Restructuring proceedings with the debtor in possession
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Debtors must submit an application for institution of insolvency proceedings no later than 60 days after becoming insolvent or excessively indebted. Restructuring proceedings with the debtor in possession gives debtors the opportunity to dispose over their assets, free themselves from their remaining debts and to reorganise their company.
In addition to filing for insolvency, they must also apply for the acceptance of a restructuring plan. The plan states the rate at which they will settle their debts. They must be able to pay at least 30 percent of the debts within two years at the latest.
The most important features of the restructuring procedure with self-administration are:
- The debtor retains the power of disposal over its own assets under the supervision of a restructuring administrator and can continue the business itself.
- The insolvency proceedings end when the creditors have accepted the restructuring plan and the court confirms it with legal effect.
- If the debtor fulfils the restructuring plan, she/he is released from the remaining debts.
- Only if the restructuring proposal has not been accepted in time can the company be liquidated.
The institution of restructuring proceedings is publicly announced via the online insolvency register.
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
After the insolvency procedures are instituted by the court , 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.
Companies must submit an application for institution of insolvency proceedings and the application for acceptance of a restructuring plan no later than 60 days after becoming illiquid or excessively indebted.
If a creditor has filed for insolvency, the debtor will be served with the petition. If she/he submits a restructuring plan to the court in time, the court can still open restructuring proceedings.
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 Regional Court (→ BMJ)German text
- in Vienna the Commercial Court Vienna (→ BMJ)German text
- in Graz the Regional Court for Civil Matters Graz (→ BMJ)German text
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.
- assesses on behalf of the court whether the restructuring plan is feasible and how realistic the submitted financial plan is.
- monitors the management of the company and the trader's living expenses.
If the creditors accept the restructuring plan and the court subsequently confirms it, the insolvency proceedings are discontinued. The debtor regains full power of disposition over their assets. After fulfilment of the restructuring plan, she/he is also released from the remaining debts.
The company can be liquidated, if the restructuring plan is not approved by the creditors within 90 days. In this case, the court will withdraw the debtor's power of disposal and appoint a liquidator. The company may still undergo restructuring without the debtor in possession.
Moreover, the court will withdraw 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
As the procedural requirements are extremely complex, it is advisable to appoint a lawyer (→ ÖRAK).
- Application for institution of insolvency proceedings
- Application for acceptance of a restructuring plan, including
- 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.
- a restructuring plan which proposes the repayment of at least 30 percent 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 hand-signed 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 subject to an obligation to keep permanent records).
The debtor must provide evidence to corroborate the information provided 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.
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.
Responsible for the content: Federal Ministry of Justice