decision matrix in practice: a manufacturing company with clean trade creditors and a single overdue bank loan is a strong PZU candidate. An IT firm with disputed contractor claims above 15% of total liabilities should open accelerated arrangement proceedings immediately. A foreign investor's subsidiary with negative equity and labour obligations requiring termination needs remedial proceedings – and probably cross-border coordination with its parent's jurisdiction.
When does board liability arise under Polish DIP restructuring?
Board liability is the single greatest concern for directors of Polish companies in financial distress. The risk is personal, not corporate. It is also irreversible once the liability-triggering event passes without a protective filing. Acting early – before insolvency becomes unavoidable – is the only reliable defence.
Under Polish insolvency law, board members of a spółka z ograniczoną odpowiedzialnością (private limited liability company, sp. z o.o.) are personally liable for the company's unsatisfied obligations if they fail to file for insolvency within 30 days of the company becoming insolvent. Opening a restructuring proceeding within that 30-day window is treated as an equivalent protective act – it demonstrates that management chose a reorganisation path rather than abandoning creditors. A restructuring filing made on day 31 or later does not extinguish the liability risk; it only mitigates it.
Two insolvency tests apply under Polish corporate legislation. The first is the liquidity test: the company is insolvent if it has failed to pay its monetary obligations for more than 24 months. The second is the balance-sheet test: the company is insolvent if its liabilities (excluding provisions and future liabilities) exceed its assets for more than 24 months. Either test, if met, starts the 30-day clock. Directors who can demonstrate they opened a restructuring proceeding in time – and that the proceeding had a reasonable prospect of success – are protected from personal liability claims by creditors and from white-collar defence exposure under criminal provisions of the Penal Code.
The Supreme Court of Poland (Sąd Najwyższy) has clarified that a director who is aware of insolvency but delays filing while hoping for a commercial rescue deal bears the burden of proving the delay was justified. That burden is high. The practical lesson: do not wait for the bank to call the loan. Open a restructuring proceeding as soon as the threatened-with-insolvency threshold is crossed.
Our team secured the dismissal of a personal liability claim against a board member of a Mazowieckie-region retail chain (spring 2025), where the director had opened PZU proceedings eight days after the liquidity test was first met. The creditor's claim exceeded PLN 3m. The court found that the timing of the filing demonstrated good faith and adequate management diligence.
What cross-border issues arise for foreign investors in Polish DIP proceedings?
Foreign investors running Polish subsidiaries face a layered problem. The Polish proceeding must be coordinated with any parallel proceedings in the parent's home jurisdiction. Misjudging the interaction between Polish restructuring law and foreign insolvency regimes can forfeit protections that either system provides individually.
EU Regulation 2015/848 on insolvency proceedings (the Recast Insolvency Regulation) determines which member state's courts have jurisdiction over the main proceedings. The key concept is the Centre of Main Interests (COMI). If the Polish subsidiary's COMI is in Poland – which it will be if management decisions are made from Warsaw or Kraków – Polish courts open the main proceedings. Foreign proceedings in another EU member state are secondary, limited to assets located in that state. A German parent whose Polish subsidiary enters PZU proceedings cannot simultaneously open German insolvency proceedings over the same Polish assets.
For non-EU parent companies – Ukrainian, US, or UK entities – the Recast Regulation does not apply. Cross-border coordination then depends on bilateral treaties or the UNCITRAL Model Law on Cross-Border Insolvency, which Poland has not formally adopted but whose principles courts increasingly reference. For practical guidance on Polish-Ukrainian cross-border insolvency scenarios, see our analysis of cross-border insolvency involving Poland and Ukraine.
A pre-packaged sale (pre-pack, formally: przygotowana likwidacja) is sometimes used alongside DIP restructuring when a clean asset transfer is more practical than an arrangement with creditors. Pre-pack allows the debtor to negotiate a sale agreement before the insolvency or restructuring filing, then execute it immediately after court approval – typically within 30 days of the filing. This preserves going-concern value while avoiding a prolonged restructuring process. For comparison with US Chapter 11 DIP financing structures, which some foreign investors seek to replicate in Poland, see our overview of restructuring practice in the United States.
Tax exposure is a separate cross-border concern. A Polish subsidiary entering restructuring may trigger controlled-foreign-corporation (CFC) rules or thin-capitalisation adjustments in the parent's home jurisdiction. Groups subject to Pillar Two global minimum tax rules should assess whether the Polish entity's effective tax rate changes during restructuring, since restructuring income (arrangement discounts) may be treated differently across jurisdictions. For a detailed treatment of Pillar Two implications for Polish subsidiaries, see our practical guide on Pillar Two for Polish subsidiaries.
To receive an expert assessment of your cross-border restructuring exposure, contact info@kordeckipartners.com.
What practical pitfalls should debtors avoid?
Most DIP restructuring failures in Poland are not caused by creditor hostility. They are caused by procedural errors, documentation gaps, or timeline miscalculations made in the first two weeks after the decision to restructure. Identifying these pitfalls early is the difference between a successful arrangement and a conversion to insolvency.
The most common error is opening PZU when the disputed-claims threshold has already been exceeded. This invalidates the proceeding. The debtor then loses the enforcement suspension and must restart under accelerated arrangement proceedings – with creditors now aware that management misjudged the situation. Courts do not penalise this directly, but creditor confidence is damaged in ways that are difficult to repair before the arrangement vote.
The second pitfall is failing to prepare a restructuring plan that creditors can actually evaluate. The plan must include a financial forecast covering the arrangement period (typically three to five years), a description of restructuring measures, and a creditor recovery analysis showing what creditors would receive in insolvency compared to the proposed arrangement. Plans that lack these elements are routinely rejected by the restructuring adviser before the creditor vote even takes place.
The third pitfall is ignoring employment law during the restructuring process. Polish labour law (Kodeks pracy, Labour Code) imposes consultation obligations before collective redundancies. Remedial proceedings permit accelerated termination of employment contracts, but only if the administrator follows a specific statutory procedure. Skipping that procedure exposes the estate to wrongful-dismissal claims that rank as preferred claims in any subsequent insolvency.
A checklist of documents to prepare before opening any DIP procedure:
- Current list of all creditors with claim amounts and dispute status
- Three-year financial statements and up-to-date management accounts
- Draft restructuring plan with financial forecast and creditor recovery analysis
- Evidence of the date on which insolvency or threatened-with-insolvency first arose
- Copies of all material contracts containing change-of-control or insolvency clauses
The fourth pitfall is underestimating the cost of the restructuring adviser. Licensed restructuring advisers charge fees that are partly statutory and partly negotiated. In PZU proceedings, the adviser's fee is typically a percentage of the arrangement's face value – often between 0.5% and 2%. In remedial proceedings, the administrator's fee can reach PLN 300,000 or more for a complex estate. Budget for this before filing.
Specific situations require tailored analysis. Your company's exposure depends on which insolvency test applies first, the composition of the creditor pool, and whether any cross-border element is present.
If your company is approaching the 30-day filing deadline or has already received creditor enforcement notices, the window for a DIP restructuring is closing. To discuss how the Restructuring Law applies to your specific situation and to receive a concrete action plan, email info@kordeckipartners.com.
Frequently asked questions
Q: How long does a PZU proceeding typically take from opening to court approval?
A: A well-prepared PZU proceeding takes three to five months from the appointment of the restructuring adviser to the district court's approval of the arrangement. The creditor vote must take place within three months of opening; the court then has one month to issue its approval decision. Delays almost always stem from an incomplete creditor list or a restructuring plan that the adviser requires the debtor to revise before circulating it to creditors.
Q: Does opening a restructuring proceeding automatically stop enforcement actions by creditors?
A: In PZU, enforcement is not automatically suspended at opening – it is suspended only once the court approves the arrangement. The debtor can apply to the court for an interim stay of enforcement during the proceeding, but this requires a separate application and is granted at the court's discretion. In accelerated arrangement proceedings and arrangement proceedings, the enforcement suspension takes effect from the moment the court issues its opening order. This distinction is frequently misunderstood and can result in asset seizures during PZU proceedings if the interim stay application is not filed promptly.
Q: Can a foreign parent company guarantee the Polish subsidiary's arrangement obligations?
A: Yes, and this is often a creditor requirement for arrangement approval. The guarantee must be structured carefully: if the parent is domiciled in an EU member state, the guarantee agreement should specify Polish law as governing law and designate Polish courts as the forum for disputes, to avoid jurisdictional complexity. A guarantee issued under foreign law that does not recognise the arrangement's discharge effect may be called even after the Polish arrangement is completed, creating double-recovery exposure for the parent. This issue arises frequently in German-Polish and Dutch-Polish group structures.
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 facing distress situations ranging from pre-pack asset sales to full remedial proceedings. 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.