How shall we calculate debt claims filed in foreign currency in restructuring proceedings?

By July 17, 2017August 28th, 2017Restructuring

Majority of debt claims filed in restructuring proceedings are expressed in Polish zloty; yet, there are also some expressed in foreign currencies. If such is the case, how shall we proceed?

If a debt claim is expressed in a foreign currency, the amount claimed needs to be recalculated into Polish zloty. The purpose of such currency conversion is to apply one and the same currency for the estimation  of the value of debt claims listed in the List of Debt Claims in order to  comply with the principle of equal treatment of creditors. The List shall precisely define the order of priority of the creditors concerned, for that purpose we need to apply one and the same measurement unit in the expression of the debt amounts.

Apart from adopting one currency, we need to know what date shall apply to such currency conversion and who  is authorized to do it. According to Article 84 of the Restructuring Law,  debt claims are listed in the List of Debt Claims by a receiver or an administrator. Therefore, on the basis of the Law, we can assume that either a receiver or an administrator are to properly recalculate the amounts of debt claims expressed in foreign currencies at the stage of their registration in the List of Debt Claims.  The  average exchange rate of NBP published as at the opening date of the proceedings shall apply to the aforementioned currency conversion. If, however, the currency is not listed in NBP table of foreign exchange rates, then we need to determine its market value as at the opening date of the restructuring proceedings.

Currency conversion is only to facilitate the estimation of priority of creditors. It does not change the contract currency or the amount of liability expressed in a foreign currency into one expressed in PLN. The primary debt amount remains in its original currency and shall be repaid in that very currency.

The above rules can be modified in arrangement proceedings. The arrangement proposals may provide for a debt amount to be repaid in Polish zloty e.g. at the exchange rate specified in the List of Debt Claims or at another rate agreed by the creditors.

If, however, an executed contract specifies the amount of liability in a foreign currency and alternatively in Polish zloty, the amount expressed in a foreign currency is not to be recalculated and the amount specified in Polish zloty is registered in the List of Debt Claims.

Author: Karolina Pacholska