Provisions on restructuring and bankruptcy proceedings of companies currently provide entities suffering financial hardships with various options of proceeding. First of all, a rule of second chance applies meaning that restructuring proceedings have priority over bankruptcy proceedings. It allows entrepreneurs to avoid repercussions of bankruptcy and secure creditors’ claims at the same time.

Let’s expand on the significance and implications of this “rule of second chance.”

1. Preservation of Business. One of the primary benefits of prioritizing restructuring proceedings is that it helps in preserving the business. When a company faces financial distress, bankruptcy can often lead to the liquidation of assets. This can result in job losses and a loss of value for shareholders. Prioritizing restructuring allows the company to continue operating, thereby preserving jobs and maintaining business operations.
2. Creditor Protection. The “rule of second chance” also benefits creditors by helping secure their claims. Creditors may have a better chance of recovering a larger portion of their debts compared to bankruptcy proceedings. By prioritizing restructuring, creditors are more likely to receive repayment. In some cases, new agreements may be negotiated that are more favorable to them.
3. Economic Stability. The promotion of restructuring over bankruptcy can contribute to economic stability. When numerous companies go bankrupt simultaneously, it can have a cascading effect on the economy. Prioritizing restructuring allows businesses to continue functioning, pay their suppliers, and contribute to economic activity. This can help mitigate the negative economic impacts of widespread bankruptcies.
4. Entrepreneurial Encouragement. The rule of second chance encourages entrepreneurship by offering a safety net to business owners who may have made mistakes or faced unexpected challenges. This can promote risk-taking and innovation, as entrepreneurs know that if they run into financial difficulties, there is a legal framework in place to help them recover and try again.
5. Negotiation and Debt Restructuring. Restructuring proceedings often involve negotiation between the company and its creditors. This negotiation can lead to more flexible terms for debt repayment, extensions of deadlines, or even debt forgiveness. This flexibility can be a win-win for both the struggling company and its creditors.
6. Legal Process Efficiency. By giving priority to restructuring, the legal system can work more efficiently. Bankruptcy proceedings can be time-consuming and costly, involving the liquidation of assets and lengthy legal battles. Restructuring may offer a quicker and less costly way to address financial issues, benefiting all parties involved.

In summary, the “rule of second chance” that prioritizes restructuring over bankruptcy proceedings offers a lifeline to companies facing financial hardships

It helps businesses to continue operating and preserve jobs. Also protects the interests of creditors and contributes to economic stability. Furthermore, it encourages entrepreneurship by providing a legal framework that supports businesses in overcoming financial challenges.

Licensed restructuring advisory

Karolina Bisek, the owner of the office holds a restructuring advisor license entitling her to act in the capacity of an official receiver (under 28th of February 2003 Bankruptcy Law), court supervisor (under 15th of May 2015 Restructuring Law) and manager (under 15th of May 2015 Restructuring Law) in restructuring proceedings. If your business suffers from shortcomings and you wish to take remedial measures, our specialists are here to serve you.

By cooperating with us, you will receive a detailed analysis of tax, legal and financial situation of your business and feasible restructuring solutions, a selection of best resolution for you and preparation of restructuring plan, a list of claims and payment plan, drawing up a motion for instituting restructuring or bankruptcy proceedings, preparation of arrangement with creditors, carrying out proceedings for an arrangement with creditors and recovery proceedings, including assistance in negotiating terms of arrangement and its realization upon agreed terms and any other restructuring and bankruptcy proceedings-related actions.

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