Insolvency 2021

Last Updated November 23, 2021

Austria

Law and Practice

Authors



Fellner Wratzfeld & Partners (fwp) comprises a team of more than 70 lawyers, advising clients as a full-service firm and also in all areas of insolvency, reorganisation and restructuring. The fwp team – known as one of the leading teams in Austria, with a strong understanding of business – provides comprehensive advice to both the creditor's and the lender's side, and has a particularly long tradition of co-ordinating restructuring negotiations in syndicated and multi-lender situations. fwp’s comprehensive approach in this field of practice also includes all forms of distressed M&A in pre-insolvency and insolvency stages, and the reorganisation and support of return to profitability with a specific specialisation in sustainable financing.

Company Insolvencies

In 2020, the number of insolvent companies in Austria was at the lowest level since 1990. With an overall decline of almost minus 40%, there were only about 3,000 insolvencies of companies. This trend continued in 2021 – in the first half of the year, the number of company insolvencies fell by around 45% compared to the previous year to 1,059 bankruptcies. This was the lowest number of company bankruptcies in over 40 years. Compared to 2019, the last “normal year” before the outbreak of the COVID-19 pandemic, to date, the decline is 59%. At the same time, the estimated liabilities have fallen even more disproportionately by around 78% to EUR392 million. The number of employees affected has also declined, falling to 3,600 (minus 65%). On the other hand, only 8,500 creditors had to deal with the insolvency of a business partner, which is almost three quarters less than in the same period of the previous year.

The reason for the decline of company insolvencies despite the massive economic slump due to the COVID-19 pandemic, were the measures that the Austrian government adopted to combat the COVID-19 crisis. These included the granting of short-time work, the granting of fixed-cost subsidies, the assumption of liabilities, the temporary suspension of the obligation to file for insolvency, as well as the suspension of tax liabilities.

Private Insolvencies

In the first half of 2021, the number of private insolvency proceedings decreased by 5% compared to the first half of 2020, to approximately 3,250 cases, which is the lowest number in 15 years. The reasons for this decrease were, on the one hand, the measures adopted by the Austrian government due to COVID-19 and, on the other, restricted consumer spending due to unemployment/short-time work and the lockdowns.

EU Directive and Implementation in Austria

On 20 June 2019, the European Parliament and the Council passed Directive (EU) 2019/1023 on Restructuring and Insolvency (the "Directive) for further harmonisation of the insolvency statutes of the member states. The Directive lays down rules on preventive restructuring frameworks available to debtors in financial difficulties where there is a likelihood of insolvency. The Directive also includes procedures leading to discharge of debt incurred by insolvent entrepreneurs and measures to increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt.

Austria implemented the Directive – unlike other European countries, such as Germany, which implemented this law at the beginning of 2021 – at the very last moment, effective from 17 July 2021, by adopting the Restructuring and Insolvency Directive Implementation Act (Restrukturierungs- und InsolvenzRichtlinie-Umsetzungsgesetz), which includes a separate new law comprising the provision for the restructuring of companies, the Restructuring Act (Restrukturierungsordnung), and which amended certain other laws including the Insolvency Act (Insolvenzordnung). The Restructuring and Insolvency Directive Implementation Act complements the procedures and pre-insolvency options introduced by the Restructuring Act (for details see 2.2 Types of Voluntary and Involuntary Restructurings, Reorganisations, Insolvencies and Receivership).

National Legislative Measures

At the national level, several legislative changes were adopted in the field of insolvency law to mitigate the economic consequences of the COVID-19 pandemic. Besides the temporary suspension of the obligation to file for insolvency (see 2.3 Obligation to Commence Formal Insolvency Proceedings), the Austrian legislator decided that bridge loans, which were taken out in the period between 1 March 2020 and 30 June 2021 to pre-finance the salaries of employees on short-time work, as well as their immediate repayment upon receipt of the short-time working assistance, cannot be challenged pursuant to Section 31 of the Austrian Insolvency Act, if the loan was not secured by the borrower’s assets and the lender was not aware of the borrower’s illiquidity when the loan was granted (for details regarding avoidance under Austrian insolvency law, see 11. Transfers/Transactions that May Be Set Aside).

The legal framework for insolvencies of business entities (as well as individuals) in Austria is codified in the Insolvency Act. Besides that, since July 2021 the new Restructuring Act has been providing a regime for restructuring (for details see 2.2 Types of Voluntary and Involuntary Restructurings, Reorganisations, Insolvencies and Receivership).

The Insolvency Act provides three different types of proceedings:

  • reorganisation proceedings with debtor in possession (the debtor retains, basically and subject to certain restrictions, control over the estate’s assets);
  • reorganisation proceedings without debtor in possession (a court-appointed insolvency administrator takes control); and
  • liquidation (bankruptcy) proceedings (a court-appointed insolvency administrator takes control of the task of selling the estate's assets at a maximum value, with the proceeds being paid out to the creditors).

Complementary to the above, since July 2021 the new Restructuring Act has provided Austria with a pre-insolvency restructuring regime in line with the Directive. The following are some of the cornerstones of the Restructuring Act.

  • A company may use the procedures provided by this Act (at the request of the debtor only) to enable the debtor to avert insolvency and ensure the viability of its company in the event of “probable insolvency”, which is the case if the existence of the debtor's company would be at risk without restructuring. This is particularly the case if (a) insolvency is imminent or (b) the equity ratio falls below 8% and the national debt repayment period exceeds 15 years. The procedure is not available to companies which are illiquid within the meaning of the Insolvency Act (see 2.3 Obligation to Commence Formal Insolvency Proceedings). 
  • The core of the restructuring procedure, which is in principle a self-administration procedure, is a restructuring plan which defines classes of “affected creditors”. In order for the restructuring plan to come into effect, the majority of the creditors in each class is required in the first instance, ie, the sum of the claims of the creditors agreeing to the restructuring plan must amount to at least 75% of the total sum of the claims of the creditors included in the restructuring plan, and a cram-down is also possible. In addition, the court has to decide on the confirmation of the restructuring plan.
  • Court approval of a restructuring plan also depends on whether the “creditor interest criteria” is met, if so requested by non-consenting creditors; the “creditor interest criteria” basically provides that a non-consenting creditor must not be treated worse than in a (regular) insolvency proceeding.
  • At the debtor’s request, the court may order a stay of execution proceedings for a period of up to three months (extendable to a maximum of six months) to support negotiations on a restructuring plan.
  • The Restructuring Act also provides for a “simplified procedure” tailored to comprise financial creditors only.

The legal representatives of an entity must file for insolvency in a scenario where the entity is “insolvent” according to the meaning in the Insolvency Act. This criterion is met if the debtor is (a) illiquid (zahlungsunfähig) or (b) over-indebted (überschuldet). Although the Insolvency Act does not provide a legal definition for illiquidity and over-indebtedness, legal literature and case law have broadly defined “illiquidity” as a situation where the debtor lacks sufficient cash (including existing credit lines) to meet its current needs and obligations. The Supreme Court of Austria has ruled that illiquidity is to be assumed when the debtor is unable to pay more than 5% of its debt obligations that are due and payable. On the other hand, “over-indebtedness” is when liabilities on the debtor’s balance sheet exceed the debtor’s assets (at liquidation value). However, a company’s substantive over-indebtedness (materielle Überschuldung) per se is not sufficient to trigger the obligation to file for the commencement of insolvency proceedings; moreover, it is necessary that the entity does not have a positive "going concern" prognosis (see 10.1 Duties of Directors).

A debtor is obliged to file for insolvency with the competent court, without undue delay, once its financial situation meets the statutory criteria for insolvency, and no later than 60 days after entering into the status of insolvency. If the debtor’s insolvency is caused by a natural disaster such as an epidemic or pandemic (including COVID-19), the 60-day period is doubled to 120 days.

If insolvency is only imminent, either restructuring proceedings under the Insolvency Act or reorganisation proceedings under the new Restructuring Act may be initiated at the debtor's request; in such a scenario, there is a “parallel world” in respect to possible regimes between which a debtor may select.

Apart from a company’s legal representatives, any creditor is entitled to file for insolvency in the form of liquidation (bankruptcy) proceedings, provided such creditor has a claim (irrespective of its maturity date) against the debtor. Proceedings in the form of reorganisation proceedings, however, can only be initiated at the debtor’s initiative.

Insolvency proceedings are to be opened by the insolvency court at the request of the debtor or a creditor, if the debtor is illiquid or over-indebted. Reorganisation proceedings (pursuant to the Insolvency Act) can already be initiated if there is a danger of illiquidity (for the definition of "illiquidity" and "over-indebtedness", see 2.3 Obligation to Commence Formal Insolvency Proceedings).

In principle, legal entities as well as individuals can be subject to insolvency proceedings under the Insolvency Act. However, neither reorganisation proceedings with, nor reorganisation proceedings without, debtor in possession apply to credit institutions, insurance companies and pension funds, as there are specific provisions for these entities (under the Banking Act, Insurance Company Supervision Act and the Pension Fund Act).

With respect to credit institutions, the Bank Recovery and Resolution Directive (BRRD) was implemented in Austria through the Austrian Recovery Bank and Resolution Act (Sanierungs- und Abwicklungsgesetz – BaSAG), which came into force in January 2015. The resolution process of former Hypo Alpe-Adria-Bank was the first to take place in Austria under this regime.

Apart from the options provided by the Restructuring Act (as discussed previously), entities that are not insolvent but that are having financial difficulties can apply for statutory restructuring of their business under the Business Reorganisation Act (Unternehmensreorganisationsgesetz). However, the Business Reorganisation Act is effectively “dead law”, as entities do not make use of this.

Austrian law previously did not provide a legal framework for out-of-court restructuring proceedings, and preliminary mandatory and consensual restructuring negotiations were not provided for in the Insolvency Act until the implementation of the Restructuring Act. However, Austrian restructuring practice already provided, to a large extent, an out-of-court restructuring approach, which inherited some of the cornerstones of the new Restructuring Act. Due to the fact that the new Restructuring Act has only been effective since July 2021, there is no relevant evidence to what extent this new law will be used either entirely or in a complementary manner, for example, with respect to the simplified procedure limited to financial creditors.

As mentioned in 2. Statutory Regimes Governing Restructurings, Reorganisations, Insolvencies and Liquidations, in a case where the insolvency of a debtor is established (ie, over-indebtedness or illiquidity under the Insolvency Act), the legal representatives must file for insolvency with the competent court within a time period of 60 days at the latest. Any attempts at out-of-court restructurings have to observe this deadline as well, which means that such restructuring without the involvement of the court must take place (and be legally enforceably settled) prior to insolvency or within the 60-day time limit.

This is not applicable in Austria.

This is not applicable in Austria.

In practice, out-of-court restructurings may be attempted by way of voluntary debt relief (including subordination), economic reorganisation of the business or equity injections, all according to the provisions of private law. Creditors might decide to grant debt relief in order to avoid formal insolvency proceedings and the negative effect this might have on the entity's public image. A prerequisite for such “quiet relief” is that all the creditors affected must be prepared to grant relief. However, each creditor can independently decide whether to initiate enforcement proceedings (Exekutionsverfahren) or insolvency proceedings. Therefore, creditors often bind their consent to the consent of the rest of the creditors as a pre-condition for their support.

Apart from the necessity to gain the consent of all the creditors, a potential disadvantage of out-of-court restructurings is the risk of voidance of agreements that were concluded at a time when the debtor was already insolvent, which can diminish the estate. An advantage of out-of-court restructuring is that these proceedings are not registered in the insolvency database. Furthermore, out-of-court restructuring is potentially much faster, provided that all the parties participate.

In accordance with statutory provisions, Austrian law recognises the following as security instruments over assets: pledges (Pfande), transfers of securities (Sicherungsübereignungen), assignments of securities (Sicherungszessionen), and reservations of title (Eigentumsvorbehalte).

Whereas pledges are intended to secure the individual claim of a creditor and the ownership of an asset remains with the debtor, a transfer of security aims to transfer the ownership of the asset to the creditor, who will only transfer the asset back to the debtor once the debt is fully paid. These two types of securities require registration with the land register where the asset concerned is real property. Priority is granted according to chronological entry in the land register.

The Austrian Supreme Court has ruled that the transfer of security in movable property validly acquired in Germany still exists after the movable property is moved to Austria, even if the publication requirements for its continued existence in Austria are not met.

With an assignment of securities, the debtor assigns claims against a third party to the creditor. This type of security requires strict acts of publication (eg, notification of third-party debtors or annotation in the books). Priority depends on the date on which the publicity requirement is met.

Regarding the enforcement of secured creditors' rights, see 5. Unsecured Creditor Rights, Remedies and Priorities.

In all three types of proceedings provided for in the Insolvency Act (reorganisation proceedings with debtor in possession, reorganisation proceedings without debtor in possession, and liquidation proceedings), claims are classified and ranked in the following order of priority.

Secured Creditors

Secured creditors either have claims of separation to receive assets (Aussonderungsanspruch) and/or claims of separation to receive the proceeds of enforcement after sale (Absonderungsanspruch). Neither of these claims is affected by the commencement of insolvency proceedings – apart from possible voidance claims (Anfechtung). The secured creditor merely has to inform the administrator and, lacking acknowledgement of the claim, potentially file a lawsuit against the insolvency administrator in order to enforce the senior security. However, secured creditors are subject to the restraint that no secured claim can be paid within six months from the commencement of insolvency proceedings in case such claims might jeopardise the business continuity of the debtor. Only if the enforcement is vital to prevent severe economic disadvantage to the secured creditor may this provision be disregarded.

Estate Claims

The next rank is taken by estate claims (Masseforderungen), which, according to the statutory provisions, are to be satisfied prior to other insolvency claims. Estate claims encompass, inter alia, the costs of the insolvency proceedings; the expenses of management and administration of the estate; claims for labour, services and goods furnished to the estate post-filing; and the costs of the insolvency administrator. Preferential creditors of estate claims share in such claims on a pro rata basis.

Insolvency Claims

Ranked behind estate claims are insolvency claims (Insolvenzforderungen), which are claims of unsecured creditors and may be filed with the competent court within a time period after the commencement of insolvency proceedings as fixed by the court. Those insolvency creditors who filed a claim that was not contested by the insolvency administrator also share in such claims on a pro rata basis.

Subordinate Claims

Subordinate claims may result from contractual provisions or from statutory provisions. Subordinate creditors do not participate in the insolvency proceedings in general, only if a surplus for distribution is generated. However, in practice, high diligence is required in drafting subordination agreements to determine the extent (and scenarios) of full or part subordination.

In comparison, the new Restructuring Act provides that debtors, except for small and medium-sized enterprises, are obliged to divide their creditors into specific classes and all creditors of the same class must be treated equally (if permissible and no classes are formed, all creditors must be treated equally). The categories of classes are mandatory and are as follows:

  • secured creditors – creditors with claims for which a pledge or a comparable security has been granted from the debtor’s assets; claims of secured creditors are to be included in this class with the amount covered by the security (any unsecured part of the claim falls into the class of creditors with unsecured claims, which means, as a general principle, that one and the same creditor may, depending on their type of claim, fall into more than one class);
  • unsecured creditors;
  • vulnerable creditors – this class includes, in particular, creditors whose claim does not exceed EUR10,000; it is the intention of the law to cover in this class the claims of creditors who do not have, as a matter of fact or as a consequence of the nature of their business, the possibility to spread their risk, eg, suppliers of a debtor);
  • bondholders – provided that in such class not only bondholders but, more generally, holders of securitised titles will be covered; and
  • creditors of subordinate claims.

The commencement of formal in-court insolvency proceedings under the Insolvency Act automatically leads to a stay against all actions of unsecured creditors, whereas secured creditors are generally not affected by the opening of insolvency proceedings.

Under the Insolvency Act, insolvency creditors can commence legal proceedings against a court-appointed insolvency administrator if the insolvency administrator contests the creditor’s claim (see 7.2 Distressed Disposals). Estate claims are to be paid by the insolvency administrator without any filing procedure. If estate claims are not paid by the insolvency administrator, estate creditors may apply to the insolvency court for remedy (Abhilfeantrag) or assert their claims by bringing an action against the insolvency administrator.

Pre-judgment attachments are not applicable in Austria.

In insolvency proceedings, claims are classified and ranked in the order of priority as described in 5.1 Differing Rights and Priorities.

Reorganisation Proceedings under the Insolvency Act

The Insolvency Act provides for two kinds of reorganisation proceedings, either with or without debtor in possession (see 2. Statutory Regimes Governing Restructurings, Reorganisations, Insolvencies and Liquidations). The main focus of these proceedings is the continuation of the debtor's business or parts thereof. In order for the provisions of reorganisation proceedings to be applicable, the debtor must be the one who files for the opening of these proceedings and the debtor must provide a restructuring plan (Sanierungsplan) to the court. For proceedings with debtor in possession, the management remains in place and the debtor retains control over the estate’s assets within the scope of ordinary business. Nonetheless, a court-appointed insolvency administrator monitors the debtor and the business situation. Also, specific actions such as the review of claims and the contesting of transactions (avoidance) are reserved for the administrator.

Unlike an out-of-court restructuring, in reorganisation proceedings the debtor is protected from the commencement of enforcement proceedings and may be granted partial debt relief via a majority decision.

However, as with liquidation proceedings, the debtor has the possibility to use the conclusion of a restructuring plan as an opportunity to rehabilitate its business. Where such restructuring plan is agreed upon in the course of liquidation proceedings, the debtor pays the quota agreed, which then leads to a residual debt discharge (Restschuldbefreiung). This possibility to rehabilitate plays an important role in practice.

Restructuring Plan

Requirements

For restructuring proceedings, a restructuring plan by the debtor must be submitted to the court with financial records for the past three years that show the debtor’s ability to pay 20% of its debt to unsecured creditors within a period of two years. If the debtor can prove that a payment of 30% within a period of two years is feasible, the debtor may additionally apply for debtor in possession. The restructuring plan must further provide for full payment of all estate claims (Masseforderungen) and evidence of the debtor’s ability to fund the estate claims for a period of 90 days following filing for the commencement of restructuring proceedings. The debtor must provide such restructuring plan within 90 days of the opening of insolvency proceedings.

In general, the approval of a suggested restructuring plan is subject to a “double majority requirement” of the creditors in the restructuring plan hearing, which is set by the court and made public by way of a formal edict of the court. Not only is it necessary to achieve a majority of those insolvency creditors who are present and entitled to vote (no specific quorum applies), but a majority of approving creditors also has to be reached on the admitted and present aggregate insolvency claims. Fully secured creditors are not entitled to vote.

Confirmation

If the creditors approve a restructuring plan, the insolvency court – as a second step – also has to confirm the restructuring plan. A possible reason for the court to deny confirmation would be an infringement of the principle of equal treatment of the creditors by granting preferential treatment to a specific creditor.

Effects

Once the restructuring plan is approved, confirmed and legally binding, the debtor is relieved of the obligation to pay the creditors the amount exceeding the quota as outlined in the reorganisation plan, which also includes a limitation on the creditors to set off their claims against this quota where general requirements are met. The effects of the legally binding restructuring plan also apply to those creditors that did not vote for the restructuring plan or did not participate at all. The insolvency proceedings are thus concluded. However, any rights of secured creditors who either have claims of separation to receive assets and/or claims of separation to receive the proceeds of enforcement after sale must not be affected by the restructuring plan. Also, the restructuring plan may provide for the appointment of a trustee to either supervise the execution of the restructuring plan (überwachter Sanierungsplan) or to manage the estate with a mandate to fulfil the restructuring plan (Treuhändersanierungsplan mit Vermögensübergabe).

If a debtor defaults on the payment of a quota as provided for in the restructuring plan, the respective creditor’s claim comes into effect again, but only proportional to the unpaid quota.

Where the statutory criteria for insolvency (over-indebtedness or illiquidity) are not yet met, a debtor may also file for the opening of reorganisation proceedings under the Business Reorganisation Act. However, these proceedings are not relevant in practice as the consent of all creditors is required.

Austrian law does not contain specific provisions on pre-packaged sales or debt-for-equity swaps.

Pre-insolvency Regime under the Restructuring Act

As outlined above in 2.2 Types of Voluntary and Involuntary Restructurings, Reorganisations, Insolvencies and Receivership, the Restructuring Act provides a new pre-insolvency restructuring regime for Austria.

Application

The prerequisite for the commencement of restructuring proceedings under the Restructuring Act is application by the debtor as well as the “probable insolvency” of the debtor, which must be stated in the application. The application for the initiation of restructuring proceedings must be accompanied by a restructuring plan or at least, a restructuring concept.

Commencement

The commencement of restructuring proceedings under the Restructuring Act does not prevent the opening of insolvency proceedings. Only the granting of a stay of execution (Vollstreckungssperre) prevents the opening of insolvency proceedings. In this regard, it does not matter whether the stay was granted against one or more creditors; it must, however, be effective, ie, it must have been served on at least one creditor.

Requirements

The restructuring plan must describe the debtor's economic situation, in particular their assets, liabilities and the company itself. In addition, the restructuring plan must contain the proposed restructuring measures and their duration, the reduction and deferral of claims, as well as the effects on jobs and any new financial support. Besides that, a financial plan for the duration of the restructuring measure must be prepared. The affected creditors (including classification into creditor classes) as well as the unaffected creditors must be listed in the restructuring plan, together with a factual justification for their inclusion/non-inclusion in the restructuring plan. The plan must also include a (conditional) forecast of the company's continued existence and a description of the necessary preconditions for the success of the plan.

Approval

First, the court will examine the completeness of the information contained in the restructuring plan as well as the appropriateness of the formation of the classes of creditors and the selection of the creditors concerned. After that, the creditors vote on the restructuring plan. In principle, the restructuring plan must be approved by the majority of the creditors included in each class, whereby the sum of the claims of the creditors agreeing to the restructuring plan must amount to at least 75% of the total sum of the claims of the creditors included in the restructuring plan.

Confirmation

The court then has to decide whether to confirm the restructuring plan. Confirmation requirements are, among other things, that the legal provisions on voting, voting rights and acceptance have been complied with; that new financing provided for in the restructuring plan is required for the implementation of the plan; and that the implementation of the plan does not unreasonably prejudice the interests of creditors. If the consent of all classes of creditors is not obtained, the confirmation by court – called a cross-class cram-down – requires that, in addition to the general requirements, the majority of the classes of creditors agree to the restructuring plan.

As stated in 6.1 Statutory Process for a Financial Restructuring/Reorganisation and in 2. Statutory Regimes Governing Restructurings, Reorganisations, Insolvencies and Liquidations, under the Insolvency Act there are two types of reorganisation proceedings, namely reorganisation proceedings with debtor in possession and reorganisation proceedings without debtor in possession. In both proceedings, the main focus lies in the continuation of the debtor's business or parts thereof. Whereas in reorganisation proceedings with debtor in possession the debtor retains, basically and subject to certain restrictions, control over the estate’s assets and is only monitored by the insolvency administrator, in reorganisation proceedings without debtor in possession the insolvency administrator takes control.

In restructuring proceedings under the Restructuring Act, the debtor also retains control over the estate’s assets. However, in certain cases, a restructuring officer must be appointed. In addition to assisting the debtor or the creditors in the negotiation of a restructuring plan, the tasks of the restructuring officer are to monitor the debtor's activities during negotiations and to report to the court.

In reorganisation proceedings, claims are classified and ranked in order of priority as described in 5.1 Differing Rights and Priorities. The Insolvency Act provides for a court-appointed creditors’ committee, which is explained in detail in 9.3 Selection of Officers.

If the restructuring plan suggested by the debtor is approved by the required majority of creditors and also confirmed by the court (see 6.1 Statutory Process for a Financial Restructuring/Reorganisation), the debtor must pay only the agreed quota to the dissenting creditors.

According to the Austrian Supreme Court, the trade of an insolvency claim against a company during insolvency proceedings is to be recognised. In the event of the acquisition of a claim after the opening of insolvency proceedings, the acquirer generally enters into the insolvency participation claim (Konkursteilnahmeanspruch) of the former creditor.

The restructuring laws (including the new Reorganisation Act) do not provide for means of corporate restructuring. However, the restructuring plan may also provide restructuring measures.

The sale or lease of the debtor’s company or parts thereof, the sale or lease of all or the main movable fixed assets and current assets, as well as the sale or lease of real property, requires the approval of the insolvency court as well as the creditors’ committee. As long as reorganisation proceedings are pending, the debtor’s business basically may not be sold.

It is the insolvency administrator’s responsibility to realise the debtor’s assets. The Insolvency Act does not provide specific deadlines or timelines to be observed by the insolvency administrator in the course of liquidation proceedings when realising the assets. When all the proceeds have been distributed among the creditors, the insolvency proceedings are concluded.

This is not applicable in Austria.

This is not applicable in Austria.

This is not applicable in Austria.

See 6.1 Statutory Process for a Financial Restructuring/Reorganisation.

This is not applicable in Austria.

The Insolvency Act provides for the possibility of set-off of claims if such claims have already been subject to compensation according to general civil law at the time of commencement of the restructuring proceedings, irrespective of the fact that such claims might not have been due or might have been subject to a condition at the time of commencement of the proceedings. Furthermore, creditors have to consider that a set-off is not possible for claims that arose within the six months prior to the commencement of insolvency proceedings if the creditor knew (or negligently did not know) about the insolvency. Claims subject to set-off do not need to be formally filed in insolvency proceedings.

If the creditor does not make use of the right to set off during the restructuring proceedings, the creditor may basically only set off against the restructuring plan quota of their claim after final confirmation of the restructuring plan and cancellation of the restructuring proceedings.

As stated in 6.1 Statutory Process for a Financial Restructuring/Reorganisation, if a debtor defaults on the payment of a quota as provided for in the restructuring plan, the respective creditor’s claim comes into effect again, but only proportional to the unpaid quota.

This is not applicable in Austria.

As opposed to restructuring proceedings with or without debtor in possession under the Insolvency Act, liquidation proceedings aim to realise the assets of the estate and distribute the proceeds among the creditors. Restructuring proceedings that fail are transformed into liquidation proceedings.

As explained in 2.2 Types of Voluntary and Involuntary Restructurings, Reorganisations, Insolvencies and Receivership, the legal representatives of an entity must file for insolvency in a case where the entity is insolvent within the meaning of the Insolvency Act (ie, if the debtor is over-indebted or illiquid). A debtor is obliged to file for insolvency proceedings with the competent court without undue delay once its financial situation meets the statutory criteria for insolvency, and no more than 60 days after it has been determined that the debtor is insolvent. Apart from the legal representatives, any creditor is entitled to file for the commencement of insolvency proceedings in the form of liquidation proceedings, provided such creditor has a claim (irrespective of its maturity date) against the debtor.

The commencement of insolvency proceedings leads to an ex lege discontinuance of any legal procedure to which the debtor is party and with respect to any enforcement actions being taken against the debtor.

In liquidation proceedings the court appoints an insolvency administrator to assume control. The management of the debtor can no longer engage in any legal acts on behalf of the debtor from the time of the opening of insolvency proceedings. The court issues an official edict to be disclosed on the electronic noticeboard of the courts (Ediktsdatei), in which the examination hearing is determined. Until this date, creditors may file their claims with the court. The court-appointed insolvency administrator decides in the examination hearing whether a creditor’s claim is contested or not; if it is contested, the respective creditor must commence legal proceedings in order to obtain an insolvency claim. The main focus of the insolvency administrator lies with the realisation of assets and the distribution of the proceeds among creditors according to the quota. When realising assets by way of sale of the debtor’s company, the insolvency administrator must first establish whether continuance is not possible, in which case, the creditors’ committee has to agree and the confirmation of the insolvency court is required.

In general, the creditors’ committee has to be consulted for each significant action of the insolvency administrator. Furthermore, certain actions have to be communicated to the insolvency court (such as settlement agreements or the fulfilment or termination of bilateral agreements where one party has not fulfilled its contractual obligations at the time of commencing insolvency proceedings) and others have to be confirmed by the insolvency court (such as the sale of the entire business of the debtor).

In addition to the insolvency administrator, the Insolvency Act provides for a court-appointed creditors’ committee, which is explained in detail in 9.3 Selection of Officers.

The Insolvency Act provides for recognition of the effects of insolvency proceedings opened in a non-EU member state (irrespective of an international treaty or the reciprocity principle), as well as decisions rendered in such proceedings, where the centre of main interests (COMI) of the debtor is located in the respective foreign country and the insolvency proceedings are comparable to such proceedings in Austria, in particular, if Austrian creditors are treated in the same manner as creditors from the state of the opening of proceedings. However, recognition is denied if insolvency or composition proceedings have already been opened in Austria, or interim measures have been ordered, or recognition leads to a result that clearly conflicts with public policy.

With regard to EU member states, the EU Insolvency Regulation stipulates that any judgment opening insolvency proceedings handed down by a court of an EU member state which has jurisdiction shall be recognised in all other EU member states from the moment that it becomes effective in the state of the opening of proceedings. The courts of the member state, within the territory of the debtor's COMI, have jurisdiction to open insolvency proceedings.

The COMI is the place where the debtor conducts the administration of its interests on a regular basis and which is ascertainable by third parties. The debtor’s COMI is determined at the time of filing for insolvency. Therefore, debtors can influence the international jurisdiction, and thus the applicable insolvency law, by timely shifting the COMI to another EU member state in order to achieve easier debt relief.

In cross-border cases, Austrian insolvency courts, as well as insolvency administrators, co-operate with foreign administrators by way of disclosure of information relevant to the foreign insolvency proceedings and by granting the foreign administrator the opportunity to participate in the decision of the realisation of assets located in Austria or the realisation of reorganisation plans.

As stated in 8.1 Recognition or Relief in Connection with Overseas Proceedings, with regard to insolvency proceedings in a non-EU member state, the Austrian Insolvency Act determines which jurisdiction's decisions, rulings or laws govern or are paramount. In respect to EU member states, the EU Insolvency Regulation applies.

Foreign creditors are not dealt with in a different way in insolvency proceedings in Austria.

The cross-border enforcement of court decisions between EU member states is controlled by various regulations, in particular, Regulation 1215/2012, the ECMA, which regulates the recognition and enforcement of judgments in civil and commercial matters. Within its scope of application, judicial decisions are enforceable in another member state without any further proceedings. Only in a few exceptional cases may this be refused, for example, if such recognition is manifestly contrary to public policy (ordre public) in the member state addressed, or the defendant was not able to arrange their defence in the proceedings in which the judgment was rendered.

Judgments of non-EUmember states may be declared enforceable in Austria if, inter alia, reciprocity is granted by international treaties and the judgments are enforceable in the state of origin. The European Commission adopted a proposal for EU accession to the Hague Recognition and Enforcement Convention, an international treaty to facilitate the recognition and enforcement of judgments in civil and commercial matters that are passed in non-EU member states.

Where insolvency proceedings under the Insolvency Act are initiated by the debtor and are conducted as reorganisation proceedings with debtor in possession, the management remains in place and the debtor retains control over the estate’s assets within the scope of ordinary business. Nonetheless, a court-appointed insolvency administrator (or in the case of reorganisation proceedings with debtor in possession, a "reorganisation administrator") monitors the management of the debtor and the business situation, at the same time preventing the discrimination of creditors. Also, specific actions such as the review of claims and the contesting of transactions (avoidance), are reserved for the reorganisation administrator.

In case of liquidation and reorganisation proceedings without debtor in possession, the estate is administered by a court-appointed insolvency administrator.

Specific actions are reserved for the insolvency administrator. For example, with regard to contracts with a mutual obligation to perform, where not all the parties have fully performed at the time of the commencement of insolvency proceedings, the insolvency administrator may elect to assume or withdraw from such contract. Furthermore, if the debtor is a tenant, the insolvency administrator can decide to terminate the lease contract as long as they respect the statutory notice period or a shorter contractual notice period. If the debtor is a landlord, the insolvency administrator steps into the contract without requiring additional special termination rights. Also, the insolvency administrator may terminate employment contracts upon partial or total shutdown of the business. In case of such shutdown, the insolvency administrator only has to observe the statutory notice periods and, if applicable, the collective bargaining agreement. A contractually agreed longer notice period to terminate employment contracts is not applicable. Moreover, the Insolvency Act provides for a six-month moratorium in case a contracting partner wants to terminate a contract with the debtor that is essential for business continuation. These contracts may only be terminated for good cause, and the deterioration of the economic situation of the debtor or default of payment of claims which were due before the commencement of the insolvency proceedings are not considered to constitute such good cause.

Appointment of Insolvency Administrator

In general, insolvency administrators are selected by the court from the official list of insolvency administrators. Under the Insolvency Act, an administrator must be a respectable and reliable person experienced in business with proficiency in insolvency matters, including commercial law and business management, where business entities are involved. Furthermore, the insolvency administrator must be independent of the debtor and the creditors.

Remuneration of Insolvency Administrator

On the one hand, in the case of a liquidation the insolvency administrator is statutorily remunerated with a percentage of the gross revenues realised from the liquidation. On the other hand, in the event of continuation, the insolvency administrator is entitled to a special remuneration. With the 2017 amendment of the Insolvency Act the minimum remuneration for the insolvency administrator has been increased.

Public Information

The identity of the insolvency administrator is made public with the official notice of the court, to be disclosed on the electronic noticeboard of the courts, which also contains information on the type of insolvency proceedings to be opened, and the timeline for the meeting of the creditors and the examination hearing regarding the claims registered by the creditors.

Removal of Insolvency Administrator

The insolvency administrator is monitored by the insolvency court, who can remove the administrator from office for good cause, either ex officio or upon request. A motion for removal can be filed at any time by the debtor or any member of the creditors' committee and must contain a reason for removal. Prior to rendering a decision, the court may hear the members of the creditors' committee, and the insolvency administrator, if feasible.

Creditors' Committee

The Insolvency Act provides for a further statutory body, a court-appointed creditors’ committee, consisting of three to seven members, which supervises and supports the insolvency administrator. In general, it is at the court’s sole discretion whether to install a creditors' committee (although also upon the request of the creditors), if the characteristics or the particular scope of the debtor’s business make it imperative. However, the court is obliged to appoint such a committee if the debtor’s business is to be sold. The members of the creditors’ committee are also chosen by the court at its sole discretion, but the creditors, representatives of the works council and other special interest groups have a right to propose certain members. The members of the creditors’ committee are to be disclosed on the electronic noticeboard of the courts.

Under the Insolvency Act, a prerequisite for the filing of insolvency proceedings is the illiquidity or over-indebtedness of the debtor. Where one of these criteria is met, the entity is deemed insolvent. For lack of a legal definition of the term, Austrian case law and commentary define "illiquidity" as a situation where a debtor lacks the means to pay all claims due and will not be able to obtain the necessary means to do so in the foreseeable future. Over-indebtedness is measured according to a two-step process:

  • firstly, a potential material insolvency is established by calculating whether the liabilities of the debtor exceed its assets; and
  • secondly, if the entity is materially insolvent, only in a case where a positive "going concern" prognosis is not feasible is the relevant entity deemed to be over-indebted under the Insolvency Act.

In general, a managing director must act in a diligent manner. Any failure to act diligently exposes the managing director to liability vis-à-vis the company. The corresponding claims of the company, which may not be settled in a case where payments by the managing directors are required for the satisfaction of the creditors, are subject to a five-year limitation period.

If a debtor meets one of the above-mentioned criteria for insolvency under the Insolvency Act (see 10.1 Duties of Directors), the legal representatives are obliged to file for insolvency without undue delay, and no later than 60 days after having determined that the debtor is insolvent. If the entity is illiquid or over-indebted and the legal representatives fail to file for insolvency without undue delay – or in any event, no later than within the 60-day time period – the legal representatives expose themselves to possible civil and criminal charges (including fraud or undue preference for a creditor) for impairment of the creditors’ interests. Disregarding the 60-day time limit is one of the few cases where a legal representative of a limited liability company may be held personally liable for damage inflicted on the company’s creditors (a possible reduction of the insolvency quota). Furthermore, the legal representatives may be liable to the entity for any payments executed while already in a state of insolvency.

The provisions of the Insolvency Act dealing with voidance rights aim at safeguarding the insolvent estate to the satisfaction of creditors. Legal acts and transactions that have taken place within certain time periods prior to the commencement of insolvency proceedings over the assets of the debtor, and which relate to the assets of the insolvent (illiquid or over-indebted) debtor, can be contested by the insolvency administrator. Therefore, the satisfaction of a pledgee can never be detrimental to the debtor’s assets, as the creditor only obtains the equivalent of what would be the outcome of a sale in the course of insolvency proceedings.

The general prerequisites for avoidance under Austrian insolvency law are the following:

  • the avoidance results in an increase of the insolvency estate (Befriedigungstauglichkeit); and
  • the challenged legal act or transaction caused the direct or indirect discrimination of creditors (Gläubigerbenachteiligung).

The discrimination of creditors will only be affirmed if the settlement fund (Befriedigungsfonds) available to creditors in the insolvency proceedings has been reduced in comparison with the amount available at the time of the contested legal act.

A transaction can be contested for intent to discriminate (Benachteiligungsabsicht), squandering of assets (Vermögensverschleuderung), free-of-charge disposal (unentgeltliche Verfügung), preferential treatment of creditors (Begünstigung) and knowledge of illiquidity (Kenntnis der Zahlungsunfähigkeit). The look-back period varies from provision to provision, ranging from a maximum of ten years for intent to discriminate, to 60 days prior to the commencement of insolvency proceedings for preferential treatment of creditors, whereas certain periods are shortened where the third party knew or should have known (ie, negligently did not know) the respective facts.

Voidance claims are asserted by the insolvency administrator on behalf of the estate only (independent of the type of insolvency proceedings), within a time period of one year from the opening of insolvency proceedings. Furthermore, the administrator may raise the plea of voidance without any time limit.

Fellner Wratzfeld & Partners

Schottenring 12
A-1010 Vienna
Austria

+43 1 53770 0

markus.fellner@fwp.at www.fwp.at
Author Business Card

Trends and Developments


Authors



Fellner Wratzfeld & Partners (fwp) comprises a team of more than 70 lawyers, advising clients as a full-service firm and also in all areas of insolvency, reorganisation and restructuring. The fwp team – known as one of the leading teams in Austria, with a strong understanding of business – provides comprehensive advice to both the creditor's and the lender's side, and has a particularly long tradition of co-ordinating restructuring negotiations in syndicated and multi-lender situations. fwp’s comprehensive approach in this field of practice also includes all forms of distressed M&A in pre-insolvency and insolvency stages, and the reorganisation and support of return to profitability with a specific specialisation in sustainable financing.

Effects of COVID-19 on the Austrian Market

To mitigate the economic effects of the COVID-19 crisis, in particular those arising from lockdowns, the Austrian government applied several economic measures to stabilise companies, such as the issuing of bridge guarantees for up to 100% of the credit value applied for at banks as well as the granting of fixed-cost subsidies. The Austrian legislator also introduced some mitigating modifications within the field of restructuring and insolvency law, such as the following.

  • The obligation to file for insolvency due to over-indebtedness was suspended until 30 June 2021, if the over-indebtedness occurred in the period between 1 March 2020 and 30 June 2021. 
  • While monetary shareholder loans would usually be considered equity replacing and therefore subordinate to creditor claims in insolvency proceedings if given for more than 60 days, such shareholder loans were not qualified as equity replacing for up to 120 days until 31 January 2021.
  • Bridge loans used to pre-finance salaries of employees on short-time work, which were taken out in the period between 1 March 2020 and 30 June 2021, and immediate repayment of such loans upon receipt of the short-time work subsidy, were not subject to Austrian insolvency voidance, if neither a pledge nor comparable security from the borrower's assets was provided for the loan and the lender was not aware of the borrower's insolvency when the loan was granted. 

These legal (and economic) measures provided by the Austrian government led to a decrease in the insolvency rate: in 2020, only about 3,000 company insolvency proceedings were opened, which meant an overall decline of almost minus 40% compared to the previous year. In the first half of 2021, the number of company insolvencies decreased by around 45% to 1,059, compared with the first half of 2020. This was the lowest number of company bankruptcies in over 40 years. 

Now, 18 months later, Austrian companies have to cope with the effects of COVID-19 without further legal measures in the field of insolvency and restructuring. Some experts predict a substantial increase in the insolvency rate, primarily for SMEs. 

These circumstances lead to the question of how to cope with imminent insolvency in order not to end up in liquidation (bankruptcy) proceedings within the insolvency an restructuring legislation provided by Austrian and European law, especially under the new Austrian Restructuring Act.

Insolvency and Restructuring Post-COVID-19

In Austria, the following four types of restructuring and insolvency procedures are available for business entities.

  • Reorganisation proceedings with debtor in possession – the main focus of these proceedings lies in the continuation of the debtor’s business or parts thereof. The debtor retains, generally and subject to certain restrictions, control over the estate’s assets and is only monitored by a court-appointed insolvency administrator.
  • Reorganisation proceedings without debtor in possession – the main focus of these proceedings is also the continuation of the debtor’s business, but the insolvency administrator takes control. 
  • Liquidation (bankruptcy) proceedings – the court-appointed insolvency administrator takes control of the task of selling the estate’s assets at a maximum value, with the proceeds being paid out to the creditors.
  • In addition to these three types of insolvency proceedings – following the Directive (EU) 2019/1023 on restructuring and insolvency, companies are also able to restructure in a preventative restructuring framework (Restrukturierungsverfahren) under the new Austrian Restructuring Act. These restructuring proceedings are a preventative restructuring mechanism and should enable debtors, even though they are in financial difficulties, to continue their business or parts thereof. The debtor is only monitored by the court or, in specific cases, by a court-appointed restructuring administrator.

The Austrian Restructuring Act

In Austria, the Restructuring Act came into force at a very late stage at the end of July 2021, so there is currently no experience as to whether and to what extent this restructuring framework will in fact be used. A glance across the border to Germany, where the parallel regime with the “StaRUG” has been in force since the beginning of 2021, is initially sobering, as according to information available on the market, this reorganisation framework has only been applied in approximately ten cases to date. The cases and reasons for this are various and have to be seen also in the context of the effects or after-effects of the COVID-19 aid packages. 

One case that stands out in terms of size and media attention is the restructuring proceedings initiated before the Munich insolvency court against eterna Mode Holding GmbH. Bondholders have agreed to a debt cut at 12.5% of the nominal value. Although many elements of the Restructuring Act have already been applied in restructuring consulting practice, it is currently expected by many that this framework will most likely be applied to financial creditors in the context of the so-called simplified reorganisation proceedings or, perhaps, also in the case of financing structures that include bondholders.

In principle, the new Restructuring Act is applicable to all entrepreneurs, which also includes sole proprietors. However, certain companies in the financial sector, such as credit institutions pursuant to Section 1 paragraph 1 of the Austrian Banking Act, as well as public bodies are expressly excluded.

The restructuring proceeding is available to companies in the event of the "likelihood of insolvency" (Section 6 Austrian Restructuring Act). This is the case if (a) insolvency is imminent or (b) the equity ratio falls below 8% and the notional debt repayment period exceeds 15 years. The restructuring mechanism must be initiated at the request of the debtor and is intended to enable the debtor to avert insolvency and ensure the viability of its company (Sicherstellung der Bestandfähigkeit). The right to apply for the initiation of restructuring proceedings is only available to the debtor and not third parties.

Similar to the obligation to file for insolvency in case of illiquidity or over-indebtedness, the debtor has to take restructuring measures (ie, file for restructuring) if there is a likelihood of insolvency. If the entity faces a likelihood of insolvency and the legal representatives fail to file for restructuring, the legal representatives expose themselves to possible civil (and criminal) charges.

The procedure is not available to companies, which are insolvent within the meaning of the Insolvency Act. Under the Austrian Insolvency Act, a debtor is deemed insolvent if the debtor is illiquid or over-indebted.

The restructuring plan must contain the proposed restructuring measures and their duration, the reduction and deferral of claims as well as any new financial support. In addition, the restructuring must describe the debtor's economic situation, in particular its assets, liabilities and the company. The affected creditors (including classification into creditor classes) as well as the unaffected creditors must be listed in the restructuring plan together with a factual justification for their inclusion/non-inclusion. The plan must also include a conditional forecast of the company's continued existence and a description of the necessary preconditions for the success of the plan. In the restructuring plan it should also be set out why restructuring proceedings under the Restructuring Act are in the best interest of the creditors, compared to insolvency proceedings. 

The court has to examine the completeness of the information contained in the restructuring plan as well as the appropriateness of the formation of the classes of creditors and the selection of the creditors concerned. Subsequently, the creditors vote whether to approve the restructuring plan. The restructuring plan is adopted if the majority of the creditors included in each class approves, ie, the sum of the claims of the creditors agreeing to the restructuring plan must amount to at least 75% of the total sum of the claims of the creditors included in the restructuring plan. The restructuring plan is binding on the parties if it is confirmed by the court (Section 34 paragraph 1 Austrian Restructuring Act). One confirmation requirement is that the implementation of the plan does not unreasonably prejudice the interests of creditors. If the consent of all classes of creditors is not obtained, the confirmation by the court – called a cross-class cram-down – is still possible if the majority of the classes of creditors agree to the restructuring plan.

Once the restructuring plan is adopted by the affected creditors, confirmed by the court and thus, legally binding, the debtor is relieved of the obligation to pay the creditors the amount exceeding the quota. The effects of the legally binding restructuring plan only apply to the debtor and the affected parties (Section 39 paragraph 1 Austrian Restructuring Act). If the debtor defaults on the payment of a quota as provided for in the restructuring plan, the respective creditor’s claim comes into effect again, but only proportional to the unpaid quota.

In the restructuring proceedings under the Austrian Restructuring Act, claims are classified as follows (Section 29 Austrian Restructuring Act): secured claims, unsecured claims, unsecured claims of vulnerable creditors, bondholders and subordinate claims.

The restructuring proceeding is designed generally as a self-administration proceeding. The debtor in the restructuring proceedings must in principle retain full or at least partial control over its assets and the day-to-day operation of its business. However, the court may make certain legal acts subject to the approval of a so-called restructuring officer or assign them to a restructuring officer. A restructuring officer must be appointed by the court if:

  • the court has granted a stay of execution and the restructuring officer is necessary to protect the creditor’s interest; or
  • the confirmation of the restructuring plan probably requires a cross-class cram-down; or
  • the debtor or the majority of the creditors so request; or
  • circumstances are known which indicate that self-administration will lead to disadvantages for the creditors.

In addition to assisting the debtor or the creditors in the negotiation of a restructuring plan and to monitor the debtor’s activities during the negotiations, the restructuring officer is obliged to regularly report to the court.

At the debtor's request, the court may order a stay of execution proceedings for a period of up to three months (extendable to a maximum of six months) to support negotiations on a restructuring plan. During this stay of execution proceedings, the debtor's obligation to apply for the opening of insolvency proceedings due to over-indebtedness is suspended. Moreover, no decision may be passed on a creditor's application for commencement of insolvency proceedings during the period of the restructuring proceedings.

The Directive (EU) 2019/1023 acknowledges that one of the most important factors for a successful restructuring plan is financial assistance. Financial assistance needs to be protected especially from voidance actions. According to the European legislator “financial assistance” should be understood in a broad sense: provision of money, third-party guarantees and the supply of stock as well as inventory, raw materials and utilities. This leads to protection of two forms of restructuring proceedings often used, namely, financial measures both from private equity investors (with subordinated loans) and banks (with new bank loans). Following this broad meaning, it is necessary to differentiate between "new financing" and "interim financing". "New financing" means financial measures taken to implement a restructuring plan, whereas "interim financing" is the financial measures necessary to continue the day-to-day business during the negotiations of a restructuring plan. Both new financing and interim financing are protected from voidance claims (Anfechtung) by Sections 36a and 36b of the Austrian Insolvency Act.

Pursuant to Section 45, the Austrian Restructuring Act provides a special form of restructuring process if only financial creditors are involved. The debtor needs a restructuring agreement with the same content as a restructuring plan, which needs to be signed by the financial creditors before opening the proceedings. The restructuring agreement is adopted, provided that enough creditors (representing at least 75% of the total sum of the claims) agree.

During the implementation of the Directive (EU) 2019/1023, COVID-19 emerged and the Austrian legislator ("ReO") as well as the German legislator (Unternehmensstabilisierungs- und -restrukturierungsgesetz – StaRUG) aligned the new restructuring mechanism with the effects of the COVID-19 situation as much as possible. The post-COVID-19 period will show if the restructuring and insolvency proceedings provided – especially the new restructuring mechanism – are able to minimise the negative effects of this medical and financial crisis. The Directive itself has to be reviewed no later than 17 July 2026 (Article 33) and, due to the experience with the Austrian Business Reorganisation Act, which ended up as “dead law”, it is very likely that modifications will be necessary to provide the restructuring level needed to cope with COVID-19.

Effects of COVID-19 on the NPL Landscape

Another upcoming (and already evident) trend concerns the non-performing loan (NPL) landscape. The severe negative impact on the global economy arising from the COVID-19 pandemic is also clearly expected to result in financial institutions facing the effects of companies’ bankruptcies and cash shortages and a rise in NPLs. This may be true, in particular, in respect of small-scale loans and the overall challenges to minimise the impact on the core business of financial institutions and to secure the most value possible. Therefore, it is expected that the transaction value for potential NPL transactions will increase. From an Austrian legal perspective, it is particularly important that Austrian banking secrecy is maintained, otherwise NPL transactions are threatened with nullity.

Private Equity on the Rise

There is also a rising trend for traditional bank loans to be substituted or combined with private equity, a trend which has been taken up by several Austrian banks by establishing new structures which allow alternative funding structures, particularly for mid-size companies. Banks have started to create or support new entities collecting private equity with a focus on, among other things, offering funding via subordinated capital structures in parallel to traditional bank loans. From the lenders' but also from the borrower's vantage point and from a legal perspective, it is crucial to differentiate between the diverse models of subordination on the market.

Fellner Wratzfeld & Partners

Schottenring 12
A-1010 Vienna
Austria

+43 1 53770 0

markus.fellner@fwp.at www.fwp.at
Author Business Card

Law and Practice

Authors



Fellner Wratzfeld & Partners (fwp) comprises a team of more than 70 lawyers, advising clients as a full-service firm and also in all areas of insolvency, reorganisation and restructuring. The fwp team – known as one of the leading teams in Austria, with a strong understanding of business – provides comprehensive advice to both the creditor's and the lender's side, and has a particularly long tradition of co-ordinating restructuring negotiations in syndicated and multi-lender situations. fwp’s comprehensive approach in this field of practice also includes all forms of distressed M&A in pre-insolvency and insolvency stages, and the reorganisation and support of return to profitability with a specific specialisation in sustainable financing.

Trends and Development

Authors



Fellner Wratzfeld & Partners (fwp) comprises a team of more than 70 lawyers, advising clients as a full-service firm and also in all areas of insolvency, reorganisation and restructuring. The fwp team – known as one of the leading teams in Austria, with a strong understanding of business – provides comprehensive advice to both the creditor's and the lender's side, and has a particularly long tradition of co-ordinating restructuring negotiations in syndicated and multi-lender situations. fwp’s comprehensive approach in this field of practice also includes all forms of distressed M&A in pre-insolvency and insolvency stages, and the reorganisation and support of return to profitability with a specific specialisation in sustainable financing.

Compare law and practice by selecting locations and topic(s)

{{searchBoxHeader}}

Select Topic(s)

loading ...
{{topic.title}}

Please select at least one chapter and one topic to use the compare functionality.