Abstract
You can respond to a business crisis in two ways: either by saving it (restructuring or remodelling the company and limiting, at least temporarily, creditor rights, while preserving the jobs and assets of the restructured entrepreneur) or by liquidating it (by realization of the estate and thus liquidation of the economic entity with a partial satisfaction of creditors and simultaneous return of tangible assets to trading). Thus, both liquidation and reorganization are possible in most countries. The problem of the accuracy of choice between the liquidation of an enterprise and its restructuring is one of the main topics of interest for practitioners and theorists dealing with the bankruptcy of enterprises. The decision to restructure constitutes an alternative to declaring an enterprise bankrupt. The aim of the article is to present kinds of restructuring proceedings, taking into account their characteristics, advantages and disadvantages, benefits and threats resulting from the multitude ofrestructuring proceedings including an analysis and statistics concerning the analysed phenomenon in the Polish economy in the years 2016–2018.
Highlights
You can respond to a business crisis in two ways: either by saving it or by liquidating it
Both liquidation and reorganization are possible in most countries [Altman, Hotchkiss, 2007, p. 22]. In both cases there should be a positive effect for the economy, i.e. either the company can be saved, and jobs can be kept or the entity which was no longer capable of conducting its business activities in a manner safe for other market participants, will be eliminated from the market and its liquefied assets will be utilized by other market participants
Comparing bankruptcy statistics in Poland with other EU member countries clearly indicates that bankruptcy proceedings in Poland are used relatively rarely, and insolvent enterprises usually disappear from the market by an informal liquidation [ [Bankruptcy and Restructuring, 2017, p. 6]
Summary
You can respond to a business crisis in two ways: either by saving it (restructuring or remodelling the company and limiting, at least temporarily, creditor rights, while preserving the jobs and assets of the restructured entrepreneur) or by liquidating it (by realization of the estate and liquidation of the economic entity with a partial satisfaction of creditors and simultaneous return of tangible assets to trading). The suggested directive focuses on three elements: common rules for a framework for restructuring at an early stage, which helps enterprises to continue their activity and preserve jobs; provisions allowing entrepreneurs to take a second chance as they will be able to relieve themselves from liabilities within a period of up to three years; allocating resources to Member States to increase the efficiency of the procedures in connection with bankruptcy, restructuring and relieving from liabilities It was not until 22nd July 2014 that the Council of Ministers adopted the New Chance Policy document, which provides many instruments for limiting the risk of liquidation and efficient conduct of corporate bankruptcy. The separation created a clear framework for both sides, which in its construction is similar to solutions from for instance the United States (Chapter 7 – bankruptcy and Chapter 11 – restructuring) [White, 1989, p. 56]
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