Insolvency proceedings briefly explained
Insolvency describes a business in a situation of illiquidity or excessive debt, the presence of which requires insolvency proceedings to be opened. The debtor is obligated to file for insolvency proceedings with a court within 60 days after the onset of insolvency. To report a business as insolvent, there are various options for insolvency proceedings, depending on the economic capacity of the business:
- Bankruptcy proceedings
- Restructuring proceedings with the debtor in possession
- Restructuring proceedings with the debtor not in possession
Former entrepreneurs also have the option of filing for personal bankruptcy as an over-indebted private individual.
The opening of insolvency proceedings is made public by edict in the "Insolvenzdatei". In addition, an entry is made in the companies register if applicable.
Illiquidity is a situation in which payments due cannot be made
Excessive debt is a situation in which liabilities exceed assets and there is no positive prognosis for continued existence
If the situation is not yet one of insolvency, there is the option of initiating a reorganisation procedure in accordance with the Unternehmensreorganisationsgesetz (Enterprise Reorganisation Act). The Chambers of Commerce in the Federal Provinces can provide information.
- Advantages are that no court fees are incurred and there is no public announcement of the company's illiquidity
- It is also possible to reach a settlement before the company actually becomes insolvent
- It is possible to negotiate out-of-court settlement up until 60 days after the company becomes insolvent or excessively indebted
- Companies must submit an application for institution of insolvency proceedings no later than 60 days after becoming insolvent or excessively indebted, if no settlement is reached
If the company only has a small number of creditors, it is preferable to arrange a face-to-face meeting – in particular with the main creditor – and set down the results in writing. If a company has a large number of creditors, a generic letter can be sent to all of them.
- Personal bankruptcy reform (discharge of debt) (→ ASB)
- Chambers of Labour (→ AK)German text
- Austrian Chamber of Commerce (→ WKO)German text
- Safeguarding businesses and crisis management (Austrian Chamber of Commerce) (→ WKO)German text
- Minimum subsistence level – debtor counselling (Vienna Social Fund) (→ FSW)German text
- IEF Service GmbH (→ IEF)German text
- Vienna Debtor Counselling Service (Vienna Social Fund) (→ FSW)German text
In general, these rules also apply to entrepreneurs from EU Member States in Austria.
Responsible for the content: Federal Ministry of Justice