Restructuring Through State-Sponsored Support Schemes
By Daniel Klementewicz, Penteris
Months of government restrictions have taken their toll on the global economy, leaving many a business owner in desperate need of financial support. A possible solution for businesses in Poland came in the form of a rescue and restructuring scheme introduced in July 2020, offering three types of aid: (i) rescue aid, (ii) restructuring aid, and (iii) temporary restructuring support.
Rescue aid is basically a short-term loan aimed at providing micro, small-, and medium-size enterprises with financial liquidity that will allow them to develop a restructuring or liquidation plan. Large enterprises may also benefit from rescue aid, although the application process is slightly more complicated.
Restructuring aid is meant to supplement the efforts of a business that already has a far-reaching restructuring plan in place. It offers the possibility of taking up bonds or shares, modifying loan repayment schedules, effecting debt-to-equity swaps, or granting relief from enforcement of administrative fines. Businesses of all sizes can benefit from this type of aid for up to 10 years.
Temporary restructuring support is directed towards helping micro, small-, and medium-size enterprises that are capable of conducting the restructuring process on their own but require financial support to ensure successful implementation. It takes the form of a loan, usually granted for 18 months, and may also be used in conjunction with rescue aid.
The new scheme, which has an annual budget of around USD 33 million, and will continue for a decade, provides for a practical solution for distressed businesses that do not qualify for any other financing available on the market. In combination with new, streamlined types of court restructuring and insolvency proceedings, this is a much-needed boost for the restructuring market in Poland.
Daniel KlementewiczGGI member firm
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Daniel Klementewicz is respected for his in-depth understanding of practical aspects of deal-making and business setups. His unique skills focus on each stage of the investment life cycle, including purchase, rollout, integration, reorganisation, and exit.
Published: Debt Collection, Restructuring & Insolvency Newsletter, No. 13, Spring 2021 l Photo: ilolab - stock.adobe.com