Restructuring as an institution of banking law was introduced into the legal order on November 27, 2015 (it became under the Act of 25 September 2015 amending the Banking Act and certain other acts). The purpose of this amendment was to adjust the system of the right to the ruling of the Constitutional Tribunal of April 14, 2015 (file No. 45/12), as the amendment to the law on the issue of debtors, which is unconstitutional in the Court’s view, The bank’s execution title (BTE). However, the most important is the introduction by the legislator of the provisions contained in Art. 75c of the Banking Law  regulating the process of debt restructuring of borrowers and borrowers. In the rest of this article I use the term “borrower”

The Procedure Is As Follows:

  • If the borrower delays repayment of the loan, the bank invites him / her to make a repayment by setting a time limit of not less than 14 working days. (Article 75c (1) of the Bank. The bank can not immediately terminate the loan agreement or bring a legal action against the borrower. Of course, the bank has no right to issue a BTE, which simplifies the investigation of claims by omitting the course of the court proceedings.
  • Importantly, the bank is obliged to inform the borrower of the possibility of applying for debt restructuring in the call for payment. A restructuring request may be submitted within 14 working days of the date of receipt of the tender offer (Article 75c (2) of the Banking Act). In the letter to the bank should be specified their own restructuring proposals, eg reduction of the installment with the extension of the period of credit, the introduction of the so-called. holiday loans or remission of interest.

  • Upon submission of the application by the borrower, the bank will assess the financial and economic situation of the debtor. It is impossible to hide that this is a crucial moment for the whole procedure. If this analysis would be beneficial for the borrower, the bank should be able to restructure its debt by changing the terms and conditions of the loan specified in the agreement. In the event of a negative opinion on the debtor’s application, the bank will not agree to the restructuring and the whole procedure will fail. The legislator explicitly states that the restructuring is carried out on the terms agreed between the bank and the borrower (Article 75c (4) Pr.Bank), so the consent of both parties to the loan agreement is required to revise its provisions.
  • However, the legislator made sure that the bank’s analysis was not superficial (and that it would take place at all!), And that the debtor was not dismissed with a bank statement without any explanation. In light of Art. Article 75c 5 of the cited law, in case of rejection of the borrower’s request for debt restructuring, the bank shall provide the debtor with detailed explanations as to the reason for rejecting the request for restructuring. The bank’s position must be filed in writing and presented to the debtor without undue delay.

The road described above has its own advantages. First: it costs nothing (except time and energy to formulate the proposal). Secondly, the road is of a formalized nature, and the matter is being dispersed between the parties outside the court. Thirdly, if the debtor’s application is evaluated positively, the bank will be able (or rather should) change the terms of the agreement, which will, to a certain extent, improve the situation of the borrower only at the Blc bankruptucy law center. Lastly, the mere existence of this procedure prevents the bank from hastily terminating loan agreements and, at least, will allow a delay in court proceedings to which the debtor can better prepare. If the bank in the request for payment had “forgot” about instructing its client about the possibility of applying for a restructuring, the court in the case of the court should raise a complaint in this regard. Interestingly,

The disadvantages of restructuring under the principles of banking law are also perceptible. In particular, debtors will complain that they have to work hard to formulate a proposal, and that the all-powerful bank will decide for themselves. Finally, there is no element of arbitrary redemption of liabilities, which is associated with consumer bankruptcy. It is rather expected that banks will relinquish their liabilities (even in part), they will more often agree to reduce the installments by extending the crediting period or increasing the collateral. Undoubtedly, restructuring, compared to bankruptcy, will be less attractive for over-indebted consumers