Change of a creditor vs a voting right in restructuring proceedings

By March 20, 2017August 28th, 2017Restructuring

A debt claim acquired during restructuring proceedings will not automatically mean acquisition of the right to vote at creditors’ meetings. Such a voting right will depend  on the manner of a debt claim acquisition.

A debt claim can be acquired by way of singular succession, usually via transfer (assignment) e.g. sale, or by way of universal succession e.g. via inheritance. In case of a debt claim transfer, if the restructuring proceedings are already pending, as per principle the new creditor who has acquired a debt claim cannot enjoy the right to vote . The  acquisition as such is, however, fully effective and does not prevent the new creditor from enjoying other rights granted in the course of the proceedings. Therefore, if arrangement with creditors is approved, such new creditor will be included therein. Exclusion from voting does not entail exclusion from the binding force of the arrangement that has already been concluded and validly accepted.

The aforementioned principle does not apply to arrangement approval proceedings for the reason that here no restructuring proceedings are opened, whereas the entire procedure concerns only the approval of the arrangement . Creditors are notified about opening of the restructuring proceedings in court only after the decision on approval of the arrangement has been announced. Such procedure means that there is no option of limiting the voting rights with respect to the arrangement.

Furthermore, the voting right is not limited if the debt claim has been acquired after the information on the manner and venue of the sale of a debt claim has been published in the Central Register of Restructuring and Bankruptcy [Centralny Rejestr Restrukturyzacji i Upadłości] and its buyer is the highest bidder. This manner of debt claim acquisition assumes that the buyer in this type of procedure  is unable to undertake acts which would in any way manipulate voting on the arrangement. Regulations concerning the aforementioned Register come into force and effect on 1 February 2018, by that date the regulations which require announcements to be published  in the Court and Commercial Gazette [Monitor Sądowy i Gospodarczy] shall apply.

For the clarity purpose, it must furthermore be explained that if a new creditor has acquired a debt claim as a result of the repayment of debt,  for which he/she was personally liable (e.g. guarantor) or materially liable (e.g. pledger) and the debt was repaid under a legal relationship established prior to the opening of the restructuring proceedings, then such a “new” creditor has the right to vote.

Acquiring a debt claim via universal succession (e.g. by way of inheritance) does not deprive the new creditor of the voting right.

Author: Karolina Pacholska