In today's article in the Compliance series, continuing the topic of Arrangement Approval Proceedings, we will present you the procedure for voting on the arrangement, the application for approval of the arrangement, and the approval of the arrangement by the court itself.
Voting on the arrangement
Under applicable regulations, after setting the arrangement date, the arrangement supervisor collects votes from creditors (you can learn more about this in our previous post ). Voting on the arrangement may take place either by collecting votes independently or at a creditors' meeting convened by the arrangement supervisor, to which the provisions on creditors' meetings for voting on the arrangement apply accordingly. Before deciding on the voting method, creditors may request information from the arrangement supervisor about the debtor's financial situation to verify the debtor's ability to implement the arrangement, which would help creditors make a rational decision about voting for or against the arrangement.
If the supervisor decides to conduct the proceedings using vote collection, the arrangement supervisor begins collecting votes by posting the ballot paper in the IT system supporting the proceedings, i.e., the National Debt Register ("KRZ"). Then, the supervisor notifies the creditors in paper form via the postal operator (or court bailiff) about how to vote through the system, instructing them on the authentication method, and instructing them on how to properly complete the ballot paper in the KRZ system.
If a decision is made to hold a vote at a creditors' meeting, the arrangement supervisor notifies the creditors included in the list of receivables of the meeting date, delivering them the composition proposals, along with information on the division of creditors into groups covering specific interest categories and the voting procedure at the creditors' meeting, along with any instructions. The arrangement supervisor chairs the meeting. Minutes are taken and the proceedings are recorded using an audio or audio-video recording device.
Requirements for accepting the arrangement
First, we'd like to point out that a restructuring arrangement may contain different proposals for different creditors. This means that the debtor has the right to divide creditors into groups (as we also wrote about last week), offering each group a different arrangement solution. In such a case, voting takes place first in the groups, and then the results of these votes are added together.
In the case of a vote on the arrangement without division into interest groups, creditors vote uniformly on the approval of the arrangement. The simultaneous achievement of two majorities is required for the approval of the arrangement:
In both voting procedures, two majorities must be obtained simultaneously to adopt the arrangement:
- a personal majority, which requires obtaining more than half of the votes "in favour" of the arrangement from among the total number of voting creditors;
- capital majority consisting in obtaining a 2/3 majority of the total receivables due to voting creditors.
It is worth noting that if the required personal or capital majority has not been achieved within one or more groups, but creditors holding a total of two-thirds of the sum of the claims owed to the voting creditors voted in favour of accepting the arrangement, and the creditors from the group or groups that voted against the acceptance of the arrangement will be satisfied under the arrangement to an extent no less favourable than in the event of bankruptcy proceedings, the arrangement will be accepted.
Counting the votes and confirming the acceptance of the arrangement
The obligation to count the votes and confirm the acceptance of the arrangement rests with the arrangement supervisor. The arrangement supervisor prepares a report , which, among other things, states whether the arrangement with the debtor's creditors has been accepted. After receiving this report confirming the acceptance of the arrangement, the debtor may file a motion with the court for its approval. The arrangement supervisor's report is a crucial element of the entire procedure because it is a mandatory element of the application for approval of the arrangement. Its basic element is the confirmation of the conclusion of the arrangement, along with an indication of the majority by which it was reached. The court is always obligated to verify whether these conditions were met, and if any deficiencies are found, it will refuse to approve the arrangement.
Application for approval of the arrangement
Only the debtor is authorized to file a motion to approve an arrangement, which, of course, prevents a creditor from filing a motion. The debtor may file this motion in person or, of course, through a proxy. An application for approval of an arrangement may be filed no sooner than one day after the arrangement date, and no later than three months after the last vote relevant to the approval of the arrangement is cast.
It is important that the application for approval of the arrangement must be accompanied by voting cards and information on whether the creditor is not subject to the circumstances set out in Article 116 of the Restructuring Law, i.e. exclusion of the right to vote in matters relating to the arrangement.
Court approval of the arrangement
Within two weeks of filing an application for arrangement approval, the court issues a ruling regarding the conclusion of the arrangement. However, this deadline is indicative, so exceeding it will not result in any negative consequences for either the court or the parties to the proceedings. This deadline should be counted from the effective filing of the application for arrangement approval. Therefore, if, for example, formal deficiencies in the application need to be addressed, the deadline does not run.
A court decision regarding the conclusion of an arrangement may be appealed within two weeks. For a creditor whose registered office or habitual residence was abroad on the date of the decision, the deadline for filing an appeal against the decision approving the arrangement, in the part concerning the jurisdiction of Polish courts, is 30 days from the date of the announcement of the decision approving the arrangement in the National Debt Register. These rules apply accordingly to creditors whose registered office or habitual residence was abroad on the date of the decision and who were omitted from the vote count.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of April 19, 2023
author:
