Use the Lexology Navigator tool to compare the answers in this article with those from other jurisdictions.
Trends and regulatory climate
What is the current state of the lending market in your jurisdiction and have any new trends emerged over the last 12 months?
Pursuant to the quarterly data published by the National Bank of Poland (www.nbp.pl/homen.aspx?f=/srodeken.htm), over the last 12 months the criteria for granting secured loans to businesses have tightened slightly and the non-interest costs of credit have increased. Some lenders have tightened requirements concerning collateral, reduced the maximum credit facility amount and shortened the facility period. Other terms of credit remain stable.
As a result of the significant slowdown of investment in Poland (including projects partially financed through EU funds), the rapidly changing legal framework and the increased risk of granting credit to certain market sectors (eg, mining, renewable energy, fuel and commercial real estate), the number of secured long-term loans granted to businesses and public entities has generally decreased over the last 12 months. Loans granted to small and medium-sized enterprises constitute an exception – here there continues to be stable growth.
Is secured lending a regulated activity in your jurisdiction?
Under the Polish legal system there are two types of secured lending: credit facilities and secured loans. The former is considered to be a banking activity (ie, an activity that can be conducted only by Polish banks, branches of foreign banks and EU credit institutions acting through a branch or on a cross-border, single EU passport basis). This activity is regulated by the Polish Banking Law.
The grant of loans (including secured loans) is not a regulated activity. However, lenders that grant loans (eg, specialised lending companies and insurers) must comply with civil law provisions relating to loans and collateral.
In the case of loans granted to consumers and mortgage credits, the relevant consumer laws and mortgage credit regulations also must be observed.
Therefore, secured lending of one type or another is available to both regulated and non-regulated entities. However, certain commonly used types of security interest (eg, financial pledges) are available only to regulated entities – in particular, banks and financial institutions.
Are there any specific regulatory issues which a prospective borrower should consider when arranging or entering into a secured loan facility?
Borrowers should always take into consideration whether their assets or rights can constitute collateral. The establishment of a security interest over certain types of asset (eg, funds maintained in several types of bank account) is prohibited by Polish law. Contractual arrangements that are binding on the borrower (eg, pactum de non cedendo) should also be taken into account.
Are there any specific regulatory issues which a prospective lender should consider when arranging or entering into a secured loan facility?
Prospective lenders should be aware of the regulatory regime applicable to the grant of credit facilities. This activity is governed by the Polish Banking Law and may be conducted only by Polish banks, branches of foreign banks or credit institutions established in Poland, or credit institutions acting on the basis of a single EU passport.
Lenders that wish to grant civil law-regulated loans need to be aware of the relevant provisions of the Polish Civil Code and other laws, as well as of the wide-ranging regulations governing business activities in Poland.
In addition, a range of separate regulations governs the grant of consumer loans. For instance, there are particular restrictions concerning:
- how the loans are marketed, originated and sold;
- how lenders administer the loans on an ongoing basis; and
- how to deal with borrowers that fall behind with their payments.
In addition, the EU Mortgage Credit Directive was recently implemented into Polish law through the adoption of the Act on Mortgage Secured Credit. Therefore, lenders active in this area should pay particular attention to its requirements.
Other regulations to be taken into account are those covering the establishment of security interest. In particular, lenders should consider the following laws:
- the Act on the Land and Mortgage Register and Mortgages, which provides the legal framework for the establishment of mortgages;
- the Act on Registered Pledges and the Pledge Register, which regulates the registrable, fixed or floating types of security that can be established over various movable assets and rights;
- the Act on Certain Financial Collateral, which enables certain types of lender (eg, banks and credit institutions) to have certain types of security interest over bank accounts and financial instruments established in their favour; and
- the Civil Code, which regulates other types of collateral that are not covered by a separate legal regime (eg, security assignment of rights, security transfer of property, ordinary pledges and suretyship).
Loans granted by entities whose business activity does not include providing financing will be subject to tax on civil law transactions.
Are there plans or proposals for reform or significant changes to the regulatory landscape in this area?
Lenders must be aware of their obligations under the recently amended Anti-money Laundering and Counter Terrorism Financing Act, which will come into force on July 13 2018. A risk-based approach will be the basis of the mandatory know-your-customer procedure. This procedure will include an analysis of the factors relevant from the perspective of a specific client, as well as the conditions indicated in risk assessment documents prepared at:
- the obligated institution level;
- the national level; and
- the European level.
Another piece of potential legislation that lenders should be aware of is the draft Act on the Restructuring of Credit Facilities Denominated and Indexed to a Currency other than the Polish Currency and on the Prohibition on Granting such Credit Facilities. The draft sets out the principles of restructuring loans that:
- are denominated or indexed to a currency other than the Polish zloty; and
- were granted to consumers after January 1 2000 for a period exceeding 60 months.
The draft act prohibits the granting of such loans and sets out rules for settling the overpayment of loans that have been repaid in part or in full.
With respect to security, limitations regarding the maximum mortgage amounts established over agricultural land are to be established.
Structuring a lending transaction
Who are the active providers of secured finance in your jurisdiction (eg, international banks, local banks or non-bank financial institutions)?
The most active providers of secured finance in Poland are banks – both international (mostly German) and domestic. However, in recent years insurance companies and mezzanine debt funds have played a noticeable (although not substantial) role on the market.
Is well-established market-standard facility documentation used in your jurisdiction for secured lending transactions?
In most cases, Polish law-secured lending transactions are governed by documentation largely based on recommended forms published by the Loan Market Association (LMA). In November 2016 the Polish Bank Association launched a recommended Polish language version of an LMA-based form for Polish law-governed loan facility agreements. This form does not have the status of an LMA document. When they are not represented by external legal counsel, domestic banks often use their own standard forms of documentation, especially in low-value transactions.
Are syndicated secured loan facilities typical in your jurisdiction?
Yes, syndicated loan agreements are very common, especially for large investments (eg, within project finance or larger real estate finance transactions).
How are syndicated facilities normally structured? Does the law in your jurisdiction allow a facility agent to be appointed to act on behalf of other banking syndicate members?
Typically, within syndicated facilities all lenders are parties to the loan facility agreement, with one also acting as agent and mandated lead arranger. The agent's role is (among other things) to coordinate the loan utilisation (including verifying the fulfilment of conditions precedent), payments, collateral administration, communication, and day-to-day administration of the loan facility.
Does the law in your jurisdiction allow security and guarantees to be held on trust by a security trustee for the benefit of the banking syndicate?
The concept of trust as understood in common law jurisdictions is not recognised in Poland. However, within syndicated lending transactions, in most cases the administrative agent also acts as the security agent in the name and on behalf of all the secured parties. In such cases, it holds the collateral on behalf of all the lenders, performs ministerial and administrative functions necessary to maintain the valid security interest and exercises remedies with respect to collateral in the case of an occurrence of an event of default. Moreover, Polish law makes a distinction between the legal concepts of pledge administrator and mortgage administrator. Guarantees are granted in favour of respective lenders.
In some secured lending transactions, the concept of parallel debt is introduced where the security agent has a separate claim against the borrower and this claim is secured and guaranteed.
Special purpose vehicle financing
Is it common in secured finance transactions for special purpose vehicles (SPVs) to be used to hold the assets being financed? Would security generally be given over the shares in the SPV or would lenders require direct asset security?
Yes, in Poland it is common in secured finance transactions for SPVs to be used to hold the assets being financed. When an SPV is used, the lender is granted security over the shares in the SPV as well as over its assets.
Is interest most commonly calculated by reference to a bank base rate or a market standard variable reference rate (eg, LIBOR, EURIBOR or HIBOR)? If the latter, which is the most commonly used reference rate in your jurisdiction?
Interest is most commonly calculated by reference to a market standard variable reference rate and then increased by the agreed margin. Depending on the currency in which the loan facility is granted, the most commonly used reference rates are EURIBOR and WIBOR (the Warsaw Interbank Offered Rate). The loan facility agreements usually contain provisions determining other benchmarks in case of lack of screening of a market standard variable reference rate. As benchmark interest rates may become negative, the parties usually agree that if this happens, the rate will be deemed to be zero.
Are there any regulatory restrictions on the rate of interest that can be charged on bank loans?
The rate of interest that can be charged on bank loans is limited by mandatory provisions of Polish law. Depending on whether a loan facility is being granted by a bank or a non-bank lender, the Polish Civil Code and the Act on Terms of Payments within Transactions Involving Commerce set limits for contractual and default interest. The limits for both types of interest are linked to the current reference rate published by the National Bank of Poland and they are above the standard market rates.
Use and creation of guarantees
Are guarantees used in your jurisdiction?
Yes, guarantees are used in Poland. A distinction can be made between bank guarantees, insurance guarantees and guarantees issued by entities that are neither banks nor insurers. With respect to the latter category, two types of guarantee are recognised:
- Suretyship – by a suretyship agreement, the surety commits the creditor to perform an obligation if the debtor does not perform it. The validity of suretyship depends on the validity of the underlying obligation of the debtor. Suretyship is regulated by the Civil Code.
- Guarantee – guarantees are not regulated by the Civil Code, but the legal construction of a guarantee is commonly recognised by Polish courts based on the freedom of contract rule.
What is the procedure for their creation?
In the case of suretyship, pursuant to the Civil Code, the surety’s declaration should be made in writing, otherwise it is invalid.
As mentioned, guarantees are not regulated by the Civil Code and therefore there are no statutory requirements relating to the form of a guarantee. Guarantee agreements are usually executed in written form.
A bank guarantee and an insurance guarantee should be made in writing, otherwise they are invalid.
Do any laws affect or restrict the granting or enforceability of guarantees in your jurisdiction (eg, upstream guarantees)?
Some of the key laws which may affect the granting or enforceability of guarantees are:
- Actio pauliana – Pursuant to the Civil Code, if a third party has gained a benefit as a result of a legal transaction effected by a debtor to the detriment of its creditors (ie, where the debtor became insolvent or became insolvent to a greater extent as a result of the transaction), each of the creditors may demand that the transaction be recognised as ineffective if the debtor consciously acted to the creditors' detriment and the third party knew about it or with due diligence could have known about it (and it is alleged that the third party knew that the debtor acted to the creditors' detriment if the third party remains in a permanent or close economic relationship with the debtor) or the third party obtained the benefit free of charge.
- Insolvency and restructuring laws – a guarantee may be at risk of being set aside under Polish insolvency and restructuring laws if it was granted by a company a certain period prior to the onset of insolvency or restructuring proceedings.
- Financial assistance regulations – a joint stock company may directly or indirectly finance the acquisition of or subscription for the shares that it issues, in particular by making loans, providing advance payments or creating security, provided that the financing is granted on market terms and the solvency of the debtor has been checked, the acquisition or subscription is for a fair price, the financing is made from the reserve capital created by the company for that purpose and the financing is based on and within the limits set out in an earlier resolution of the general assembly of the company. In the case of a limited liability company, the shareholders may not receive, under any title, any payments from the company's assets needed to fully finance the share capital.
Subordination and priority
Describe the most common methods of structuring the priority of debts and security.
Debts may be classified in the following layers, starting from the most privileged:
- senior secured debt;
- senior unsecured debt;
- mezzanine debt;
- subordinated debt; and
The most common methods of structuring the priority of debt and security are the contractual subordination of debt and the creation of different ranking security in rem over the assets of the debtor.
In the event of the insolvency of the borrower, the holders of the security interests in rem will be satisfied from the secured assets before all other creditors (in accordance with their priority).
The priority of security interests is determined by chronological order; however, in general, the priority of the security interests in rem may also be amended contractually.
It is also typical for the various classes of lender to sign an intercreditor agreement and for the borrower to regulate the priority of debts, the security and the manner of enforcing the security.
Documentary taxes and stamp duty
Are any taxes, stamp duty or other fees payable on the granting of a loan, guarantee or security interest, or on its enforcement?
Tax on civil law transactions Loan agreements (and amendments to such agreements, if they result in an increase of the principal) may be subject to a 2% tax on civil law transactions (TCLT) if:
- the rights arising out of the loan agreement are exercised in the territory of Poland (if the loan is granted by a foreign company, this condition is not fulfilled); or
- the rights arising out of the loan agreement are exercised abroad, but the borrower has its place of residence or registered office in Poland and the loan agreement was executed in Poland.
Tax obligations arise when a loan agreement is executed. Generally, the tax base is the amount or value of the loan (principal). If the principal is to be paid in tranches and the total amount of a given tranche is unknown (eg, in the case of an agreement not specifying the total amount of the principal), the tax is due in relation to a given tranche once it is paid out. The borrower is obliged to calculate and pay the tax within 14 days of executing the loan or receiving the tranche of the loan.
As a rule, loans granted by financial institutions and entities whose business activity consists of providing financing (and are considered as value added tax (VAT) payers) are not subject to TCLT (as they are subject to VAT – they benefit from VAT exemption). Moreover, loans granted by a shareholder to the company in which it holds the shares (a limited liability company or joint stock company) are exempted from TCLT.
A guarantee or a security is not subject to TCLT.
The establishment of a mortgage is subject to TCLT. The tax rate is 0.1% of the amount of the secured debt – if it is possible to determine the amount of the debt – or PLN19 (approximately €5) to secure a debt of an undetermined amount.
Court fees There are court fees involved in the registration of registered pledges and mortgages in the relevant registers. Additional court fees are payable if any amendments to the registered pledges or mortgages are registered.
Stamp duty Stamp duty is payable if the application to register a security is filed by an attorney in fact.
Notarial fees Notarial fees are involved if any security interest is executed in the form of a notarial deed (eg, mortgage) or with signatures certified by a notary (eg, a civil pledge over shares in a limited liability company) or with the date certified by a notary (eg, a security assignment or security transfer of assets). In any case, notarial fees are capped at PLN10,000 (approximately €2,350).
Withholding tax Unless an exemption applies, interest payments made to a non-Polish entity under a loan – as well as guarantees and securities granted – are subject to withholding tax.
Payments of interest to Polish entities other than individuals are not subject to withholding tax.
The general withholding tax rate on interest paid, guarantees and securities granted to non-Polish residents is 20%. The rate may be reduced or eliminated by way of a double taxation treaty concluded between Poland and the payment recipient’s country of residence, under certain conditions (ie, the payer obtains a valid certificate of fiscal residence of the payment recipient/beneficial owner).
According to the relevant Polish provisions that are based on the EU Interest Royalty Directive, revenues arising out of interest payments are exempted from withholding tax if all of the following conditions are met:
- The company making the payment is related to a company located in another EU or European Economic Area (EEA) member state that is the recipient of the payment (a related company being a direct shareholder company, direct subsidiary company or direct sister company that has held directly at least 25% of the capital of the other company for an uninterrupted period of two years).
- Both the payer and the recipient company:
- are tax resident in an EU/EEA member state;
- are subject to corporate income tax in the European Union or European Economic Area; and
- are in the form of a company listed in the annex to the Polish Corporate Income Tax Act.
- The recipient must present a certificate of tax residence issued by the tax authorities in its country of residence and a signed declaration that it is subject to tax on its entire taxable income in its country of residence.
- The recipient must present a statement that it is the beneficial owner of the interest received.
Since the obligation to pay withholding tax is subject to double taxation treaties to which Poland is a party, if the above exemption does not apply, the relevant double taxation treaty should be verified to determine any possible reduction or exemption (eg, the treaty between Poland and France provides for no withholding tax on interest). Moreover, a number of Polish double taxation treaties provide for an exemption applicable to interest payable to banks.
Corporate income tax As a rule, income generated on transactions of granting guarantees, securities or any other security by a foreign company are not subject to corporate income tax in Poland (other than the obligation to pay withholding tax).
Notwithstanding this, if a guarantee or security is granted free of charge, it may be treated as a free-of-charge benefit that leads to the generation of revenue subject to corporate income tax for the entity to which the benefit was granted.
VAT Transactions granting guarantees, securities or any other security are generally subject to VAT, but benefit from VAT exemption if they take the form of providing services.
In such case, services granting securities, guarantees and any other security for financial and insurance transactions and services of agency in the supply of such services are exempt from VAT. The management of credit guarantees by a creditor or lender also benefits from VAT exemption.
Is it more common for local law to govern the terms of the facility documentation or is the law of another jurisdiction often elected by the parties (eg, English law or New York law)?
The choice of governing law usually depends on the jurisdiction of incorporation and internal policies of the lender. In the case of Polish lenders, the governing law of the facility documentation is usually Polish or, in some cases, English.
In cross-border transactions where foreign lenders provide financing to Polish borrowers or where Polish companies are guarantors, the law of the jurisdiction in which the lender has its seat is usually chosen as the law governing the facility documentation.
Are there any restrictions on the making of loans by foreign lenders or the granting of security or guarantees to foreign lenders?
Polish law does not distinguish between Polish and foreign lenders with respect to the making of loans or creating security, unless specific economic sanctions apply to a relevant country. However, certain types of security interest, namely financial pledges, are available only to a definite group of lenders specified in the Act on Certain Financial Collateral. Therefore, when considering the establishment of a security interest regulated by this act, foreign lenders should always verify whether it can be created in their favour.
Are there any exchange controls that restrict payments to a foreign lender under a security document, guarantee or loan agreement?
In principle, compliance with EU rules on payments – such as EU Regulation 2015/847 on information accompanying transfers of funds – must be ensured. Anti-money laundering and tax considerations may also need to be taken into account.
In the case of a payment to a foreign lender, residents must comply with certain notification requirements set out in the Foreign Exchange Law.
International money transfers relating to foreign exchange dealings must be made with the intermediation of authorised banks or payment institutions or electronic money institutions authorised to provide payment services if the amount of transfer or settlement exceeds the equivalent of €15,000. This requirement does not apply to cases in which a party to the settlement is:
- an authorised bank;
- a domestic payment institution;
- a branch of an EU payment institution;
- a domestic electronic money institution; or
- a branch of an EU electronic money institution.
Security – general
Is it possible to create a security interest over all assets of an entity? If so, would a single security agreement suffice or is a separate agreement required for each type of asset?
Under Polish law, it is possible to grant security over all of the movable assets and rights of a Polish company. Granting security over all of a company's assets may be achieved by the establishment of a registered pledge. However, real property cannot be encumbered by a registered pledge and separate security (namely a mortgage) must be established over it.
Release of security
What are the formalities for releasing security over the most common forms of assets?
In principle, security interests of an accessory nature (eg, pledges and mortgages) expire if the secured obligation expires. In the case of other types of security interest, the conditions for expiry are regulated by the underlying agreement that established the security interest.
It is common for lenders to issue a release letter after the secured obligation is repaid to evidence the expiry of the obligation and the related security.
If the secured obligation does not expire but the related security is to be released, a waiver letter from the lender is required to release the security.
Asset classes used as collateral for security
Can security be granted over real estate? If so, what are the most common forms of security granted over real estate and what is the procedure?
Yes, security can be granted over real estate. The most common form of security over this asset class is a mortgage.
In principle, the establishment of a mortgage requires the execution of a mortgage agreement or mortgage statement in the form of a notarial deed (subject to certain statutory exceptions) and registration in the relevant land and mortgage register.
Land and mortgage registers in Poland are maintained by the divisions of the district courts with jurisdiction over the area in which the real estate is located.
Machinery and equipment
Can security be granted over machinery and equipment? If so, what are the most common forms of security granted over this kind of property and what is the procedure?
Yes, security can be granted over machinery and equipment. The most common forms of security over this asset class are pledges and security transfers of ownership.
The establishment of a pledge requires the execution of a pledge agreement and, in the case of a registered pledge, registration of the registered pledge in the pledge register.
There are no statutory requirements relating to an agreement for the security transfer of ownership. However, in order to be effective against the bankruptcy estate of a security provider, it should be executed in written form with the date certified by a notary.
Can security be granted over receivables? If so, what are the most common forms of security granted over this kind of property and what is the procedure?
Yes, security can be granted over receivables. The most common forms of security over this asset class are pledges and security assignments.
The establishment of a pledge requires the execution of a pledge agreement and, in the case of a registered pledge, registration of the registered pledge in the pledge register.
With regard to security assignment, the Civil Code provides that if the receivable is confirmed in writing, its assignment must also be confirmed in writing. However, in order to be effective against the bankruptcy estate of a security provider, the security assignment agreement should be executed in written form with the date certified by a notary.
Financial instruments and cash
Can security be granted over financial instruments? If so, what are the most common forms of security granted over this kind of property and what is the procedure?
Yes, security can be granted over financial instruments. The most common form of security over this asset class is financial collateral (however, it may be granted only in favour of regulated entities listed in the Act on Certain Financial Collateral).
Financial collateral may take the following forms:
- transfer of the right to financial instruments;
- financial pledge over financial instruments (non-registrable security instrument); or
- the blocking of accounts recording financial instruments.
In order to establish a financial collateral, a relevant agreement must be executed in written form. The Act on Financial Collateral also states that the financial collateral should be recorded – the manner of which depends on the financial instrument over which the financial collateral is established.
The other common type of security over a financial instrument is a registered pledge. The establishment of a registered pledge requires the execution of a registered pledge agreement and the registration of the registered pledge in the pledge register.
Can security be granted over cash deposits? If so, what are the most common forms of security granted over this kind of property and what is the procedure?
Yes, security can be granted over cash deposits. The most common forms of security granted over this asset class are a cash blockade, a power of attorney to a bank account and a cash deposit.
A written form of a document creating the abovementioned security interest is sufficient.
Can security be granted over intellectual property? If so, what are the most common forms of security granted over this kind of property and what is the procedure?
Yes, security can be granted over IP rights, provided that they are transferable. The most common form of security granted over this asset class is a pledge.
The establishment of a pledge requires the execution of a pledge agreement and, in case of a registered pledge, registration of the registered pledge in the pledge register.
A pledge over industrial property rights must also be disclosed in the register kept by the Polish Patent Office.
Criteria for enforcement
What are the common enforcement triggers for loans, guarantees and security documents?
The enforcement triggers for loans vary depending on the contract; however, the most common triggers are non-payment and breach of obligations or representations under the loan agreement (and the lapse of any security period, if agreed).
With respect to credit facilities granted by banks, the Banking Law provides that where the borrower fails to comply with the conditions for granting the credit or loses its creditworthiness, the bank may reduce the amount of granted credit or give notice of termination of the credit contract, unless the Restructuring Law provides otherwise. The notice period for contract termination is 30 days (unless the parties specify a longer period in the contract) or seven days if the borrower is threatened with bankruptcy. The notice of termination of the credit contract due to the borrower having lost its creditworthiness or being threatened by bankruptcy may not be submitted if the bank has agreed to the implementation of a rehabilitation programme by the borrower.
Guarantees are usually triggered if the borrower fails to pay its debt under the underlying agreement, the performance of which is secured by the guarantee.
The same applies to the security documents.
Process for enforcement
What are the most common procedures for enforcement? Are there any specific requirements with which lenders must comply?
Enforcement is usually preceded by at least one notice being given by the lender to the debtor, stating the lender’s intention to commence enforcement proceedings.
In financing transactions, lenders usually require that debtors provide a declaration of voluntary submission to enforcement. This is not a security instrument itself, but its role is to expedite the court enforcement proceedings, as it replaces the court order adjudicating the lender's receivables. As a consequence, the enforcement proceedings may be started without the lengthy part of the court proceedings where the lender must provide evidence of its receivables towards the borrower.
Procedures for the enforcement of security depend on the type of security.
Mortgages and civil pledges may be enforced only through court enforcement proceedings.
Registered and financial pledges may be enforced through either court enforcement proceedings or, if the pledge agreement so provides, one of the out-of-court enforcement methods listed in the Act on Registered Pledges and the Pledge Register or the Act on Financial Collateral, as applicable.
Providing for such out-of-court enforcement methods in pledge agreements is crucial for the lender, because it allows lengthy court proceedings to be avoided. Such methods include:
- the lender taking over the pledged asset for an agreed value to be applied to satisfy the secured claim; and
- the right of the lender to sell the pledged asset and to satisfy its claim from the sale proceeds.
In the case of the security assignment of rights or the security transfer of ownership, the lender is (or becomes so on the occurrence of an event of default) the owner of the assigned rights or transferred assets.
Ranking in insolvency
In what order do creditors rank in case of the insolvency of a borrower?
The creditors holding security in rem are privileged in the event of the insolvency of the borrower, as the assets that have been pledged or mortgaged, or transferred under the security assignment or security transfer of ownership agreements, are extracted from the bankruptcy estate and are used solely to satisfy such creditors in accordance with their priority.
If such assets are not sufficient to satisfy all of the claims in full, the claims of a creditor holding security in rem with a lower ranking are satisfied only once all the claims of a creditor holding security in rem with a higher ranking have been satisfied in full.
Unsecured creditors are satisfied in the manner and order specified in the Bankruptcy Law. The first to be satisfied from the bankruptcy estate are the costs of insolvency proceedings. Once these costs are satisfied in full, the outstanding amount is divided into four categories:
- employee pay, alimony claims, compensation for the impairment of health or death, social security contributions, as arose before initiation of the insolvency proceedings, and some receivables under legal actions performed during the restructuring proceedings (and meeting statutory criteria);
- other claims that are not covered by the remaining categories, in particular taxes and other public duties;
- interest arising from the claims covered by the abovementioned categories, as well as court and administrative fines and claims under donations and bequests; and
- receivables of the shareholders of the insolvent company (the shareholders being limited liability companies or joint-stock companies) towards the company under a loan granted by the shareholders to the company or similar legal action (together with interest), concluded in the five years before the company is declared insolvent.
The receivables of unsecured creditors fall within the second category.
If the bankruptcy estate is insufficient to satisfy all of the claims in full, claims falling under a lower category are satisfied only once all the claims falling under the higher category have been satisfied in full. If the bankruptcy estate is insufficient to satisfy all of the claims from the same category in full, the claims will be satisfied proportionally to the share of each amount claimed in the total amount of claims from the category.