Hospital in Giżycko – the first recovery procedures
On March 1, 2017, the District Court in Olsztyn, 5th Commercial Department, decided to commence recovery proceedings for “Szpital Giżycki” Sp. z O.O. (case ref. no. V GR 4/7).
Therefore, in line with the Restructuring Law act, the court has taken over the debtor’s own management and designated a judge – receiver.
As the new receiver informed the creditors, “Commencement of the recovery proceedings does not result in any changes to everyday functioning of the Hospital in Giżyck”.
It does not result in any changes to the Hospital’s functioning, but has significant consequences for the creditors:
– invoices issued by the date of commencement of the proceedings (by April 30, 2017 inclusive) are at this time u n p a y a b l e – the creditor must wait for the proceedings to complete, and that date cannot be foreseen. Filing a suit with the court after March 1 shall mean charging the creditor with the costs of the proceedings, therefore it is pointless.
– It is very likely that in the case of the restructuring/recovery plan’s entering into life, creditors will not be satisfied in 100%. Will they lose only interests (and possibly the costs of the previously commenced proceedings) or also a part of the main receivables, depends on numerous factors, e.g. the majority of creditors’ disposition towards concessions in terms of the amount of amortization. Usually, payment is also divided into installments, often for a period of several years.
– A hospital covered by such proceedings usually continues its operations and is obligated to pay for the purchased goods on an ongoing basis (partial deliveries from tender agreements). A mystery is, however, whether the hospital’s loss of solvency is permanent enough that it will not be able to also settle those ongoing payments. In such a case, termination of the agreement would be justifiable.
It is the first public hospital, which has decided to pursue such a solution – will there be any imitators when the hospital chain is announced?