Amid the current market uncertainties, distressed asset sales are likely to rise. International investors are looking for efficient solutions, preferably ones that reflect solutions in their home jurisdictions. One popular mechanism is the use of pre-pack sales. A pre-pack sale manages the adverse impact of insolvency proceedings on the distressed company’s business, while reducing the time and cost of such proceedings, and offering greater asset realisation to be distributed among creditors.
As previewed in our prior post, Poland’s simplified restructuring proceeding (uproszczone postępowanie restrukturyzacyjne) is now in effect. The enabling legislation – with only minor changes from the description in our prior post affecting such restructurings – was finally adopted on 19 June 2020, signed into law on 23 June 2020 and took effect the same day.
Poland’s Parliament (the Sejm, the lower House of Parliament) is close to passage of an extraordinary debtor restructuring relief law as part of its fourth COVID-19 crisis legislation.
The measure, referred to as Shield Law 4.0 (Tarcza 4.0) would:
The coronavirus pandemic poses new risks and challenges for business at a scale unknown before. In order to assist businesses, the Polish government has announced that a PLN 212 bn ($53bn) stimulus package will be put in place. For a summary see our previous post. Start up of the aid package will take time, and the shape of further aid to come is as yet unknown.
One of the many questions asked by our clients is: “Does Polish law recognise the concept of ‘piercing the corporate veil?’” Is it possible to disregard the separate legal personality of a company or corporation and make shareholders liable for the debts of the company? This question has been asked since the introduction of the market economy in Poland (in 1989) and there is still no clear answer.
The English High Court has sanctioned a scheme of arrangement for Algeco Scotsman PIK SA, a Luxembourg-incorporated company, after the creditors consented to the New York governing law and jurisdiction clause being altered in favour of the jurisdiction of the English courts. The issues discussed were:
- the fair representation of a class of creditors;
- cross-jurisdictional schemes; and
- early tender fees offered to creditors.
Background
UK lawyers and restructuring professionals have been highlighting their concerns for British business and Financial Markets if the Government is unable to negotiate a bespoke treaty between the UK and the EU to preserve the mutual and reciprocal recognition provisions written into the Recast EU Insolvency Regulation (Recast EIR) and the Recast Brussels Regulation (the Judgements Regulation) after Brexit in 2019.
In a corporate world where the capital structures of companies are becoming increasingly complex, schemes of arrangements under the Companies Act 2006 have established themselves as the restructuring procedure of choice for many distressed companies. This popularity is evidenced by the fact that schemes of arrangement have been increasingly used by overseas companies wishing to restructure their debts under the flexibility offered by English law.
Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings comes into effect on 26 June 2017 for insolvency proceedings that are opened on or after that date. The Recast Regulation replaces the EC Regulation (1346/2000) on insolvency proceedings and has direct effect in the UK until such time as the UK leaves the EU.
The Insolvency Rules (England and Wales) 2016 (“IR2016”) came into force on 6 April 2016 applying to most corporate and personal insolvency regimes in England and Wales. However, there is still unfinished business for the Government and further regulation is expected to be introduced later this year to ensure the changes apply uniformly in all areas.