Restructuring in Austria

Wolfgang Kaltenegger
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Draft law on restructuring of companies has become necessary because Austria also has to comply with the implementation of an EU directive for pre-insolvency proceedings (by July 2021).
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Draft law on restructuring

The draft is based on:

  • existing EU legislation relating to preventive restructuring frameworks which were already implemented in some Member States as restructuring regime (e.g. in French, German, Spanish and Italian law), as well as
  • some provisions governing proceedings under Chapter 11 of the US Bankruptcy Code.


Summary of Government Bill (Regierungsvorlage=RV) Insolvency Law EU Directive RIRL (Restructuring and Insolvency Directive EU 2019/1023)

Ministerial Draft:

Draft Federal Act creating a Federal Restructuring Act and amending the Insolvency Code, the Court Fees Act, the Judicial Recovery Act and the Lawyers' Fees Act to implement the Restructuring and Insolvency Directive (Restructuring and Insolvency Directive Implementation Act - RIRL-UG).


Overview of the main points of the RV

The core/objective/content of the directive is the creation of a Europe-wide harmonized preventive restructuring framework, implemented in a judicial, pre-insolvency restructuring procedure for companies that have got into financial difficulties. Measures such as restructuring, debt rescheduling and, above all, reduction of creditors' claims are intended to secure or restore their continued existence at an early stage ("at the onset of probable insolvency") and to avert or at least limit unnecessary liquidations of viable companies (going concern prognosis). Full debt relief in a time frame shortened to three years is intended to give "honest debtors" a second chance. At the same time the self-management of business activities, based on a restructuring plan and under support of a restructuring officer, should be enabled in whole or in part. 

This should also:

  • secure jobs throughout Europe,
  • reduce non-performing loans and
  • promote the economy.


1. Scope of application

Legal entities and natural persons who operate a business.
Excluded are the financial sector, public bodies and natural persons, who are not entrepreneurs.


2. Jurisdiction / Procedural rules

Reference to application of the Insolvency Code - also for the jurisdiction of the court - unless otherwise provided in this Act.

Simplified restructuring procedure:

The debtor has to apply for it at the court, if only financial creditors are affected and they are taken into account majoritarian in proportion to their claims; minorities may be outvoted.

Regular restructuring procedure:

Restructuring of liabilities, with the exception of liabilities to employees, by a court-confirmed majority vote of creditors, overruling minorities only with court approval.

3. Requirements /conditions

Existence of a "probable insolvency" (imminent insolvency, equity solvency ratio below 8%, notional debt- repayment period longer than 15 years) of the debtor, instant "if the business continuity would be at risk without initiation of restructuring measures". The restructuring procedure is then required.

Business continuity is the condition. The debtor has an obligation to cooperate, he must submit all necessary information and evidence, such as annual financial statements for at least the last 3 years, which the creditors need for the restructuring negotiations. The evaluation of the business continuity requires a going concern assumption, but it may also be conditional on the acceptance of the restructuring plan.

At the initiation of the restructuring procedure the evaluation of insolvency is made by the court, is insolvency instant,  this procedure is not possible.
The debtor may be overindebted in terms of the insolvency law.
If insolvency sets in during the procedure or was present at the time of initiation, insolvency proceedings are to be applied for and to be opened by court.. But then not, if this is not in the general interest of the creditors, when an agreement on the restructuring plan is imminent.
Is in addition a stay of execution also applied for, insolvency excludes the restructuring procedure.


4. Implementation and process of the restructuring procedure

The debtor has to apply for initiation and submit a restructuring plan. During the procedure the debtor retains full or partial control "over assets and the day´s trading’s of his business" - self-administration/management. Self-administration can be limited by the court or by the appointment of a restructuring officer, but not by "restrictions imposed on a debtor by operation of law in bankruptcy proceedings".

If a stay of execution is also applied for in support of the restructuring negotiations, the secret proceedings have to be announced. Execution on the debtor's assets are then prohibited for a period of 3 months; it can be extended only once to a maximum of 6 months.
If a restructuring plan is not submitted on the application, it must be submitted to the court within 60 days from application, who must schedule a restructuring session/hearing within 30 to 60 days from submission.

5. Acceptance, voting and confirmation of restructuring plan

The debtor must divide the creditors affected (by reduced claims, deferrals) into creditor classes:

  • Creditors with secured claims,
  • Creditors with unsecured claims,
  • Bondholders, creditors in need of protection with claims of less than 10,000 Euros and
  • Creditors with subordinated claims.
  • Voting takes place in creditor classes according to a head and claim majority (at least 75% of the claim majority of the affected creditors present).
  • A restructuring plan that was not accepted by the affected creditor classes in each voting class may be confirmed by the court upon application by the debtor (cross-class cram-down).

Cross-class cram-down:

  • Acceptance of the restructuring plan by a majority of the creditor classes, including secured creditors (cram-down only possible if a restructuring agent is appointed); or
  • Acceptance of the restructuring plan by a majority of the classes of creditors who can be expected to receive a distribution quota in the event of insolvency proceedings.

The restructuring plan has essentially to include:

  • the restructuring measures targeted
  • the indication of the affected and non-affected creditors (not all creditors need to be included)
  • the division into creditor classes and
  • the period of the plan

The restructuring plan has to be confirmed by the court.

6. Amendments to the Insolvency Code

  • New financing, interim financing and transactions (to be defined precisely) are protected and not contestable on grounds of over-indebtedness.
  • Prolongation of avoidance periods from the date of the opening of the insolvency proceedings are to be renewed for the period of the restructuring proceedings and not only by the duration of the stay of execution.

Do you still have questions? Our expert Wolfgang Kaltenegger will be happy to assist you.


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