COMPARATIVE GUIDE
30 June 2023

Restructuring & Insolvency Comparative Guide

Restructuring & Insolvency Comparative Guide for the jurisdiction of Austria, check out our comparative guides section to compare across multiple countries
Austria Insolvency/Bankruptcy/Re-Structuring

1 Legal framework

1.1 What domestic legislation governs restructuring and insolvency matters in your jurisdiction?

In Austria, insolvency matters are mainly governed by the Insolvency Act. Except where the Insolvency Act provides for special procedural rules, the procedural rules of the Jurisdiction Act, the Code of Civil Procedure and their introductory laws will apply in a subsidiary manner.

The EU Restructuring Directive (2019/1023) was implemented into Austrian law by the Restructuring Act. The Restructuring Act offers corporate debtors whose business is in financial difficulties (ie, a likelihood of insolvency) access to flexible, preventive restructuring proceedings. The Restructuring Act provides for a non-public restructuring procedure with court involvement and self-administration.

1.2 What international / cross-border instruments relating to restructuring and insolvency have effect in your jurisdiction?

The EU Insolvency Regulation (2015/848) has effect in Austria.

1.3 Do any special regimes apply in specific sectors?

The provisions on reorganisation proceedings according to the Insolvency Act as well as the Restructuring Act do not apply to credit and financial institutions, or to insurance companies. For financial institutions, there are special provisions in the Financial Institution Recovery and Resolution Act.

1.4 Is the restructuring and insolvency regime in your jurisdiction perceived to be more creditor friendly or debtor friendly?

Since a major reform of the Insolvency Act in 2010, Austrian insolvency law has been rather debtor friendly. The Insolvency Act now primarily pursues the goal of restructuring and, where a company is capable of restructuring, protects it from hasty liquidation. Therefore, one of the main goals of the insolvency regime is to help the debtor to accomplish a restructuring or reorganisation solution. The concept of restructuring was also further strengthened by the Restructuring and Insolvency Directive Implementation Act and the introduction of the Restructuring Act.

In many cases, restructuring is more advantageous not only for the debtor, due to the continuation of the company, but also for the creditors. Furthermore, reorganisation of a company according to the Insolvency Act is permissible only if the creditors receive a higher quota than they would receive in case of liquidation.

1.5 How well established is the legal regime and infrastructure relevant to restructuring and insolvency in your jurisdiction (e.g. extent of recent legislative changes, availability of specialist judges / courts / advisers)?

Even before the implementation of the EU Restructuring Directive (2019/1023), the Austrian restructuring and insolvency regime and the relevant infrastructure were well established and efficient.

There are no specific insolvency courts in Austria. Restructuring and insolvency cases are heard by the commercial courts or, with respect to consumers, by district courts. In each (commercial as well as district) court, there is a special department for insolvency proceedings.

Insolvency administrators must be reliable and competent persons with knowledge of insolvency matters and sufficient expertise in business law or business administration. However, no specific training or exam is required. In most cases, attorneys are appointed as insolvency administrators, and sometimes also trustees or business consultants. There is a list of insolvency administrators at the Linz Higher Regional Court, where any person interested in insolvency and restructuring administration can register. Furthermore, in most cases, debtors and creditors in insolvency and restructuring proceedings are advised and represented by attorneys.

2 Security

2.1 What principal forms of security interest are taken over assets in your jurisdiction?

The principal forms of security interests over assets which are recognised under Austrian law are:

  • pledges;
  • mortgages;
  • transfer of ownership by way of security;
  • assignment by way of security; and
  • retention of title.

2.2 How can those security interests be enforced (and what factors could complicate or prevent this process)?

In insolvency proceedings, creditors holding security interests (‘secured creditors') have a claim to preferential (‘segregated') satisfaction from the assets to which their security interests relate.

If assets which are subject to a security interest are sold by the insolvency administrator, the proceeds will primarily be used to satisfy the secured creditor.

3 Restructuring

3.1 Are informal workouts available in your jurisdiction? If so, what forms do they typically take, and what are the benefits and drawbacks as compared to formal restructuring proceedings?

The Austrian legislature deliberately avoided introducing detailed legal regulations on informal workouts. However, informal workouts – such as a moratorium, a new money facility, a respite or an out-of-court settlement – can always be negotiated and concluded outside of formal judicial proceedings between a debtor and its creditors. From a legal point of view, agreements resulting from informal workouts are ordinary agreements (settlements) based on civil law.

The major drawback of these settlements is that no creditor is obliged to agree to such measures. Therefore, informal workouts always need the consent of the major creditors. Even a sole major creditor may prevent an informal solution; whereas restructuring or reorganisation proceedings can be concluded with the consent of the majority of the creditors.

On the other hand, the advantages of informal workouts are:

  • the preservation of discretion;
  • the speed of the restructuring process; and
  • above all, the flexibility – especially since there are no requirements with regard to statutory minimum quotas and payment deadlines. There are also no other requirements – such as the existence of (impending) illiquidity – for informal workouts; and the principle of equal treatment of creditors in principle does not apply.

3.2 What formal restructuring proceedings are available in your jurisdiction, and what are the benefits and drawbacks of each?

Since the implementation of the EU Restructuring Directive (2019/1023), Austrian law provides for three categories of restructuring proceedings:

  • Based on the fundamental idea that corporate restructuring is preferable to bankruptcy, both in terms of satisfying creditors and from an economic perspective, the Austrian legislature enacted the Corporate Reorganisation Act back in 1997. The purpose of the Corporate Reorganisation Act is to make businesses at risk of insolvency aware of the need for action at an early stage so that the commencement of insolvency proceedings can be avoided as far as possible. If the business is not insolvent, but the economic situation is nevertheless so critical that there is a need for reorganisation, it should take measures to be able to continue to participate in economic life. However, this project failed to find acceptance in practice.
  • The new restructuring proceedings pursuant to the Restructuring Act offer corporate debtors in financial difficulties (ie, a likelihood of insolvency) access to flexible, preventive restructuring proceedings. The Restructuring Act provides for a non-public restructuring procedure with court involvement and self-administration. The essential difference from an out-of-court settlement is that the consent of all creditors affected by the restructuring measures is no longer mandatory. However, as this restructuring scheme is very new and Austrian law offers tried-and-tested proceedings for reorganisation (see below), it remains to be seen how it will be accepted in practice.
  • At the moment, the most successful form of restructuring in Austria is a so-called ‘reorganisation plan' pursuant to the Insolvency Act. All debtors can apply for the completion of a reorganisation plan. If a debtor submits a reorganisation plan proposal together with an application for insolvency, the proceedings are conducted as reorganisation proceedings and not as bankruptcy proceedings. The minimum legal requirements for reorganisation plans include:
    • a minimum quota of 20% on the insolvency claims; and
    • payment of the quota within a timeframe of two years.
  • The reorganisation plan must be accepted by a majority of the insolvency creditors and confirmed by the court. Once the reorganisation plan has been confirmed by the court, it becomes legally effective and the debtor is released from its remaining debts. There is partial debt relief, combined with a moratorium. The advantage for the creditors is that they usually still receive a better deal when a reorganisation plan is concluded than if the company were liquidated. In the event of any default on the reorganisation plan, the moratorium is lifted.

3.3 How, by whom and on what grounds are formal restructuring proceedings initiated? What are the main preconditions for success?

Restructuring proceedings pursuant to the Restructuring Act and restructuring through a reorganisation plan according to the Insolvency Act are always (and only) initiated on application of the debtor. Third parties – including creditors, shareholders, employees, the public prosecutor and the court – are not entitled to file for the commencement of such proceedings.

Restructuring proceedings can be initiated by debtors that operate a business, regardless of their legal form. In addition to the debtor's application, restructuring proceedings may be initiated only if there is a likelihood of insolvency, which requires the company to be in danger of going out of business without restructuring. If the debtor is already illiquid, it can no longer make use of the restructuring proceedings. The debtor must also submit a proposal for a restructuring plan together with the application, but in any case within a maximum period of 60 days after the commencement of restructuring proceedings.

In contrast, all debtors can apply for the completion of a reorganisation plan according to the Insolvency Act. The application can be filed together with an application for insolvency as well as during bankruptcy proceedings. The reorganisation plan must meet the minimum legal requirements (eg, minimum quota of 20% on the insolvency claims and a two-year deadline for payment).

3.4 What are the effects of the commencement of formal restructuring proceedings, both for the debtor and for creditors?

During restructuring proceedings, the debtor generally retains control over its assets and its business (self-administration). Only if requested by the debtor or a majority of the creditors, or if necessary to protect the creditors' interests, is a restructuring administrator appointed by the court.

On the debtor's request, the court will order a stay of enforcement if and to the extent necessary to support the negotiations on a restructuring plan. All claims – including secured claims – can be covered by the stay of enforcement.

The debtor's obligation to file an insolvency petition due to over-indebtedness is suspended for the duration of the stay of enforcement. Also, a creditor's petition for the opening of insolvency proceedings based on the existence of over-indebtedness will not be decided; in this case, the proceedings for the opening of insolvency proceedings enter a ‘suspended' state.

As restructuring proceedings are not available for illiquid debtors, the debtor's obligation to file for insolvency due to illiquidity remains unchanged even during the stay of enforcement.

Creditors whose claims are covered by a stay of execution may not:

  • refuse performance of ‘essential contracts' which remain to be performed due to non-payment of claims arising prior to the stay of execution; or
  • prematurely declare them due, terminate them or otherwise change them to the detriment of the debtor (contract termination stay).

3.5 Does a moratorium or stay apply and, if so, what is its scope? Are there exceptions?

In restructuring proceedings, the court may order a stay of execution at the debtor's request to support negotiations on a restructuring plan. In practice, this is most likely to be relevant in the case of tax and fiscal debts, which are usually immediately enforceable. The stay of execution may extend to claims of one creditor or several creditors or creditor classes (including secured claims), and may not exceed three months. However, at the debtor's or restructuring administrator's request, the stay may be extended to a maximum of six months. A hearing of the creditors prior to the court's decision on the stay of execution or its extension is not mandatory.

The court may refrain from imposing a stay of execution – in particular, if it is not necessary or if the debtor is illiquid. There is a rebuttable presumption of illiquidity if enforcement proceedings for the collection of taxes and social security contributions are already pending.

The order granting the stay of execution is served on the affected creditors and the competent enforcement court is notified accordingly. It cannot be contested.

3.6 What process do restructuring proceedings typically follow (including likely length of process and key milestones)?

Restructuring proceedings according to the new Restructuring Act may be initiated only by court order on the debtor's application. Unlike insolvency proceedings and reorganisation proceedings, restructuring proceedings are not usually published by edict and are thus secret proceedings.

Restructuring proceedings are very flexible and streamlined, and thus result in cost savings. Therefore, the court's rights and obligations are limited to the following, among others:

  • monitoring rights;
  • order of a stay of enforcement;
  • decisions on interim financing and transactions; and
  • appointment of a restructuring administrator.

The interests of the majority of creditors will have priority in the further proceedings. For this purpose, a fixed component of the restructuring proceedings is the meeting at which the creditors vote on the restructuring plan. The court usually orders the meeting to be held within 30 to 60 days of submission of the restructuring plan. The restructuring plan must achieve a majority of the affected creditors (per head) in each class; and the sum of the claims of the consenting creditors must amount to at least 75% of the total sum of the claims of the affected creditors. Majorities are calculated only from the creditors present at the meeting. If a majority is reached in each class of creditors, the court must decide whether to confirm the restructuring plan.

Even if the restructuring plan is not approved by a majority of creditor classes, it can be confirmed on the basis of a cross-class cramdown. The decision confirming the restructuring plan may be:

  • challenged by any opposing creditor; or
  • refused by the debtor and any consenting creditor.

In the best-case scenario, restructuring proceedings can be completed within three months.

3.7 What are the roles, rights and responsibilities of the following stakeholders in restructuring proceedings? (a) Debtor, (b) Directors of the debtor, (c) Shareholders of the debtor, (d) Secured creditors, (e) Unsecured creditors, (f) Employees, (g) Pension creditors, (h) Insolvency officeholder (if any), (i) Court.

(a) Debtor

Whereas debtors in insolvency proceedings can be all persons who are capable of becoming insolvent, restructuring proceedings can only be initiated by debtors that operate a business, regardless of its legal form.

Unlike in insolvency proceedings, the debtor generally retains control over its assets and its business (self-administration), but is supervised by the court. Only if requested by the debtor or a majority of creditors, or if necessary to protect the creditors' interests, is a restructuring administrator appointed by the court. In this case the powers granted to the restructuring administrator can lead to a restriction of the debtor's self-administration.

(b) Directors of the debtor

See above.

(c) Shareholders of the debtor

To conclude a restructuring plan, the debtor needs the consent of the shareholders. In particular, a debt-equity swap is inadmissible without their consent.

However, shareholders must not complicate or prevent the approval, confirmation or implementation of the restructuring plan without cause (prohibition of obstruction). This notwithstanding, there is no provision for direct sanctions in the event of breach of this prohibition.

According to the Restructuring Act, no deadlines other than those provided for by corporate law are relevant for the convening of any necessary shareholders' meetings. However, since a vote on the restructuring plan by the creditors can only take place once the respective necessary approvals of the shareholders' meeting have been obtained, there is ultimately a risk of delay or even failure of the restructuring process.

(d) Secured creditors

According to the Restructuring Act, ‘secured creditors' are creditors with claims secured by a lien or comparable security from the debtor's assets.

While third-party securities remain unaffected by a restructuring plan, the reduction of secured claims is generally permissible. The corrective that protects the secured creditors is their creditor's interest, which is examined after the vote on the restructuring plan at the request of a rejecting creditor by the court.

Secured claims may also be covered by a stay of enforcement. Like other creditors, secured creditors vote on the restructuring plan and can apply for annulment of the stay of enforcement or the appointment of a restructuring administrator.

(e) Unsecured creditors

The role, rights and responsibilities of unsecured creditors are the same as those of secured creditors.

(f) Employees

No separate role, rights or responsibilities are prescribed. In particular, the individual and collective rights of employees according to labour law are not affected by the restructuring proceedings or the restructuring plan.

(g) Pension creditors

No separate role, rights or responsibilities are prescribed.

(h) Insolvency officeholder (if any)

If requested by the debtor or a majority of the creditors, or if necessary to protect the creditors' interests, the court will appoint a restructuring administrator.

The requirements, appointment and dismissal of the restructuring representative are based on the provisions for the appointment of an insolvency administrator.

The court must define the duties of the restructuring administrator when appointing him or her. These may range from:

  • merely assisting in the negotiations on a restructuring plan;
  • to monitoring the debtor's activities during the restructuring proceedings; and
  • even to taking partial control of the debtor's assets or business.

However, the restriction of self-administration imposed by the court may under no circumstances exceed what would be the case in bankruptcy proceedings.

In contrast to insolvency proceedings, in view of the restructuring administrator's duties, which depend on the individual case, the restructuring administrator does not receive a percentage-based standard, but rather an appropriate remuneration on a case-by-case basis, which is paid by the debtor.

(i) Court

Restructuring proceedings are always initiated by court order. The judicial activity is essentially limited to a formal examination of the application to determine whether it complies with the legal requirements.

During the restructuring proceedings, the court's rights and obligations are limited and include the following:

  • monitoring the debtor and (if appointed) the restructuring administrator;
  • appointing a restructuring administrator;
  • granting a stay of execution;
  • defining the tasks of the restructuring officer as part of his or her appointment;
  • reviewing and confirming the restructuring plan (including a cross-class cram-down); and
  • approving certain interim financings and transactions

3.8 Can restructuring proceedings be used to "cram down" and bind dissentient creditors to a transaction supported by other creditors? Are creditors separated into classes for the purposes of voting in the proceedings? What are the relevant voting thresholds? Is "cross-class cramdown" available?

The debtor must divide the creditors affected by a restructuring plan into classes (only small and medium-sized enterprises are exempt from this requirement). The purpose of this is to group affected parties with similar interests and rights for the voting procedure.

The debtor must establish the following five creditor classes:

  • secured creditors (creditors entitled to separate satisfaction in the insolvency proceedings);
  • unsecured creditors;
  • bondholders;
  • creditors in need of protection with a claim of less than €10,000; and
  • subordinated creditors.

For the approval of a restructuring plan, the following majorities in each creditor class must be reached:

  • head majority; and
  • sum majority of at least 75%.

The majorities are calculated only on the basis of the affected creditors present at the meeting (in person or virtually, depending on the chosen form). If no classes have been formed, the required majorities will be calculated on the basis of the total number of creditors present.

If the necessary majorities are not reached in all classes, the debtor can apply for a cross-class cramdown. This cross-class cramdown requires that classes of creditors rejecting the restructuring plan be placed on an equal level with classes of equal priority (the order of satisfaction according to the Insolvency Act is decisive) and be placed in a better position than subordinated classes. Austria has opted to implement the ‘relative priority rule' (instead of the ‘absolute priority rule', which would also have been possible according to the EU Restructuring Directive). Furthermore:

  • no creditor class can receive more than the total amount of its claims; and
  • a majority of the classes, including the class of secured creditors, or a majority of the creditor classes that would receive an insolvency quota in insolvency proceedings, must agree to the restructuring plan.

The comparative scenario is therefore based on an overall realisation by way of a ‘transferring reorganisation'.

3.9 Can restructuring proceedings be used to compromise secured debt?

Restructuring proceedings can also be used to compromise secured debts. However, at the request of refusing creditors, this reduction must – in the context of the examination of the creditors' interests – withstand a comparison with the alternative scenario according to the Insolvency Act.

3.10 Can contracts / leases be disclaimed or otherwise addressed through restructuring proceedings?

Restructuring proceedings cannot be used to modify certain contracts or leases, except where they can be consensually renegotiated.

Also, the following are inadmissible:

  • any agreement to refuse performance in respect of contracts still to be performed, or to prematurely terminate, cancel or otherwise modify such contracts to the debtor's disadvantage, solely because of:
    • an application for restructuring proceedings;
    • an application for the granting of a stay of execution;
    • the initiation of restructuring proceedings;
    • the granting of a stay of execution; or
    • a deterioration in the debtor's economic situation that makes the initiation of restructuring proceedings possible.

Furthermore, creditors to which the stay of execution applies may not, in respect of claims arising before the stay of execution and solely on the basis that the claims have not been paid by the debtor, refuse performance in respect of contracts still to be performed or accelerate, terminate or otherwise modify such contracts to the debtor's disadvantage.

3.11 Can liabilities of third parties (e.g. guarantors) be released through restructuring proceedings?

Restructuring proceedings do not foresee any specific mechanism by which liabilities of third parties may be released. Secured creditors' rights against third parties thus cannot be limited without the secured creditors' consent. Only the debtor is (also) released from liability vis-à-vis the third party.

3.12 Is any protection and/or priority afforded to the providers of new money in the context of restructuring proceedings (i.e. is "DIP financing" available)?

The Restructuring and Insolvency Directive Implementation Act introduced (limited) avoidance protection for new financing and interim financing approved in the course of restructuring proceedings. This financing is not avoidable due to indirect disadvantage if the opposing party was not aware of the debtor's illiquidity or over-indebtedness. However, this (limited) protection against avoidance only covers:

  • new financing that is included in a restructuring plan confirmed by the court; and
  • interim financing that has been approved by the court.

3.13 How do restructuring proceedings conclude?

Restructuring proceedings conclude with the court's confirmation of the restructuring plan becoming legally effective.

Moreover, the restructuring proceedings will be terminated if:

  • the debtor has not submitted a restructuring plan within the period specified by the court;
  • the debtor has not complied with an order to improve the restructuring plan in due time;
  • the debtor withdraws the restructuring plan;
  • the debtor persistently violates obligations to cooperate and provide information or restraints on disposal;
  • the debtor fails to pay the advance on costs for the remuneration of the restructuring administrator in due time;
  • the debtor fails to submit the annual financial statements for which the deadline for preparation expired during the restructuring proceedings;
  • insolvency proceedings have been opened against the debtor's assets;
  • it is evident that the restructuring plan will not:
    • prevent the debtor's illiquidity or the occurrence of over-indebtedness;
    • eliminate over-indebtedness that has already occurred; or
    • ensure the viability of the company;
  • the creditors reject the restructuring plan and the meeting is not extended;
  • a required resolution of the general meeting does not become effective within six months of the passing of the resolution; or
  • the confirmation of the restructuring plan is refused with final effect.

4 Insolvency

4.1 What types of insolvency proceeding are available in your jurisdiction, and what are the benefits and drawbacks of each?

Insolvency proceedings according to the Insolvency Act are understood to be a one-stop procedure. Insolvency proceedings can be carried out as bankruptcy proceedings or reorganisation proceedings (with or without self-administration). Consumer insolvency proceedings are called ‘debt settlement proceedings'.

While reorganisation proceedings aim to facilitate the turnaround of companies, bankruptcy proceedings basically aim to facilitate the break-up and liquidation of companies. However, even during bankruptcy proceedings, it is frequently possible for the debtor to file a reorganisation plan proposal and thus to push for a turnaround of the company.

In recent years, the possibility of debt relief has been simplified several times for natural persons, especially for consumers through so-called ‘debt settlement proceedings'.

With regard to the benefits and drawbacks of proceedings, in many cases, restructuring is more advantageous not only for the debtor, due to the continuation of the company, but also for the creditors. Furthermore, reorganisation of a company according to the Insolvency Act is permissible only if the creditors receive a higher quota than they would receive in case of liquidation.

4.2 How, by whom and on what grounds are insolvency proceedings initiated? Can the instigating party (or any other parties) select the identity of the relevant insolvency officeholder?

Insolvency proceedings may be initiated only on the basis of an application. Both the debtor and creditors are entitled to file an application for insolvency proceedings. While insolvency proceedings cannot be initiated by the court on its own, once an application has been filed, its withdrawal or the satisfaction of the creditor can no longer prevent the commencement of proceedings if the other requirements for the commencement of insolvency proceedings are fulfilled.

The debtor must file the application without culpable delay and at the latest within 60 days of the occurrence of illiquidity. Insolvency creditors are also entitled to file an application if they can certify both the existence of a claim and the debtor's bankruptcy.

The insolvency court must appoint an insolvency administrator ex officio upon the commencement of insolvency proceedings. Whom the court appoints as insolvency administrator is in principle at its own discretion. Neither the instigating party nor the debtor can select the insolvency administrator.

4.3 What are the effects of the commencement of insolvency proceedings, both for the debtor and for creditors?

The commencement of insolvency proceedings takes place by order of the insolvency court. This order is published by edict in the insolvency register, which can be freely accessed online at https://edikte.justiz.gv.at/edikte/edikthome.nsf.

By 00:00 of the day following the date of publication of the order, the effects of the commencement of insolvency proceedings enter into force. The main effects are as follows:

  • the debtor's loss of power of disposal regarding the insolvency estate;
  • invalidity of the debtor's legal acts and of payments made directly to the debtor;
  • suspension of civil and enforcement proceedings;
  • extinction of certain rights of segregation and separation;
  • suspension of enforcement proceedings for eviction from rented premises;
  • cancellation of sequestration of properties;
  • freezing of the land register;
  • effects on certain claims; and
  • effects on legal transactions.

4.4 Does a moratorium or stay apply and, if so, what is its scope? Are there exceptions?

Once insolvency proceedings have commenced, individual legal actions by creditors against the insolvency debtor are generally prohibited. The insolvency creditors are subject to a stay of litigation and enforcement proceedings. All pending proceedings in which the debtor is plaintiff or defendant are interrupted ex officio. Individual legal proceedings are thereby prevented and the insolvency creditors are satisfied from the insolvency estate on a pro rata basis only if they participate in the insolvency proceedings by filing their claim.

Furthermore, interest arising since the commencement of insolvency proceedings and costs incurred by creditors for participating in the insolvency proceedings are excluded from the insolvency proceedings and will not be satisfied.

On the other hand, the insolvency administrator is obliged to satisfy creditors of the insolvency estate whose claims arise from transactions of the insolvency administrator after the commencement of insolvency proceedings in full when they become due, irrespective of the status of the proceedings.

4.5 What process do insolvency proceedings typically follow (including likely length of process and key milestones)?

Insolvency proceedings are initiated on the basis of an application and start with a commencement order by the insolvency court. This order is published by edict in the insolvency register. By 00:00 of the day following the date on which the order is published, the effects of the commencement of insolvency proceedings will enter into force.

At the same time as the commencement of proceedings is announced in the edict, the insolvency court schedules the first creditors' hearing, which usually takes place no more than 14 days after the commencement of insolvency proceedings. The creditors must also file their claims within a period that usually ends 14 days before the general hearing for the proving of debts. The general hearing itself takes place 60 to 90 days after the commencement of insolvency proceedings and serves to examine whether and to what extent filed insolvency claims should be taken into account in the insolvency proceedings.

If the debtor operates a business, the commencement of proceedings marks the beginning of the so-called ‘review stage', which ends with the report hearing. The decision on the continuation or closure of a company is made at the report hearing. The report hearing must take place no later than 90 days after the commencement of insolvency proceedings; it may also be combined with the general hearing. During the insolvency proceedings, the debtor may file a reorganisation plan proposal.

If the administrator has obtained sufficient proceeds from the realisation of the insolvency estate, he or she may distribute them among the insolvency creditors. If all assets are distributed among the creditors or a reorganisation plan is concluded, the insolvency proceedings will end. The insolvency proceedings are always terminated by court order, which must be made public by edict in the insolvency register.

4.6 What are the respective roles, rights and responsibilities of the following stakeholders during the insolvency proceedings? (a) Debtor, (b) Directors of the debtor, (c) Shareholders of the debtor, (d) Secured creditors, (e) Unsecured creditors, (f) Administrator, (g) Employees, (h) Pension creditors, (i) Insolvency officeholder, (j) Court.

(a) Debtor

In Austria, all private individuals and legal entities, as well as partnerships, can become insolvent and be debtors in insolvency proceedings.

Upon the commencement of insolvency proceedings, the debtor's legal position is significantly restricted. It loses most of its ability to dispose of the insolvency estate. Furthermore, there are restrictions in the area of public law and the debtor's personal rights are massively affected too (eg, blocking of mail; obligations to provide information and to cooperate with the court; possibility of forced appearance before the court; and even imprisonment).

In reorganisation proceedings with self-administration and, to a certain extent, in debt settlement proceedings, the debtor remains authorised to dispose of the insolvency estate.

(b) Directors of the debtor

Like the debtor's legal position, the legal position of its directors is also significantly restricted by the commencement of insolvency proceedings. However, a director's position under corporate law will not expire automatically upon the commencement of insolvency proceedings. In reorganisation proceedings with self-administration, directors remain authorised to dispose over the insolvency estate.

(c) Shareholders of the debtor

Shareholders have no special rights in insolvency proceedings solely on the basis of their corporate status. If a company is liquidated in bankruptcy proceedings, shareholders will receive compensation only in the unlikely event that all other creditors of the company have been fully satisfied. If a company is restructured and continues to exist after the termination of insolvency proceedings, they will retain their position.

If shareholders are also creditors of the company, their claims may be subordinate to other insolvency claims if they result from so-called ‘equity-replacing payments' by the shareholder to the company while it is in crisis.

(d) Secured creditors

Creditors that have a claim to preferential (‘segregated') satisfaction from certain assets of the debtor are called ‘secured creditors'.

In general, secured creditors are not affected by insolvency proceedings. Therefore, secured creditors should not file their claims in insolvency proceedings like insolvency creditors. However, secured creditors regularly have a dual position because they are usually also insolvency creditors with their claim covered by the right of preferential satisfaction.

Apart from a few exceptions, secured creditors may also enforce their rights during the insolvency proceedings – vis-à-vis the insolvency administrator – both in and out of court. The enforcement of a security interest depends on the nature of the security and the terms of the security. Certain types of securities can be enforced even without court intervention. Furthermore, there is no stay of civil or enforcement proceedings for those creditors.

If secured assets are sold by the insolvency administrator, the proceeds will primarily be used to satisfy the secured creditors. Secured creditors exclude other creditors from payment from the secured assets up to the value of their claims. The residue from the separate estate after satisfaction of the secured creditors proceeds to the common insolvent estate.

(e) Unsecured creditors

A distinction must be drawn between:

  • claims that arise after the commencement of insolvency proceedings (creditors of the insolvency estate); and
  • claims that arose prior to the commencement of insolvency proceedings (insolvency creditors).

Insolvency creditors must file their claims with the insolvency court in writing or orally. The application must state:

  • the amount of the claim;
  • the facts giving rise to the claim;
  • a description of the evidence; and
  • if applicable, the rank claimed.

Insolvency creditors are also requested to file their claims within a period that usually ends 14 days before the general hearing. However, delayed filing of a claim is also admissible.

Insolvency creditors are paid out of the insolvency estate. They usually only receive a percentage of their claim – the so-called ‘insolvency quota' – and therefore regularly suffer a partial loss of claim.

(f) Administrator

In Austrian insolvency proceedings, the main role is played by the insolvency administrator. The insolvency administrator's duties include the following:

  • custody and administration of the insolvency estate;
  • review of the company's economic situation;
  • investigation of the status of the assets and establishment of an inventory;
  • collection and protection of assets;
  • identification of liabilities by contesting and acknowledging them in the general hearing;
  • review of whether the company can be continued or reopened, and whether a reorganisation plan is in the creditors' interests;
  • continuation of the business until the report hearing;
  • representation of the insolvency estate in and out of court;
  • exercise of the option with regard to two-sided transactions not yet fully performed and decisions on whether certain permanent obligations should be terminated prematurely;
  • enforcement of avoidance claims;
  • realisation of the insolvency estate;
  • accounting; and
  • distribution of the proceeds of the insolvency proceedings.

The insolvency administrator is appointed by the insolvency court. He or she is obliged to carry out his or her duties with the care of a good businessperson. In case of a violation, he or she may be liable towards the insolvency estate or the creditors.

The insolvency administrator will receive a lump-sum remuneration for his or her work, which is regulated by law and will be paid out of the insolvency estate.

(g) Employees

Employment relationships are not affected by the commencement of insolvency proceedings. The insolvency estate becomes the debtor of wages payable since the commencement of insolvency proceedings. In bankruptcy and restructuring proceedings without self-administration, the insolvency administrator exercises the functions of the employer. In reorganisation proceedings with self-administration, the debtor remains functionally the employer, but the reorganisation administrator has certain powers of approval and objection.

However, there is the option of preferential termination. On the one hand, this is intended to make it possible to terminate employment relationships in a cost-effective manner. On the other hand, the legislature wants to ensure that those employees who are needed for the continuation of the company actually remain in the company.

In order to provide sufficient protection for employees of an insolvent employer, the Insolvency Remuneration Fund provides certain benefits to employees in the event of an employer's insolvency. This fund is largely financed by contributions from all employers.

(h) Pension creditors

No separate role, rights or responsibilities are prescribed. However, there is some precedent that in certain cases, pension claims from a voluntary occupational pension will be paid by the Insolvency Remuneration Fund.

(i) Insolvency officeholder

See (f).

(j) Court

Although the insolvency administrator is the central figure in the insolvency proceedings, the insolvency court has important – especially supervisory and supportive – functions within the proceedings. They include the following:

  • verifying the requirements for the commencement of insolvency proceedings and deciding on the commencement of proceedings;
  • selecting and appointing the insolvency administrator;
  • publishing announcements in the insolvency register;
  • organising the notification of the commencement of insolvency proceedings (eg, in the company register, public books and ship and patent registers, as well as in seizure records);
  • issuing instructions to and supervising the insolvency administrator;
  • approving the closure of the company, certain legal transactions and the release of assets;
  • convening and conducting various hearings (eg, report hearings, first creditors' meeting, audit hearings, reorganisation plan hearing);
  • deciding on the remuneration of the insolvency administrator, the execution of the distribution and the termination of the insolvency proceedings;
  • examining the admissibility of a reorganisation plan, confirming the reorganisation plan and declaring the invalidity of the reorganisation plan; and
  • deciding on the termination of insolvency proceedings.

4.7 What is the process for filing claims in the insolvency proceedings?

Insolvency creditors must file their claims with the insolvency court in writing or orally. The application must state:

  • the amount of the claim;
  • the facts giving rise to the claim;
  • a description of the evidence; and
  • if applicable, the rank claimed.

Insolvency creditors must also file their claims within a period that usually ends 14 days before the general hearing. However, delayed filing of a claim is also admissible.

The general hearing itself takes place 60 to 90 days after the commencement of insolvency proceedings and serves to examine whether and to what extent filed insolvency claims should be taken into account in the insolvency proceedings. If the claim is contested by the insolvency administrator, the insolvency creditor must sue the insolvency administrator/insolvency estate.

Only if the claim is acknowledged by the insolvency administrator or the insolvency creditor wins the trial against the insolvency administrator/insolvency estate is the insolvency creditor satisfied on a pro rata basis in the insolvency proceedings.

4.8 How are claims ranked in the insolvency proceedings? Do any claims have "super priority" and is there scope for subordination by operation of law (e.g. equitable subordination)?

Apart from secured creditors, which have a claim to preferential satisfaction from the sale of certain assets of the insolvency estate, all insolvency creditors are satisfied equally as a matter of principle (so-called ‘par condicio creditorum').

However, this does not apply to so-called ‘subordinated claims'. These are not insolvency claims as such and will be eligible only after the claims of the insolvency creditors have been fully satisfied. This subordination is an exception to the principle of classless insolvency. Subordinated claims include, for example:

  • claims arising from equity-replacing payments; and
  • claims for which the creditor has submitted a declaration of subordination.

4.9 What is the effect of insolvency proceedings on existing contracts? Is the counterparty free to terminate? Can they be disclaimed?

Despite the commencement of insolvency proceedings, the debtor's contracts remain valid for the time being.

Only the insolvency administrator has a general right to terminate and withdraw from contracts that have not yet been fulfilled completely by both parties. Creditors or contractual partners may terminate contracts for good cause only if termination of the contract could jeopardise the going concern of the debtor's business. The decline of the debtor's economic situation by itself is not a significant reason for termination. This restriction also applies to lessors. This restriction on termination of the contract does not apply:

  • if the contractual partner would otherwise suffer severe personal or economic disadvantage;
  • in the case of claims for payment of loans; and
  • in the case of employment contracts.

This general ban on the termination of contracts applies for a period of six months after the commencement of insolvency proceedings.

These provisions also may not be excluded or limited by contract; likewise, the agreement of a right of withdrawal or the termination of a contract in the event of the commencement of insolvency proceedings is inadmissible.

If the debtor is contractually obliged to perform a service other than in money and is in default of performance, the insolvency administrator must declare immediately upon the request of the contracting party, but within five working days at the latest, whether it is withdrawing from the contract. If it does not make a declaration to that effect, it will be assumed that the debtor is withdrawing from the transaction.

4.10 Can transactions entered into by the debtor prior to be insolvency be challenged and set aside? What are the relevant grounds / look-back periods / defences?

In Austria, transactions entered into by the debtor prior to insolvency proceedings may be challenged and set aside by the so-called ‘avoidance law'. The avoidance aims to ensure equal treatment of creditors in the periods prior to the commencement of insolvency proceedings through the annulment of legal and real acts that are not otherwise affected by the commencement of insolvency proceedings. The insolvency administrator is entitled to contest these act by filing a lawsuit.

The objects of avoidance are legal and real acts that were performed before the commencement of insolvency proceedings and that affect the debtor's assets. These include, for example, the conclusion of:

  • executory agreements and dispositions;
  • acknowledgements;
  • renunciations;
  • deliveries of goods;
  • procedural acts; and
  • pledges.

An act may be challenged only to the extent that it prejudices the creditors. Another basic requirement for any challenge is the suitability for satisfaction.

The grounds for avoidance are:

  • intention to disadvantage (legal and real acts performed by the debtor with the intention to disadvantage its creditors);
  • disposal of assets (objective imbalance between payment and counter-performance to the disadvantage of the debtor);
  • disposal without payment;
  • preferential guarantees or satisfaction of creditors; and
  • guarantees or satisfactions of creditors that were aware of the debtor's illiquidity or over-indebtedness.

The look-back periods (period of avoidance) vary depending on the grounds for avoidance:

  • The longest period of avoidance is 10 years prior to the commencement of insolvency proceedings if the third party was aware of the debtor's intention to disadvantage its creditors; and
  • The shortest period is six months prior to the commencement of insolvency proceedings for avoidance of guarantees or satisfactions of creditors that were aware of the debtor's illiquidity or over-indebtedness.

Furthermore, the insolvency administrator is obliged to file a lawsuit within one year of the commencement of the insolvency proceedings.

The defence also depends on the respective ground for avoidance. In principle, the insolvency administrator, as the plaintiff for avoidance, bears the burden of assertion and proof for the existence of the general requirements for avoidance, as well as the special (objective and subjective) grounds for avoidance. However, if the affected legal act was performed vis-à-vis a close relative (so-called ‘familia suspecta'), a reversal of the burden of proof with regard to the subjective elements of certain grounds for avoidance applies at the expense of the close relative; close relatives must therefore ‘prove themselves free' in this case.

4.11 How do the insolvency proceedings conclude? Can any liabilities survive the insolvency proceedings?

Insolvency proceedings are always terminated by court order. This order must be made public by edict in the insolvency register.

The reasons for conclusion of insolvency proceedings are as follows:

  • There is proof of the total distribution of the proceeds;
  • There are no assets to cover costs and no advance on costs is paid;
  • All creditors of the insolvency estate and insolvency creditors have consented after the expiry of the filing period;
  • The opening order is amended in a legally binding manner on the basis of an appeal; or
  • The order confirming a reorganisation plan or payment plan or initiating the foreclosure proceedings becomes final.

If the insolvency proceedings do not end with a debt discharge, insolvency creditors may enforce that part of their claim exceeding the insolvency quota in court or through enforcement against the debtor.

5 Cross-border / Groups

5.1 Can foreign debtors avail of the restructuring and insolvency regime in your jurisdiction?

The Austrian courts have jurisdiction to open and rule on restructuring and insolvency proceedings with respect to debtors whose registered office (for legal entities) or permanent residence (for individual debtors) are located in Austria. If a debtor has neither a registered office nor a permanent residence in Austria, the existence of a branch or assets in the court's jurisdiction is sufficient to establish the jurisdiction of the Austrian courts.

According to the EU Insolvency Regulation, foreign debtors can avail of restructuring and insolvency proceedings in Austria if their ‘centre of main interests' (COMI) is located in Austria. These debtors are entitled to file for the commencement of main insolvency proceedings in Austria. Secondary insolvency proceedings can be opened where foreign debtors have an establishment in Austria.

5.2 Has the UNCITRAL Model Law on Cross Border Insolvency or the UNCITRAL Model Law on Recognition and Enforcement of Insolvency-Related Judgments been adopted or is it under consideration in your country?

Neither the UNCITRAL Model Law on Cross Border Insolvency nor the UNCITRAL Model Law on Recognition and Enforcement of Insolvency-Related Judgments has been adopted or is under consideration for adoption in Austria.

5.3 Under what conditions will the courts in your jurisdiction recognise and/or give effect to foreign insolvency or restructuring proceedings or otherwise grant assistance in the context of such proceedings?

According to the EU Insolvency Regulation, insolvency and restructuring proceedings opened by the courts in another EU member state should be immediately and automatically recognised in Austria from the moment they become effective in the state in which the proceedings are opened. This principle of automatic recognition also applies to decisions which derive directly from the insolvency proceedings and are closely linked with them (eg, decisions relating to avoidance actions). The only ground for refusing recognition is breach of the Austrian public order.

However, even if the EU Insolvency Regulation does not apply, insolvency proceedings from third countries are generally recognised in Austria under the following circumstances:

  • The COMI is in the third country;
  • The insolvency proceedings in the third country are comparable to Austrian insolvency proceedings;
  • No insolvency proceedings are pending in Austria; and
  • There is no violation of the Austrian public order.

5.4 To what extent will the courts cooperate with their counterparts in other jurisdictions in the case of cross-border insolvency or restructuring proceedings?

The EU Insolvency Regulation provides for cooperation among courts in cross-border insolvency and restructuring proceedings. This is the case not only where main and secondary proceedings against a single debtor are concerned, but also in the case of insolvencies in a corporate group. In both cases, where appropriate, the courts may, for instance, appoint an independent person or body to act on their instructions, if this is not incompatible with the applicable rules.

Where the EU Insolvency Regulation does not apply (ie, insolvency or restructuring proceedings opened by courts in non-EU states), Austrian law sets out no specific rules. Therefore, courts have no obligation to coordinate or work together with foreign courts or officers, other than those under the EU Insolvency Regulation.

5.5 How are corporate groups treated in the context of restructuring and insolvency proceedings? If there is no concept of a group proceeding (or consolidation), is there any regime through which insolvency officeholders must / may cooperate?

Austrian insolvency law contains no specific material rules concerning corporate groups. Reference is simply made to the relevant provisions of the EU Insolvency Regulation (Articles 56 to 77). These provisions will apply if the assets of two or more members of the same group of companies are affected. In principle, this refers to the parent company and its subsidiaries. A ‘parent company' is defined as an entity that exercises direct or indirect control over one or more subsidiaries. In cases where consolidated financial statements must be prepared according to the Accounting Directives, there is a presumption that a parent company exists. However, there is no substantive consolidation. ‘Group insolvency law' therefore does not mean that insolvency proceedings are opened over several legal entities and a unified estate is created.

With regard to the administrative coordination of several insolvency proceedings, the EU Insolvency Regulation refrains from assigning a leading role to one insolvency proceeding – for example, that of the group parent – but rather pursues the goal of facilitating cooperation between all insolvency proceedings, all administrators and all courts. Therefore, Articles 41 to 43 of the regulation define the duties of cooperation and communication between:

  • the insolvency administrators;
  • the courts and the insolvency administrators; and
  • the courts themselves.

Furthermore, Articles 61 to 70 of the regulation provide for the introduction of a ‘group coordination procedure'. However, its practicability seems questionable.

5.6 Is your country considering adoption of the UNCITRAL Model Law on Enterprise Group Insolvency?

Austria is not currently considering adopting the UNCITRAL Model Law on Enterprise Group.

5.7 How is the debtor's centre of main interests determined in your jurisdiction?

According to the EU Insolvency Regulation, the COMI is the place where the debtor conducts the administration of its interests on a regular basis and is therefore ascertainable by third parties. In the case of legal persons and companies, unless proven otherwise, it is presumed that the COMI is at the registered office. For private individuals who operate a business, it is presumed that the principal place of business is the COMI; for private individuals who do not operate a business, the COMI is presumed to be the place of their habitual residence.

5.8 How are foreign creditors treated in restructuring and insolvency proceedings in your jurisdiction?

Austrian insolvency law does not distinguish between domestic and foreign creditors. Foreign creditors have the same rights and duties in restructuring and insolvency proceedings as all other creditors.

According to the EU Insolvency Regulation, foreign creditors should receive an individual notice providing information about the proceedings and the lodging of claims (a standard form for the lodging of claims may be included).

6 Liability risk

6.1 What duties do the directors of the debtor have when the company is in the "zone of insolvency" (or actually insolvent)? Do they have an obligation to commence insolvency proceedings at any particular time?

Austrian insolvency law establishes the obligation of the debtor to file for insolvency. This obligation also applies to directors. If the requirements for the opening of insolvency proceedings (illiquidity or over-indebtedness) are fulfilled, debtors must file an application without culpable delay, but no later than 60 days after the occurrence of insolvency. In the event of an insolvency resulting from a natural disaster (ie, a flood, avalanche, snow pressure, landslide, hurricane, earthquake, epidemic, pandemic or similar disaster of comparable scope), the period will be extended to 120 days. The application is not culpably delayed if the opening of reorganisation proceedings with self-administration has been carefully pursued. This period can also be used for out-of-court reorganisation attempts or restructuring proceedings according to the Restructuring Act.

6.2 Are there any circumstances in which the directors could incur personal liability in the context of a debtor's insolvency?

Directors must exercise the care of a prudent businessperson vis-à-vis the company. Directors who violate their duties are jointly and severally liable for the damage incurred to the company (‘internal liability' vis-à-vis the company). This also applies with regard to damages incurred by the company because of insolvency proceedings. Shareholders, creditors of the company and other third parties, on the other hand, cannot file claims against directors, but only against the company, in case of violation of this duty.

6.3 Is there any scope for any other party to incur liability in the context of a debtor's insolvency (e.g. lender or shareholder liability)?

In Austria, the obligation to file for insolvency is a protective law in favour of creditors. If a director breaches his or her obligation to file for insolvency proceedings without culpable delay, he or she must pay damages to the insolvency creditors. With regard to the damages to be compensated, there is a distinction between so-called ‘old' and ‘new' creditors.

‘Old creditors' are those whose claims already existed at the time the application for insolvency should have been filed. In the event of late filing, directors are liable to these creditors for the so-called ‘quota damage'. This is intended to put old creditors in the position they would have been in had the insolvency estate available at the time the application for insolvency should have been filed been distributed (‘hypothetical quota').

‘New creditors' are creditors whose claims against the insolvent company rose after the time the application for insolvency should have been filed. In the event of late filing, directors are liable to these creditors for so-called ‘damage caused by breach of trust'. New creditors are to be placed in the same position as if they never had entered into a contract with the insolvent company, which can sometimes mean full compensation for damages.

Also, regarding the legitimacy to assert these claims, a distinction must be made between old and new creditors. While new creditors can assert the damage they have suffered at any time, old creditors do not have the right to do so, as long as the insolvency proceedings have not been legally terminated. During the insolvency proceedings, these claims can only be asserted by the insolvency administrator.

7 The Covid-19 pandemic

7.1 Did your country make any changes to its restructuring or insolvency laws in response to the Covid-19 pandemic? If so, what changes were made, what is their effect and are they temporary or permanent?

The Austrian legislature implemented a number of special regulations in response to the COVID-19 pandemic.

For example, from 1 March 2020 to 30 June 2021, there was no obligation for debtors to file for insolvency in the event of over-indebtedness. Unless the debtor was illiquid, insolvency proceedings were not initiated at the request of a creditor.

Furthermore, the period of 120 days for filing for insolvency in case of a natural disaster was (permanently) extended to cases of epidemics and pandemics.

Until 31 December 2021, debtors could apply for a reorganisation plan or payment plan with a period of three years for fulfilment (instead of the regular two years).

Finally, various types of relief on fiscal claims and social security contributions were available.

8 Other

8.1 Is it possible to effect a "pre-pack" sale of assets, and is it possible to sell the assets free and clear of security, in restructuring and insolvency proceedings in your jurisdiction?

The concept of pre-pack administration does not exist in Austrian restructuring and insolvency proceedings. Whereas restructuring proceedings according to the new Restructuring Act are very flexible and impose no restrictions to the debtor's restructuring measures, as long as they are accepted by the necessary majorities of creditors (and the court), in insolvency proceedings assets may be sold only with the prior consent of the insolvency administrator and/or the court. Therefore, ‘pre-pack' would be irrelevant for an insolvency administrator.

Assets which are subject to a lien may be auctioned by the insolvency administrator in a formal court hearing. In this case, the proceeds will be used to satisfy the secured creditors primarily. If the proceeds are insufficient to satisfy all secured creditors in full, the lower-ranking secured creditors will not obtain satisfaction. Nevertheless, all liens expire and the asset is acquired free of securities.

8.2 Is "credit bidding" permitted?

The concept of credit bidding does not exist in Austrian restructuring and insolvency proceedings. Creditors can only propose to purchase certain assets from the insolvency estate and the insolvency administrator may decide to launch such a process. However, there is no obligation for the insolvency administrator to act upon creditors' wishes or proposals.

9 Trends and predictions

9.1 How would you describe the current restructuring and insolvency landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

Since the Insolvency Act was reformed in 2010, Austrian insolvency law has been rather debtor friendly. The Insolvency Act primarily pursues the goal of restructuring and helps companies that are capable of restructuring to avoid a hasty liquidation. Therefore, one of the main purposes of the insolvency regime is to help debtors to achieve a successful restructuring or reorganisation. The idea of restructuring was also further strengthened by the Restructuring and Insolvency Directive Implementation Act and the introduction of the Restructuring Act. Furthermore, private insolvency law has been adapted several times in recent years and has become very debtor-friendly too.

As the relevant provisions of Austrian insolvency and restructuring law are quite new and already take into account all requirements of EU law, no far-reaching legislative reforms are planned for the next 12 months.

10 Tips and traps

10.1 What are your top tips for a smooth restructuring and what potential sticking points would you highlight?

Companies should not only analyse the causes of any crisis, but also find suitable methods and instruments for crisis management. These include both preventive strategies for avoiding corporate crises and strategies for overcoming any crisis that nonetheless arises.

In most cases, a crisis that threatens the company's existence will not have arisen suddenly and unexpectedly, but will rather have evolved from a strategic crisis to an economic crisis and then to a liquidity crisis.

A crisis-like corporate development is usually detected too late or the symptoms are not taken sufficiently seriously. This is often combined with a lack of willingness or ability to act. The lack of an early warning system in the form of a meaningful accounting system is also frequently observed. As a result, the undesirable economic development is not recognised in time and the company crisis leads to a situation that threatens the existence of the company. In addition, distressed companies have too little ability to adapt to changing conditions.

Successful restructuring requires:

  • appropriate empowerment;
  • consistent willingness to implement; and
  • increased willingness to change.

Therefore, a structured and comprehensive plan with clearly defined measures must be established, and a crisis team must be formed with the help of external advisers.

In 2013, an initiative of banks and lawyers with the participation of stakeholders involved in out-of-court restructuring issued guidelines to increase efficiencies and improve cooperation in restructurings. These set out the following principles for successful restructuring:

  • cooperative and standstill willingness of all creditors;
  • financial creditors' waiver of enforcement of their claims;
  • omission of disadvantageous actions by the company from the creditors' point of view;
  • coordination of the creditors' actions vis-à-vis the debtor;
  • provision of information to creditors by the company;
  • legal compliance and consideration of creditors' positions;
  • information sharing and confidentiality; and
  • priority repayment of additional funds granted in the course of an out-of-court restructuring.

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.

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