How does a debtor's restructuring or bankruptcy affect security for a bank's claims? In practice, it is only when the debtor becomes insolvent that the actual effectiveness of the security interest can be verified. Its value depends not only on how it is established, but also on how it functions in restructuring or bankruptcy proceedings.
This issue is analyzed by Katarzyna Kostępska, attorney at law, a partner at KKG Legal and head of the Restructuring and Insolvency Practice, and Dominika Pastuszka, attorney at law, senior associate at KKG Legal in the Banking, Finance, and Business Insurance Practice, in a practical commentary published in SIP LEX Wolters Kluwer.
What bank security interests do the authors analyze?
The publication “Security Interests Used by Banks and the Possibility of Enforcing Them in Bankruptcy and Restructuring” discusses four types of security interests:
- transfer of title as security,
- assignment of future receivables from the lease of premises as security,
- a registered pledge over a pool of assets with a variable composition,
- a financial pledge on brokerage instruments.
Katarzyna Kostępska, attorney at law and Dominika Pastuszka, attorney at law, explain how the various security interests work and how they can be enforced, and then analyze their effectiveness when restructuring proceedings are initiated against a debtor or the debtor is declared bankrupt.
How does a debtor’s restructuring affect the bank’s security interests?
Restructuring may significantly change the way a bank can enforce a previously established security interest.
The fact that a creditor holds a security interest does not automatically mean that the creditor will be excluded from the arrangement or will be able to enforce that security interest under the rules in effect before the commencement of the proceedings.
Factors that are relevant to assessing the bank’s position include, among others, the type of security interest, its value, the proposed method of satisfying the creditor, and the legal framework applicable to the proceedings in question.
What Changes did the 2025 Amendment to the Restructuring Act Bring About?
The commentary devotes particular attention to the changes to the Restructuring Act introduced by the amendment of July 25, 2025.
One of the most significant consequences of the new regulations is that secured claims are automatically covered by the arrangement by operation of law. This change affects the banks’ current status as secured creditors and the manner in which they may enforce their security interests during the restructuring process.
The authors also analyze the significance of the value of the collateral for the bank’s situation and how legal changes affect the extent and manner of satisfaction of the creditor’s claim.
How can one assess the effectiveness of a security interest in the event of the debtor's insolvency?
From the bank’s perspective, the effectiveness of a security interest should not be assessed solely at the time it is established. It is also important to consider how it will function in the event of the debtor's restructuring or bankruptcy.
When selecting security interests, it is therefore advisable to also consider the possibility of insolvency and analyze whether—and on what terms—the bank will be able to enforce the security interest and obtain satisfaction.
The commentary shows that the true value of a security interest becomes apparent precisely in a crisis—when it must be enforced in the context of the debtor’s restructuring or bankruptcy.
The full commentary is available in Wolters Kluwer's SIP LEX link.