Continuity of a business in case of insolvency proceedings
After insolvency procedings are opened, the liquidator will review what chance the business has to continue to operate and the prospects for successful restructuring.
Within 90 days after insolvency proceedings are opened, a reporting session must take place in court.The liquidator reports
- whether the conditions for the business being closed immediately or for operations to continue have been met and
- if the restructuring plan meets the creditor's interests.
The liquidator must continue the business up to the reporting session, unless it is apparent that continuation will lead to an increased losses to insolvency creditors.
Obligations of the debtor
The debtor must provide the liquidator with information that includes the following:
- a list of creditors
- a list of assets
- bank details
- information about existing contracts and any pending court proceedings
- if the intent is continue, they must make a list of monthly fixed costs.
There must also be current annual accounts and updated accounting records.
The liquidator must analyse the figures and prepare a prognosis for continuing operation.
Closure of a business
If the outcome is negative, the liquidator must submit an application for closure.
The debtor can prevent the company from being closed by filing a security deposit for continuation. The purpose of this is to avoid creditors suffering financial losses from continuation.
Continuation of a business
If the conditions for continuation are met, the insolvency court must after hearing the creditors issue a decision regarding continuation. If a restructuring plan is also under consideration because it is in the interest of the creditors and is feasible, the debtor can apply for a deadline for submission of a restructuring plan.
If, during the reporting session, the debtor submits an application for the granting of a deadline for submission of a restructuring plan, the business cannot be wound up within this period of no more than 14 days. If the debtor then applies for a restructuring plan within these 14 days, the business will be continued. If the restructuring plan is not accepted within 90 days or it is not in the interest of the creditors, the business is closed and wound up.
In general, these rules also apply to entrepreneurs from EU Member States in Austria.
Responsible for the content: Federal Ministry of Justice