The Austrian federal law on the restructuring of companies, which entered into force on 17 July 2021, creates a new judicial pre-insolvency restructuring procedure in implementation of a European directive. The Restructuring Code ("Restrukturierungsordnung", ReO) intends to give companies facing economic problems the opportunity to take measures to avert insolvency and ensure the company's viability.

The new restructuring procedure can only be initiated at the request of the company itself. Creditors cannot file an application. The key element of the procedure is a restructuring plan that provides restructuring measures for the affected creditors. The aim is to avert insolvency and ensure viability, so that business operations can continue.

The ReO refers to the probability of insolvency as a prerequisite for the initiation of proceedings, which according to Section 6 (2) ReO takes place if the existence of the company would be endangered without a restructuring, i.e., insolvency is imminent but has not yet occurred. This is assumed if the equity ratio falls below 8% and the notional debt repayment period exceeds 15 years.

Such a restructuring procedure must be well prepared. Pursuant to Section 7 (1) ReO, a restructuring plan, a financial plan for 90 days, a current status as well as the annual financial statements of the last three years must be attached. If the application is not inadmissible, the court of first instance issues a decision to initiate proceedings. The insolvency court of first instance has exclusive jurisdiction with respect to proceedings under the ReO. For Vienna, the special jurisdiction of the commercial court of Vienna applies.

The court appoints a restructuring officer, who then supports the company's efforts while at the same time safeguarding the interests of the creditors. The task is similar to the duties of a restructuring administrator under the Austrian Insolvency Code (IO).

The court, or the restructuring officer on its behalf, examines the restructuring plan for its legality, the going concern prognosis and the classes of creditors created in the restructuring plan (see below). At a court meeting, which can also be held as a video meeting, the creditors vote on the restructuring plan. This will usually be approximately 30 to 60 days after the commencement of proceedings. The debtor must first submit the restructuring plan to the affected creditors. In order to be accepted, the majority of creditors present in each class must agree. Furthermore, the sum of the claims of the creditors agreeing in each class must reach at least 75%. Finally, the agreed restructuring plan then needs to be confirmed by the court.


At the debtor's request, the court may order a stay of execution, thereby preventing executions on assets to achieve the restructuring objective. This stay of execution lasts up to three months, with an extension to a maximum of six months. The stay of execution is accompanied by a stay on the opening of insolvency proceedings. During this period, the debtor's obligation to apply for the opening of insolvency proceedings due to over-indebtedness is suspended. Also, insolvency proceedings do not have to be opened due to illiquidity in case it would not be in the general interest of the creditors.

The stay of execution also entails a contract termination lock. This means that solely because claims of the contractual partners have not been paid those partners cannot refuse performance under the contract or prematurely terminate it. This intends to preserve the company's viability.

Creditor classes and creditor interest criteria

The ReO requires creating different creditor classes in the restructuring plan. This must be done by the company itself. A distinction is made between creditors with secured claims, creditors with unsecured claims, creditors in need of protection, bondholders, and

creditors with subordinated claims. Certain creditors must not be affected by the restructuring, such as employees. Creditors within the same class must be treated equally in relation to their claims. This equal treatment is a confirmation requirement for the agreed restructuring plan.

If approval cannot be obtained in all classes of creditors, the plan may still be confirmed by the court based on a class-wide "cram-down". In this case, the rejecting creditor classes must be placed on equal terms with classes of equal rank and better than subordinated classes.

Rejecting creditors may request a review of compliance with the creditor interest criterion after the vote. Confirmation of the plan is only possible if the criterion is met. The criterion is met if no rejecting creditor is placed in a worse position by the plan than in an insolvency proceeding, whereby the next best alternative scenario to the restructuring plan is to be used for comparison. This can be a liquidation, but also the conclusion of a restructuring plan in accordance with the IO. The highest ratio achievable under these alternative scenario variants is decisive.

Ending of the restructuring procedure

Pursuant to Section 41 ReO, the restructuring proceedings end when the confirmation of the restructuring plan becomes legally effective.


The ReO creates a new procedure for the restructuring of companies, which can be used in the event of probable insolvency, but not yet illiquidity, to reorganize creditor claims by means of reduction and deferral and in order to secure viability for the future.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.