Insolvency proceedings in Austria
What entrepreneurs and managing directors should know
Corporate insolvency is an exceptional economic and legal situation. It is crucial to recognize financial difficulties early, comply with legal deadlines, and take the right measures. Austrian insolvency law distinguishes between bankruptcy proceedings and restructuring proceedings.
When does insolvency occur?
A company is insolvent if it can no longer meet its due payment obligations and this is not just a temporary liquidity bottleneck.
For corporations, insolvency-related over-indebtedness can also constitute grounds for insolvency. This is not to be assessed solely on the basis of negative equity; in particular, the going-concern forecast plays an essential role.
A restructuring procedure can be considered even in the event of impending insolvency.
Insolvency application: Deadlines and responsibility
In the event of insolvency or over-indebtedness relevant under insolvency law, the insolvency application must be filed without culpable delay. The statutory maximum period is generally 60 days. It is not a general waiting period and may only be utilized under the statutory requirements.
The management is obliged to continuously monitor the economic situation, initiate necessary measures in a timely manner, and ensure compliance with statutory obligations.
A delayed application can result in personal liability consequences.
What is the management still allowed to do?
In a corporate crisis, special caution is required regarding payments, asset disposals, and new obligations. In particular, managing directors should:
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continuously monitor and document the liquidity situation,
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not favor individual creditors without legal review,
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not transfer or withdraw assets to the detriment of creditors,
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enter into new obligations only after careful examination,
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fully secure accounting, business records, and proof of assets,
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obtain timely legal and economic professional advice.
Not every payment is automatically inadmissible. Which measures are permissible or required in a specific case depends on the timing, the economic situation, and the legal requirements.
Bankruptcy proceedings or restructuring proceedings?
Bankruptcy Proceedings
In bankruptcy proceedings, a court-appointed insolvency administrator takes over the management of the insolvent assets. They examine the economic situation and decide, within the legal framework, on the continuation or closure of the company as well as the liquidation of assets. Even in bankruptcy proceedings, a reorganization plan can still be offered under certain conditions.
Reorganization Proceedings without Self-Administration
The goal is the economic reorganization and, if possible, the continuation of the company. A court-appointed insolvency administrator takes over the management. The reorganization plan must generally offer the insolvency creditors a quota of at least 20% within a maximum of two years.
Reorganization Proceedings with Self-Administration
With appropriately qualified preparation, the company management can generally continue to be carried out by the company itself under the supervision of a reorganization administrator.
Prerequisites include, among other things, a reorganization plan with a minimum quota of 30% within a maximum of two years, as well as the submission of the legally required additional documents.
What happens after the proceedings are opened?
The competent court opens the insolvency proceedings and, depending on the type of proceedings, appoints an insolvency administrator. The opening of the proceedings is publicly announced in the insolvency register. Creditors are requested to register their claims. Subsequently, the economic circumstances are examined and further steps for business continuation, restructuring, or asset liquidation are determined. In the case of restructuring proceedings, the creditors decide on the proposed restructuring plan. The legally required majorities are necessary for its acceptance.
What role does the insolvency administrator assume?
The insolvency administrator is an organ of the insolvency proceedings appointed by the court. Their tasks depend on the respective type of proceedings. Among other things, they examine the asset and debt situation, the registered claims, and the possibilities for business continuation or liquidation. The management remains obliged to cooperate and provide necessary information. However, their previous powers of disposal may be significantly restricted by the opening of the proceedings.
Early action creates room for maneuver
The earlier an economic crisis is recognized, the greater the possibilities for an orderly restructuring can be.
Up-to-date bookkeeping, comprehensible overviews of assets and liabilities, as well as realistic liquidity planning form important foundations for assessing the economic situation and preparing for a potential insolvency proceeding.
INSOLVIA supports companies and their lawyers in the structured economic, financial, and organizational preparation of the required application documentation.
Legal Notice: This information serves as general guidance and does not replace individual legal advice. The assessment of insolvency maturity, obligations to act, and legal procedural requirements is carried out by appropriately authorized legal advisors.
Well prepared. Clearly structured. Responsibly accompanied.
In an economic crisis, time, transparency, and reliability are crucial. INSOLVIA creates a sound foundation for the next steps in insolvency or restructuring proceedings through systematic preparation and careful processing of company data.