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Restructuring proceedings with the debtor in possession

General Information

In the case of restructuring proceedings with the debtor in possession, traders are able to continue performing legal transactions.

Caution

In general, these rules also apply to entrepreneurs from EU Member States in Austria.

In order to be eligible for restructuring proceedings with the debtor in possession: 

  • a restructuring plan must have been submitted before insolvency proceedings are instituted;
  • the proper preparations must have been made for proceedings;
  • it must be possible for at least 30 percent of the debt to be paid off within two years; and
  • the majority of creditors must agree to the restructuring plan. This creditor majority must hold more than half of all debts. Only those creditors present at the insolvency meeting will have their votes counted.

Please note

It is also possible to institute such proceedings merely in the event of a risk of insolvency. This increases the company's chance of survival.

The restructuring proceedings are instituted by the court, which appoints an administrator. They are responsible for supervising the debtor, who may continue to make use of their assets. The administrator assesses on behalf of the court whether the restructuring plan is feasible and how realistic the submitted financial plan is. They also monitor the management of the company and the trader's living expenses.

The company cannot be liquidated unless it fails to reach an agreement on its restructuring proposal within 90 days from institution of restructuring proceedings.

If the restructuring plan is not approved by the creditors within 90 days, the court will withdraw the debtor's right of possession and appoint a liquidator. The company may still undergo restructuring without the debtor in possession.

However, they will no longer have access to their assets and the proceedings will turn into bankruptcy proceedings (whereby this change of status also appears on the online insolvency register) if:

  • the trader withdraws the restructuring plan;
  • the restructuring plan is rejected by the court;
  • the restructuring plan is rejected by the creditors during the restructuring plan meeting; or
  • it becomes apparent that the insolvency assets are insufficient to cover preferential debts

Once the court has given official confirmation of the restructuring plan, the insolvency proceedings are discontinued and the effects of insolvency cease to apply.

Deadline

Companies must submit an application for institution of insolvency proceedings no later than 60 days after becoming insolvent or excessively indebted.

Competent Authority

The Regional Court (BMJ)German text (in Vienna: the Commercial Court (BMJ)German text)

Documents Required

  • Application for institution of insolvency proceedings
  • Application for acceptance of a restructuring plan

The application for acceptance of a restructuring plan with the debtor in possession must include:

  • information on how the necessary funds will be raised to cover the costs of the restructuring plan;
  • information on the number of employees and their representative bodies within the company;
  • information on the reorganisation measures required in order to implement the restructuring plan, in particular financing measures.

In addition, the following must be submitted before instituting restructuring proceedings:

  • a restructuring plan which proposes the repayment of at least 30% of the debt held by the insolvent company's creditors within no more than two years from the date of acceptance of the restructuring plan;
  • a precise list of assets;
  • a complete and up-to-date overview of the company's assets and liabilities, with the different asset components indicated and evaluated, and with the liabilities reported at the amount repayable and broken down into categories (status);
  • comparison of projected revenue and expenditure for the upcoming 90 days indicating how the funds necessary to ensure the continued existence of the company and the payment of preferential debts will be raised and allocated (financial plan);
  • a list of the persons who must be notified by law (the creditors in the insolvency proceedings for whom an address is known, employee representation bodies, persons who have undertaken to assume liability for the debtor's debt);
  • annual financial statements for the last three years (if the company is subject to an obligation to keep permanent records).

The debtor must provide evidence to corroborate the information provided, hand-sign the list of assets and undertake to sign a statement before court declaring that the information provided regarding the company's assets and liabilities is accurate and complete, and that they have not attempted to conceal any of their assets.

Additional Information

The institution of restructuring proceedings is announced via the online insolvency register, including whether the proceedings are being instituted with the debtor in possession or not.

Once the restructuring plan has been implemented in full, the debtor has the option to have the mention of insolvency proceedings removed from the insolvency register and the register of companies.

Tip

As the procedural requirements are extremely complex, it is advisable to appoint a lawyer (→ ÖRAK).

More links

Legal Basis

Sections 140 to 179 of the Insolvenzordnung (IO)

Expert Information

There is no expert information available.

Translated by the European Commission
last update: 29 January 2021

responsible for content: Federal Ministry of Justice

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