Distressed M&A – acquiring assets from Polish

A German private equity fund identifies a Polish manufacturing group in pre-insolvency distress. The assets are attractive. The timeline is short. Miss the filing window or misread the priority waterfall, and a competitor walks away with the business while the fund is still reviewing the data room.

Distressed M&A in Poland means acquiring assets, shares, or entire businesses from entities undergoing formal insolvency, restructuring, or accelerated pre-pack proceedings. Polish insolvency law provides four distinct procedural tracks, each with its own timeline, creditor-approval thresholds, and asset-transfer mechanics. The asset-purchase route offers the cleanest title, but the buyer must act within court-ordered deadlines – typically 30 to 90 days from the court's approval of the sale plan.

This page sets out the four procedural tracks available to distressed buyers in Poland, the key instruments that protect acquisition value, the pitfalls that derail transactions, and the cross-border considerations that affect foreign investors. A self-assessment checklist closes the guide.

What procedural tracks govern distressed acquisitions in Poland?

Polish insolvency and restructuring law is codified in two statutes: the Prawo restrukturyzacyjne (Restructuring Law, PRL) and the Prawo upadłościowe (Bankruptcy Law, PU). Together they create four tracks that a distressed buyer will encounter. Understanding the distinction matters from day one, because each track determines whether the buyer is dealing with a court-supervised trustee, a court-appointed administrator, or the debtor's own management.

The first track is consumer or business bankruptcy with asset liquidation. The National Court Register (KRS) records the opening of proceedings. A court-appointed trustee (syndyk) takes over all assets, which are sold under court supervision. The buyer acquires clean title free of pre-existing encumbrances – a significant advantage over share deals. Sales typically proceed by tender or auction, with the court's approval required for transactions above a statutory threshold.

The second track is the arrangement procedure (postępowanie układowe). Here the debtor retains management, and the buyer may negotiate directly with the company before a creditor vote. Asset carve-outs and partial acquisitions are common. The third track is remediation proceedings (postępowanie sanacyjne), which allow the debtor to restructure liabilities while an administrator controls the estate. The fourth – and fastest – track is the pre-pack (przygotowana likwidacja), discussed separately below.

The Polish Financial Supervision Authority (KNF) must be notified when the distressed entity holds a financial licence. The Office of Competition and Consumer Protection (UOKiK) merger-control thresholds apply even in insolvency. Buyers who ignore either requirement face transaction nullity.

Bankruptcy liquidation: clean-title asset sale, trustee-controlled, court approval required
Arrangement procedure: debtor in possession, negotiated asset carve-outs possible
Remediation proceedings: administrator-controlled, broader restructuring scope
Pre-pack: pre-agreed sale submitted with the bankruptcy petition, fastest timeline

How does the pre-pack mechanism work in Polish law?

The pre-pack (przygotowana likwidacja) is the most buyer-friendly instrument in Polish restructuring law. The debtor or a creditor files a sale plan simultaneously with the bankruptcy petition. The court can approve the transaction within as little as two to four weeks of the hearing, bypassing the full liquidation process. The buyer secures clean title on the same terms as a regular bankruptcy sale – but without waiting months for a trustee-run auction.

The pre-pack mechanism requires the buyer to submit a valuation by a court-approved expert. The offer price must not fall below the expert's assessed liquidation value. Courts scrutinise connected-party transactions with particular care. If the buyer has any relationship with the debtor's shareholders or management, the court will appoint an independent examiner, adding two to six weeks to the timeline.

We secured the acquisition of a food-processing plant in the Małopolska region for an international buyer through a pre-pack approved in under five weeks (spring 2025). The transaction protected over 300 jobs and gave the buyer priority over a competing creditor's enforcement action that had been running for 14 months.

Pre-pack timing is critical. The sale order lapses if the buyer does not complete payment within the court-set deadline – usually 30 days from the order. Extensions require a separate court application and are not guaranteed. Buyers must therefore have financing committed, not merely indicative, before filing.

For cross-border context on how Polish insolvency interacts with neighbouring jurisdictions, see our analysis of cross-border insolvency involving Poland and Romania.

What are the main pitfalls that destroy acquisition value?

Distressed transactions in Poland carry risks that do not appear in standard M&A. The three most damaging are: title defects surviving asset sales, hidden board liability claims attaching to acquired entities, and environmental encumbrances that follow the land regardless of insolvency. Each can turn an attractive acquisition into a multi-year dispute.

Title defects arise when the trustee sells assets that are subject to retention-of-title clauses (zastrzeżenie własności) or financial leases. Polish insolvency law does not automatically extinguish these rights. The buyer must verify the asset register and the debtor's supplier contracts before bidding. Failure to do so is the single most common reason distressed acquisitions are challenged post-closing.

Board liability is the second risk. Under Polish corporate legislation, directors who failed to file for bankruptcy within 30 days of insolvency may be personally liable for unpaid creditor claims. A share-deal buyer inherits the entity and becomes exposed to those claims indirectly through the company's balance sheet. Asset deals avoid this exposure – but only if structured correctly.

We obtained interim measures protecting assets worth over EUR 4m for a Silesian manufacturing buyer whose target had undisclosed retention-of-title claims from three German suppliers (autumn 2024). The interim order gave the buyer 60 days to renegotiate the supply terms before the sale completed.

Environmental liability is the third pitfall. Polish environmental law imposes remediation obligations on the current landowner, not the historical polluter. An asset buyer acquiring contaminated land through insolvency does not inherit insolvency-protected status. A Phase I environmental survey is non-negotiable for any industrial site.

Verify retention-of-title clauses and financial leases before bidding
Assess board liability exposure for share-deal targets
Commission Phase I environmental survey for all industrial land
Confirm UOKiK merger-control filing obligations
Check KNF notification requirements for licensed entities

A well-designed internal reporting channel can surface these issues early. For guidance on compliance infrastructure that supports distressed-deal due diligence, see our article on whistleblower channel design and technical requirements.

How should foreign investors structure their Polish distressed entry?

Foreign investors face additional structuring considerations that domestic buyers do not. Polish restructuring law applies the EU Recast Insolvency Regulation (Regulation 2015/848) when the debtor's centre of main interests (COMI) is in Poland. This determines which court has jurisdiction and which law governs the proceedings. For a German or Swiss parent with a Polish subsidiary in distress, the COMI analysis can determine whether the case is handled in Warsaw or Frankfurt.

Foreign buyers acquiring through a newly incorporated Polish special-purpose vehicle (SPV) benefit from liability ring-fencing. The SPV holds the distressed assets, keeping the parent insulated from undisclosed claims. The SPV should be registered in the KRS before the bid is submitted, because courts will not approve a sale to a non-existent entity. Registration takes five to seven business days under the standard online procedure.

Currency and financing structure also matter. Polish courts set sale prices in PLN. A euro-denominated acquisition facility creates FX exposure during the 30-day payment window. Buyers should either match the currency or build a hedging mechanism into the financing commitment letter.

Tax structuring deserves early attention. An asset purchase in insolvency is subject to civil-law transaction tax (podatek od czynności cywilnoprawnych, PCC) at 2% on real property and 1% on other assets, unless VAT applies. The trustee's sale of a going concern may qualify as a VAT-exempt transfer of an organised enterprise (zorganizowana część przedsiębiorstwa, ZCP), which removes the right to input-VAT recovery. The distinction between an asset bundle and a ZCP is fact-specific and should be resolved before signing.

For a deeper examination of how Polish insolvency proceedings interact with Swiss-law financing structures, see our analysis of cross-border insolvency involving Poland and Switzerland.

What does a distressed buyer need to prepare?

Preparation separates buyers who close transactions from those who lose them to better-organised competitors. Polish distressed processes move faster than standard M&A. A trustee-run auction can open and close within three weeks. Pre-pack court hearings are scheduled with little notice. Buyers who arrive without committed financing, a completed legal-title review, and a ready SPV structure will not be competitive.

The checklist below covers the minimum preparation for any Polish distressed acquisition. Items marked with a timeline are court-imposed, not negotiable.

Financing: committed facility letter (not indicative term sheet) before bid submission
SPV: Polish entity registered in the KRS, minimum 5 business days before bid
Title review: asset register search, retention-of-title verification, lease review
Environmental: Phase I survey for all industrial or agricultural land
Regulatory: UOKiK and KNF pre-clearance assessment completed before court hearing

Beyond the checklist, buyers should appoint Polish restructuring counsel before approaching the trustee or administrator. Counsel can obtain court file access, review the trustee's asset description, and flag valuation disputes before the bid is locked. This step alone can identify value-destroying defects that do not appear in the marketing materials.

White-collar defence exposure is a less obvious preparation item. If the distressed target is under investigation by the prosecution service (prokuratura) for financial crimes, assets connected to the alleged offence may be subject to a prosecutorial freeze (zabezpieczenie majątkowe). A freeze can block transfer even after court approval of the sale. Buyers should request a criminal-register check as part of due diligence.

Decision matrix: if the target holds real property and the buyer wants clean title with no creditor claims, the pre-pack or bankruptcy liquidation route is correct. If the buyer wants to preserve the debtor's contracts and workforce, the arrangement or remediation track is more appropriate – but the buyer becomes a creditor, not an asset owner, until the arrangement is confirmed. Timeline for arrangement confirmation: typically four to eight months from petition.

Specific situations require specific advice. A foreign investor entering a Polish distressed process without local counsel risks forfeiting bid eligibility, missing court deadlines, or acquiring assets with encumbrances that insolvency proceedings do not extinguish. Those consequences are irreversible once the sale order is issued.

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

Frequently asked questions

Q: Can a foreign buyer participate in a Polish insolvency auction without a local entity?

A: Yes, foreign entities can bid directly in Polish insolvency auctions. However, the court's sale order will name the buyer, and any subsequent KRS registration or real-property transfer requires a Polish tax identification number (NIP) and, for real estate, approval from the Ministry of Internal Affairs and Administration if the buyer is from outside the European Economic Area. Setting up a Polish SPV in advance is faster and avoids post-closing delays of up to 12 months for non-EEA buyers.

Q: How long does a full bankruptcy liquidation sale typically take in Poland?

A: From the court's declaration of bankruptcy to the completion of the first significant asset sale, the typical timeline is six to eighteen months, depending on asset complexity and creditor disputes. The pre-pack route compresses this to four to eight weeks. Buyers seeking speed should file a pre-pack offer simultaneously with or immediately after the debtor's bankruptcy petition. Waiting for the trustee to organise an auction forfeits the timing advantage entirely.

Q: Is the buyer liable for the insolvent company's tax debts after an asset purchase?

A: Under Polish tax law, a buyer of an organised enterprise (ZCP) through insolvency proceedings may inherit tax liabilities up to the value of the acquired assets, unless the transaction is structured as a pure asset bundle rather than a ZCP. The distinction is fact-specific. Polish tax authorities have challenged ZCP classifications in distressed transactions and imposed successor liability exceeding PLN 5m in several cases. A binding tax ruling (interpretacja indywidualna) before signing provides protection, though it takes up to three months to obtain.

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 distressed M&A, insolvency, and restructuring. We work with Polish entrepreneurs, foreign investors, and in-house legal teams navigating complex asset acquisitions from distressed entities. To discuss your situation, contact info@kordeckipartners.com.