Practical aspects of implementing the creditor satisfaction test

Introduction

The Creditor Satisfaction Test was introduced into Polish restructuring law by the amendment of August 23, 2025, implementing Directive (EU) 2019/1023 of the European Parliament and of the Council on preventive restructuring frameworks. This new creditor protection tool covers all restructuring proceedings, except for micro-enterprises, as defined by law. The creditor satisfaction test in restructuring is a mandatory analytical document intended to ensure transparency for creditors and a reliable basis for voting on an arrangement. This regulation strengthens the position of creditors by providing them with professional tools for assessing the benefits of the proposed arrangement compared to an alternative bankruptcy scenario.

The responsibilities of the trustee in preparing the test

Responsibility for preparing the Creditor Satisfaction Test in Restructuring Law rests with the court supervisor, arrangement supervisor, or administrator, who holds the required restructuring advisor license. The trustee is obligated to prepare the document in compliance with the highest professional standards, taking into account due diligence requirements and applying recognised valuation methodologies in accordance with Polish Valuation Principles and International Valuation Standards. In the case of public companies or strategic entities, additional qualification requirements may apply regarding the individuals preparing the test. The trustee may delegate certain tasks to third parties, but this requires the debtor’s consent and does not relieve the trustee of full responsibility for the quality and accuracy of the prepared document.

The procedure for making the Satisfaction Test available to companies requires meeting precise statutory deadlines – the document must be made available to creditors at least 30 days before the vote on the arrangement. The test is an integral part of the package of documents, including the list of receivables, the restructuring plan, and the opinion on the viability of the arrangement. Failure to meet statutory deadlines may result in the vote being postponed and the trustee being held professionally liable. The trustee is potentially liable for errors in preparing the test, which highlights the importance of having adequate third-party liability insurance to protect against financial risk.

Methodology for preparing a creditor satisfaction test

The Creditor Satisfaction Test must include a detailed valuation of the business assuming the implementation of the restructuring plan, taking into account the going concern methodology and long-term business continuity. The document should also present the valuation of assets in a bankruptcy scenario, encompassing both the sale of the business as a whole and the liquidation of individual assets. A key element is determining the expected degree of creditor satisfaction in both scenarios, taking into account the order of satisfaction in accordance with bankruptcy law. The test must also include an analysis of the expected duration and costs of individual proceedings, allowing for a comprehensive assessment of the economic viability of each scenario.

As part of the valuation methodology, the trustee is required to use the DCF method as the primary tool for valuing the going concern. The cash flow forecast should cover a 5-10-year period, taking into account the restructuring plan and realistic assumptions regarding the debtor’s future financial condition. The WACC discount rate must reflect the actual risks associated with the business and the restructuring process. The comparative method requires the identification of comparable transactions in the industry and the application of appropriate market multiples, with adjustments taking into account the specific characteristics of the entity being valued. The asset valuation in a liquidation scenario should take into account the realistic sale terms, the costs of the proceedings, and the likely timeframe for the sale of individual assets.

Particular attention should be paid to analysing the creditor structure and existing security interests, including mortgages, registered pledges, and treasury pledges. The bankruptcy trustee must categorise creditors according to the order of satisfaction specified in Article 342 of the Bankruptcy Law and assess the effectiveness of individual security interests in bankruptcy proceedings. The analysis should consider the impact of security interests on the recovery rate of receivables and the possibility of realising them under a restructuring arrangement.

Practical and procedural aspects

The data collection process requires close collaboration between the bankruptcy trustee and the debtor to provide comprehensive financial, operational, and legal information regarding assets and liabilities. The bankruptcy trustee is obligated to verify the reliability of the data received by analysing accounting records, comparing them with data from previous periods, and consulting with the debtor’s auditors. Analysis of legal documentation regarding ownership titles, encumbrances, and significant commercial agreements affecting the value of the enterprise is also crucial. The bankruptcy trustee should also verify the technical condition of key assets and their compliance with legal and environmental requirements.

Collaboration with external entities requires the bankruptcy trustee to carefully select property appraisers and industry experts with the appropriate competencies and experience in valuing businesses in crisis. Coordination of the interdisciplinary team should include a clear division of responsibilities and a timeline for each valuation stage. The bankruptcy trustee remains responsible for ensuring the quality of the valuations prepared and their consistency with the adopted methodology. Documenting assumptions and justifications requires a transparent description of the data sources, valuation methodology, and key macroeconomic and industry assumptions influencing the results.

The importance of the test in litigation

The Satisfaction Test serves a key evidentiary role in court proceedings, providing the basis for considering creditor objections to a proposed arrangement. Under the new regulation, if a creditor votes against the arrangement and demonstrates a higher recovery rate in bankruptcy proceedings based on the satisfaction test, the court is required to refuse approval of the arrangement. The standard of proof required to challenge the test includes presenting alternative calculations or identifying significant errors in the valuation methodology. The role of court experts in assessing the test can be crucial in disputed cases where independent verification of the assumptions and results presented by the bankruptcy trustee is necessary.

In the context of the cross-class cram-down mechanism, the satisfaction test is a fundamental element in assessing the “fairness” of the arrangement and its compliance with the conditions for compulsory approval. The CCCD mechanism can only be applied if at least one group of creditors, which would receive higher satisfaction in the event of bankruptcy, votes in favour of the arrangement. The test is a fundamental tool for verifying whether this condition is met and assessing whether the restructuring plan ensures fair treatment of all groups of creditors. In appeal proceedings, the test may be subject to allegations of flawed methodology or calculation errors, which underscores the importance of its thorough preparation.

Common practical problems and challenges

The valuation of specific assets is one of the greatest challenges in preparing a satisfaction test, particularly in the case of intangible assets such as patents, licenses, and technological know-how. Problems also arise when valuing real estate in unusual locations or with limited market liquidity, where comparable transactions are lacking. Inventories with limited market liquidity, especially in niche industries, require special attention when determining their liquidation value. Assets encumbered with legal disputes or claims require consideration of legal risk and the potential costs of resolving disputes.

The uncertainty of financial forecasts during restructuring poses another significant challenge, especially given the volatile macroeconomic environment and the unpredictable market response to the restructuring process. Difficulties in forecasting business also arise from the need to consider the risk of the debtor’s failure to comply with the terms of the arrangement and potential changes in the company’s operating structure. The problem of discounting future cash flows under conditions of high uncertainty requires particular caution in determining the discount rate and conducting a sensitivity analysis of key assumptions.

Managing conflicts of interest and external pressures is a crucial ethical aspect of preparing a satisfaction test. The bankruptcy trustee must remain objective regarding the expectations of various groups of creditors, who may have conflicting interests regarding the terms of the arrangement. Pressure from the debtor to adopt optimistic assumptions can affect the objectivity of the analysis, requiring professional independence from the bankruptcy trustee. Conflicts between creditors with different legal statuses require special attention when structuring the test and presenting the results for individual groups.

Conclusions and recommendations

The satisfaction test is a groundbreaking tool that increases the transparency of the restructuring process and improves the quality of creditor decisions. The introduction of a mandatory test will contribute to reducing the number of disputes and appeals by providing creditors with a reliable analytical basis. The new regulation strengthens the position of bankruptcy trustees as key participants in the process, simultaneously raising the requirements for their analytical competence. The expected outcome is to enhance the quality of restructuring arrangements and increase their acceptance among creditors.

Bankruptcy trustees are recommended to invest in business valuation competencies and build a network of specialised experts in various fields. Proper planning of the test is crucial, taking into account the complexity of the analysis and the need to consult with external experts. Continuous monitoring of developing case law and court practice regarding the interpretation of new regulations will allow us to adapt the methodology to the expectations of the courts. The likely issuance of guidelines by the Ministry of Justice regarding the preparation of tests and the development of professional standards in the field of bankruptcy trustees will require systematic improvement of qualifications.

Professional support in preparing creditor satisfaction tests

FA Partners specialises in providing comprehensive support to bankruptcy trustees and restructuring advisors in preparing creditor satisfaction tests. Our team combines experience in business valuation with in-depth knowledge of the specifics of restructuring proceedings, providing reliable and professional analytical opinions.

To discuss the details of our collaboration and tailor our services to the specifics of your case, please get in touch with Tomasz Zapała at tomasz.zapala@fapartners.pl, Managing Partner of FA Partners, restructuring advisor, and CFO. Our team guarantees timely completion and the highest substantive standards of the analyses prepared.