POLAND Law and Practice Contributed by: Karol Tatara, Paweł Kuglarz, Anna Czarnota and Mateusz Kaliński, Tatara & Partners Restructuring & Insolvency Law Firm
sions on some of the potential changes into national laws, together with remarks and positions towards the Proposal. In all, 49 entities issued their positions within this legislative process, and the European Com - mission is now analysing these documents, aiming to propose a Directive soon. According to Article 1.1, the Proposal covers the fol - lowing areas: • avoidance actions; • tracing of assets belonging to an insolvency estate; • pre-pack proceedings; • the duty of directors to submit a request for the opening of insolvency proceedings; • simplified winding-up proceedings for micro-enter - prises; • creditors’ committees; and • the drawing-up of a key information fact sheet by member states on certain elements of their national law on insolvency proceedings. Within the whole EU, the level of coherence of the above-mentioned issues is relatively low, thus many member states are now faced with the need to assess what changes are required and what amendments to the law are necessary. Test of best satisfaction of creditors The proposal of the Directive also provides for the preparation of a test to assess the satisfaction of cred - itors, as a basis for evaluating the price proposed by the investor. Such a test is also postulated in the EU Restructuring Directive, and could be standardised, for example, in the practice of drafters, so as to provide the broadest and most reliable knowledge for creditors and other parties interested in bankruptcy proceedings. Possible auction The Directive provides for an auction procedure, either with or without the involvement of an insolvency prac - titioner (IP). Where the court decides to appoint an IP, a public auction is not required. Where the court refuses to appoint an IP, however, the public auction procedure is obligatory.
Pre-pack proceedings The proposed amendments regarding prepared liqui - dation (pre-pack) proceedings merit special attention. In the section on pre-pack proceedings, the Proposal provides, among other things, for the appointment of a special, independent body (the so-called “monitor”) to evaluate the pre-pack procedure and the benefits to creditors. It is envisaged that this body may be a bankruptcy trustee and at the same time a party to the pre-pack transaction concluded with the investor. In Poland, such a person could successfully be the temporary court supervisor, who would then become the trustee of the bankruptcy estate. Polish insolvency law creates certain risks for an investor who decides to invest in the preparation of the pre-pack procedure, however. Should the inves - tor make a substantial financial effort to carry out the required audits and due diligence reports, and then lose the bid, their financial investment will be wasted and the investor stands to recover nothing. Whereas the other participant, who may have offered EUR1 more in the bidding process and then won the auc - tion, not only collects the assets (free from any col - lateral, with the execution sale effect) but also without any financial effort whatsoever on their part connected with the preparation of the pre-pack procedure. This is why the popularity of the pre-pack procedure in Poland collapsed after this rule was introduced in March 2020. The solution to this is included in the proposed EU Directive, as it envisages the possibility to get the investor’s ancillary costs of preparing the pre-pack reimbursed. This is an excellent example of how EU law can enor - mously improve national law. The proposal of the Directive emphasises the effi - ciency of the procedure, but also mentions the need to ensure its transparency. These values must always be properly balanced, as must the often-conflicting interests of different participants in the proceedings.
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