PKPU or direct talks: choosing a path when bank debt bites

When cash flow no longer covers instalments, a corporate debtor essentially has three paths: negotiate directly with creditors, go to mediation, or file for a suspension of debt payment obligations (PKPU) at the Commercial Court. Each carries different costs, timelines and risks.

1. Direct negotiation

Suits cases with few creditors and a working relationship. It can mean lower interest, a longer tenor, a grace period or debt conversion. The key is a proposal backed by realistic cash-flow projections, not just a request for relief.

2. Mediation

A neutral mediator helps the parties find common ground in private. Any settlement reached can be confirmed as a settlement deed so that it is enforceable.

3. PKPU

PKPU is governed by Law No. 37 of 2004. The debtor may offer all creditors a composition plan within at most 270 days, including extensions. If the plan is approved and ratified by the court (homologation), it binds every creditor. If it fails, the debtor is declared bankrupt.

What to prepare

• An up-to-date list of debts, creditors and collateral
• Cash-flow projections for 12 to 36 months under several scenarios
• Asset valuations and their legal status
• Loan agreements and correspondence with the bank