According to the Central Economic Information Center, in the first half of this year, 2261 restructuring proceedings were initiated – almost the same number as throughout the whole of 2022. Trade, transport, and construction are leading in the statistics. As indicated by restructuring advisor Patryk Kruczek, the increasing number of proceedings is due to the ever-increasing costs of conducting business activities, resulting from, among others, the rise in credit and leasing costs, higher electricity prices, and regulatory burdens. – In the following periods, we can expect a further increase in the number of restructuring proceedings – predicts the expert.
– Over the years we have seen a significant increase in the number of restructuring proceedings. By July alone we had reached about 70% of all proceedings that started throughout 2023. Furthermore, in the first half of this year, we almost surpassed the total number of restructuring proceedings opened in 2022. So we can talk about a great interest from businesses in this type of insolvency proceedings – says Patryk Kruczek, a lawyer and restructuring advisor at Kruczek + Partnerzy Law Firm.
According to the CEIC data, in the first half of this year, 2261 restructuring proceedings were opened, which means an increase by almost 4.7% compared to the same period last year. There were 4244 of them in the whole of 2023, and the year before – 2379 (26% more than in 2021). Over 90% of them are simplified proceedings for the approval of the arrangement.
– This significant increase in the number of restructuring proceedings is de facto due to rising costs of conducting business activities and companies’ debt service– including the rise in the WIBOR benchmark, which is reflected in the cost of loans, as well as an increase in leasing fees. In the TSL industry, we can also talk about new obligations arising from the Mobility Package, which requires entities to modernize their machines. Another factor is also the high wage pressure in certain sectors, such as IT – Kruczek lists.
Data from the Central Economic Information Center show that in the first half of this year, most restructuring proceedings concerned individual business activities (over 70%, similar to last year) and limited liability companies (19%). In industry breakdown, most of the proceedings concerned entities involved in trade (nearly 21%), transport (15.2%), and construction (14.7%).
– The transport sector – taking into account the number of proceedings opened last year – shows a rather high dynamics in the increase in the number of restructuring proceedings. This is primarily due to the decrease in competitiveness and the need to modernize the fleet of machines due to the introduction of the European Mobility Package – says the lawyer and restructuring adviser. – One has to take into account the rising costs due to the increase in electricity prices, which particularly affect the manufacturing industry. In the case of the construction industry, an important factor might be the delay in the introduction of the plan to support housing loan holders and the stagnation of housing sales.
In 2023 as a whole, entities from the “transport and warehouse management” sector initiated a total of 513 restructuring proceedings. In the first half of this year alone, the number reached 343 cases.
According to the analysis of the CEIC, in the first half of the year, 219 company bankruptcies were published in the Court and Economic Monitor and the National Debt Register. Although a slight increase compared to the situation a year ago was noted, experts emphasize that there is currently no problem with company bankruptcies.
– Restructuring proceedings start with signing a contract with a restructuring advisor who has a license. The next step is to announce it in the National Debt Register. The restructuring advisor together with his client, the debtor, prepare a restructuring plan, which is later, along with the voting cards, delivered to the creditors. After obtaining the quorum and an appropriate number of “yes” votes, the debtor applies to the bankruptcy court to approve the arrangement – explains Patryk Kruczek. – Considering that the restructuring process introduces a three-month grace period – a ban on the termination of key contracts, such as leasing contracts, and the suspension of enforcement proceedings – this is definitely advantageous for entrepreneurs who during this time can revise their business activity, consider possible cost-cutting actions and restructure their obligations.
The expert draws attention to the high, reaching about 70%, effectiveness of restructuring proceedings and the fact that they usually run quite smoothly – the average waiting time for an arrangement approval order is about 100 days from the filing of the application to the court.
– There are 30 bankruptcy courts in Poland, with about 220 judges dealing with these proceedings. The question is whether the growing number of proceedings over recent years matches the number of judges handling them. We are talking here not only about restructuring proceedings but also about bankruptcy proceedings and consumer bankruptcy proceedings – points out the expert.
The lawyer also predicts that – taking into account the benefits it provides to companies in difficult situations – the number of restructuring proceedings in future periods will continue to grow. Especially since the costs of running a business are still increasing.
