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Home page Resolution Protection of creditors
Published: 20 October 2016

Protection of creditors

Within the legal framework of resolution, several solutions are established to secure interests of creditors of an entity under resolution. The basic principle says that no actions of the Bank Guarantee Fund may not deplete the guaranteed funds. Regardless of a resolution tool applied, all funds collected by a depositor in accounts in banks and credit unions (in Polish zloty or in foreign currencies) up to the amount of the PLN equivalent of 100 000 EUR, are fully secured, and in the case of a transfer to another entity, they are subject to the guarantee protection as before.

Any collateral established for the benefit of creditors of an entity under resolution is fully acknowledged by the Fund during execution of the resolution proceedings.

The provisions of the Act of 10 June 2016 on the Bank Guarantee Fund, Deposit Guarantee Scheme and Resolution introduce also a particular solution known as the „no creditor worse off principle”, according to which, after completion of resolution, an independent entity assesses whether the loss incurred by creditors of an entity under resolution is not higher than the loss which would have been incurred if the BGF had not taken actions towards an entity under the bankruptcy threat and had that entity been liquidated within the standard bankruptcy procedure. If it is determined that creditors have incurred greater losses than they would have incurred under the standard bankruptcy procedure, the Fund shall pay them compensation in the amount of the difference between the sum received by them in the resolution proceedings and the sum which they could have received in the standard bankruptcy procedure.

Last updated: 7 November 2016