A manufacturing group with operations spread across three EU countries entered insolvency proceedings in Poland with debts owed to more than forty separate creditors. The creditor pool included domestic trade suppliers, two foreign-owned banks, and a group of minority bondholders seated in Germany. Without a coordinated restructuring strategy, the company risked liquidation – and every creditor risked recovering far less than a negotiated restructuring plan could deliver.
This matter centred on Polish insolvency proceedings under the country's restructuring legislation, which provides a formal process for approving a restructuring plan binding on all creditors once a required voting majority is reached. The company qualified for the arrangement procedure rather than full liquidation, preserving its operating assets throughout. The process ran from initial court filing through to plan approval in approximately nine months.
This case study describes the strategy chosen, the key milestones reached, the complications that arose, and three lessons directly transferable to similar cross-border restructuring situations.
Client profile and the challenge faced
The client was a mid-sized industrial group, incorporated in Poland, with subsidiary entities in two other EU member states. Its Polish operating entity held the majority of tangible assets. It also carried the largest share of consolidated group debt.
The central challenge was creditor heterogeneity. Domestic trade creditors held relatively small individual claims. The two foreign banks held secured claims with priority status. The German bondholders held unsecured but sizeable claims and were coordinating among themselves before formal proceedings began. Each creditor group had a different economic interest. Each required a different approach at the creditors meeting.
Polish insolvency legislation distinguishes between creditors by class – separating secured from unsecured claims and applying separate voting thresholds to each. This classification system shaped every element of the strategy. Misclassifying a creditor, or failing to submit a complete proof of debt in time, could displace a creditor from voting entirely. with potentially adverse consequences for the vote count needed to confirm the restructuring plan.
For a company operating across borders, the risk of inaction was acute. Delay beyond the statutory filing window would have triggered the automatic appointment of a administrator (court-appointed restructuring supervisor) under conditions less favourable to the debtor. Liquidation, the alternative, would have destroyed the operational value of the business entirely.
Legal strategy: choosing arrangement over liquidation
Polish restructuring law offers several procedural pathways. The team assessed each against the client's asset profile, creditor composition, and the time available before statutory obligations required a filing.
The arrangement procedure – postępowanie układowe (arrangement proceedings) – was selected. It allows a debtor to retain management control under court supervision, negotiate with creditors, and put a restructuring plan to a vote. This was preferable to accelerated arrangement proceedings, which cap total disputed claims at a defined threshold the client would have exceeded.
The rationale was economic. The going-concern value of the Polish entity significantly exceeded the estimated recovery under a forced sale. Presenting that differential clearly to each creditor class – particularly the secured banks – was central to securing their support before the formal creditors meeting.
Early engagement with the German bondholder group was prioritised. They had already appointed their own legal representative. Rather than treating this as adversarial, the strategy treated it as an opportunity. A preliminary economic analysis was shared with their counsel before filing, illustrating the recovery differential between arrangement and liquidation. This reduced the risk of coordinated opposition at the creditors meeting.
For context on the broader insolvency and restructuring tools available in Poland, see our overview of insolvency and restructuring services in Poland.
Key milestones and complications encountered
The filing was made within the statutory period. The court appointed a court supervisor – nadzorca sądowy – rather than a full administrator or liquidator, consistent with the arrangement procedure chosen. This preserved the client's management team in operational control.
The proof of debt submission period generated the first significant complication. Several trade creditors submitted claims with inconsistent documentation. Two foreign bank claims required translation and notarisation before they could be accepted. One bondholder submitted a claim in excess of the contractually agreed principal, citing penalty interest calculated under German law. Polish insolvency legislation governs the valuation of claims in Polish proceedings. The excess portion of that claim was contested, and its classification was referred to the supervising court for determination.
The creditors meeting itself was convened approximately six months after filing. The secured bank creditors voted in favour of the restructuring plan at the first session. The trade creditor class reached the required majority after two rounds of discussion. The bondholder class required an additional session after the court ruled on the disputed claim amount. Once that ruling issued, the plan achieved the necessary majority across all creditor classes.
A secondary complication arose from the subsidiary entities in the other EU member states. Their creditors were not formally party to the Polish proceedings. However, inter-company claims created indirect exposure. Resolving those inter-company positions required parallel coordination. Matters touching the corporate disputes dimension of the cross-border group structure were addressed in a separate workstream – drawing on tools discussed in our analysis of corporate disputes in Poland.
Court confirmation of the restructuring plan followed within three months of the creditors meeting. Implementation – covering debt rescheduling, partial write-downs on unsecured claims, and asset disposal undertakings – was phased over a defined period monitored by the court supervisor.
To explore how a similar multi-creditor restructuring strategy might apply to your situation, contact us at info@ferrazwhitmore.com.
Three transferable lessons for cross-border restructuring matters
Lesson 1: Creditor classification determines everything. In Polish insolvency proceedings, the class to which a creditor is assigned shapes both voting weight and recovery priority. International clients frequently underestimate this. A foreign bank that assumes its claim carries the same status it would in its home jurisdiction may miscalculate its position entirely. Verifying classification early – before filing – avoids disputes that can delay or derail the creditors meeting.
Lesson 2: Pre-filing engagement with organised creditor groups pays dividends. The German bondholder group in this matter had already begun coordinating before proceedings opened. Engaging their counsel early, and sharing economic analysis voluntarily, converted a potential blocking coalition into a negotiating counterpart. In cross-border restructurings involving foreign institutional creditors, this preliminary diplomacy is often more valuable than procedural manoeuvring after filing.
Lesson 3: Inter-company claims across jurisdictions require a parallel track. A restructuring plan that resolves the Polish entity's external creditor claims may still leave inter-company positions unresolved. Those positions can affect the economic outcome for the restructured entity – and can create liability exposure in the subsidiary jurisdictions. Addressing them in a coordinated workstream, rather than leaving them to surface during implementation, protects the integrity of the overall restructuring. For a comparable cross-border approach applied in a different jurisdiction, see our case study on corporate restructuring in Portugal.
To discuss how these lessons apply to a multi-creditor restructuring challenge you are currently managing, reach out to info@ferrazwhitmore.com.
About Ferraz & Whitmore
Ferraz & Whitmore is an international law firm based in Lisbon, advising business clients across 46 jurisdictions. Our insolvency and restructuring practice supports clients through Polish and wider European insolvency proceedings, multi-creditor negotiations, and cross-border restructuring plan implementation. As a law firm in Poland and across the EU, we combine Portuguese civil law expertise with English common law tradition. giving clients a practical advantage when creditor populations and applicable legal systems cross borders. Our attorneys have advised on restructuring matters before courts in both civil law and common law systems. Additionally. Our network of local counsel covers the key European markets where inter-company and cross-border issues most frequently arise. Engaging a lawyer in Poland with genuine cross-border experience can be the deciding factor in achieving plan confirmation across a diverse creditor class. To discuss how Ferraz & Whitmore can support your restructuring matter, contact us at info@ferrazwhitmore.com.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.