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:

• Create a “simplified restructuring proceeding” that would permit any debtor to commence this proceeding if faced with the risk of insolvency, understood as a 3-month delay in meeting payment obligations, even if this has nothing to do with the effect of the pandemic;
• Create an automatic 4-month moratorium (in U.S. parlance, an “automatic stay”) on enforcement actions and executions, simply upon the debtor’s announcement, without any judicial action – the current restructuring law has no such automatic provision;
• Permit restructuring of all secured debt, so long as the new payment terms provided that such creditors would receive 100% of their obligations at some (later) future date, with a potential cram down if they object to the revised payment terms;
• Limit the role of the court to hearing motions to lift the automatic moratorium for cause, to approve the arrangement plan following creditors’ voting, or to dismiss the proceeding if 4 months have elapsed without a motion to approve the arrangement;
• Have the proceeding run by a licensed restructuring advisor (of which there are approximately 1400 in Poland) who has been contracted by the debtor. This advisor formally acts as an arrangement supervisor, who works with the debtor to prepare a list of creditors, collects and counts votes in favor of a plan, and determines whether it has been accepted;
• Limit the debtor to managing its ordinary business affairs; any decisions out of the ordinary could only be taken with the supervisor’s consent. The role of any creditors’ committee is effectively eliminated;
• Set a deadline for commencing simplified restructuring proceedings of 30^th June 2021.

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