New legislation concerning insolvency was one of the big changes which allowed Poland to advance to 24th place, one place higher than last year, in the Doing Business 2017 ranking (published in October this year).
The new Polish insolvency law was introduced on 1 January 2016. As a matter of fact it consists of the new restructuring law (under the name "Restructuring Law") and some essential amendments to the Bankruptcy and Recovery Law of 2003 (the "Bankruptcy Law"). The main purpose of new legislation is to make resolving insolvency easier and help entrepreneurs manage financial difficulties.
According to the newly amended Bankruptcy Law, one of the most important changes is new definition of a person who is insolvent. Article 11 provides two main conditions of insolvency: lack of financial liquidity (longer than 3 months) and indebtedness. Second condition concerns situation, when for at least one year the amount of entrepreneur’s obligations exceeds the sum of his assets.
Another modification is new deadline for submitting an application to declare bankruptcy which is now 30 instead of 14 days. In the opinion of lawyers and entrepreneurs, previous regulation (two-week period) was unrealistic and difficult to fulfill.
What is more, the Restructuring Law provides four new restructuring procedures, depending on thebankruptcy probability.This solution is intended to facilitate reaching an agreement between debtor and creditor.
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