JNS LEGAL Law Firm's success in the proceedings for approval of the arrangement (revocation of the arrangement)

New proceedings for approval of an arrangement (PZU)[a new type of restructuring proceedings] have been the real bane of entrepreneurs for almost a year now - especially creditors in the financial industry (banks, factoring, leasing, lending and other companies providing financing or lending capital). We are facing such cases more and more often and currently with increasing success and interesting threads.

One of them was a voted arrangement in which the client we represented (the factoring company) ended up in a separate group of creditors in which he was alone, so it can be considered that dedicated or even created for him.

On behalf of our client, we filed motions to rescind the effect of the notice of arrangement and to refuse to approve the arrangement. The court granted the latter motion and refused to approve the arrangement, deeming it, following our motion, to be grossly unfavorable and detrimental to the creditor. The court, following us, pointed out, among other things, that:

  • "The court finds no justification why a creditor from the group (...) should be satisfied at a much lower level. For this is indicated neither by the amount of his claim nor by the special situation of creditors from other groups."
  • "The grossly unfair terms of the arrangement for the (...) creditor are also evidenced by the fact that despite having a claim in a higher amount than the (...) creditor, the final - as a result of the implementation of the arrangement would receive a lower amount. This is because the satisfaction of the main claim (...) ((...)PLN) at the level of 70% results in the amount of (...)PLN, while the creditor (...)[another creditor from the financial sector] included in group (...)would be repaid in the amount of (...)PLN (100% of satisfaction of the main claim)."
  • "The Court's assessment is not altered by the fact that (...) may also demand payment from (...), who, together with the debtor (...), is liable to the creditor in solidum.”

Significantly, as a result of the above, the subsequent arrangement proposals presented much more favorable payment terms for the customer.

Due to the increasing number of PZU-type proceedings, the increasing boldness of debtors in proposing unfavorable arrangements, and the ability of the Courts to accept them (often without much thought) - the creditor's active participation in PZU plays an increasingly important role.

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