Varieties of creditor protection: insolvency law reform and credit expansion in developed market economies

Abstract This article is, so far as the author is aware, the first to examine in detail the implications of the explosion of covenant-lite loans for English corporate insolvency law. Covenant-lite loans lack certain early warning mechanisms that have traditionally been found in loans to heavily indebted borrowers. Concerns about the implications of covenant-lite loans have been raised in the broadcast and print media, and by economists and central banks in England and the United States. This is an issue that matters to us all. This article argues that covenant-lite lending means that lenders and borrowers may start restructuring negotiations when the scale of the distress is acute, implicating operational and financial liabilities. It provides a detailed analysis of the additional corporate insolvency law tools which may be needed as a result, and explains why this analysis is relevant for the detailed working out of current corporate insolvency law reform proposals.

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13 National Report for Poland

10.1093/law/9780198727293.003.0013 ◽

2016 ◽

Author(s):

Porzycki Marek ◽

Rachwał Anna

Keyword(s):

Law Reform ◽

Bankruptcy Law ◽

Insolvency Law ◽

National Report ◽

Participation Rights ◽

The Law ◽

Insolvency Proceedings ◽

Final Text

This chapter discusses the law on creditor claims in Poland, where a comprehensive insolvency law reform is ongoing. In May 2015, Parliament adopted the final text of the Restructuring Law (RL). Due to enter into force on 1 January 2016, it will cover four restructuring proceedings: arrangement approval; fast arrangement; arrangement; and reorganization. Their common aim will be rescuing the debtor’s enterprise via an arrangement adopted by a majority of creditors. They will apply in case of both threatened and actual insolvency, and replace the current reorganization bankruptcy and rarely used rehabilitation proceedings. The existing Bankruptcy and Rehabilitation Law will have its provisions on reorganization bankruptcy and rehabilitation proceedings repealed, and be renamed ‘Bankruptcy Law’. The chapter deals with insolvency claims, administration claims, and non-enforceable claims in turn. Each section covers: the definition and scope of the claim; rules for submission, verification, and satisfaction or admission of claims; ranking of claims; and voting and other participation rights in insolvency proceedings.

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