AUSTRIA Law and Practice Contributed by: Markus Fellner, Florian Kranebitter, Elisabeth Fischer-Schwarz and Florian Henöckl, Fellner Wratzfeld & Partners
Estate Claims The next rank is taken by estate claims ( Masseforder- ungen ), which ‒ according to the statutory provisions – are to be satisfied prior to other insolvency claims. Estate claims encompass, inter alia: • the costs of the insolvency proceedings; • the expenses of management and administration of the estate; • claims for labour, services and goods furnished to the estate post-filing; and • the costs of the insolvency administrator. Preferential creditors of estate claims share in such claims on a pro rata basis. Insolvency Claims Ranked behind estate claims are insolvency claims ( Insolvenzforderungen ), which are claims of unse - cured creditors and may be filed with the competent court within a time period after the commencement of insolvency proceedings as fixed by the court. Those insolvency creditors who filed a claim that was not contested by the insolvency administrator also share in such claims on a pro rata basis. Subordinated Claims Subordinate claims may result from contractual provi - sions or from statutory provisions. Subordinate credi - tors do not participate in the insolvency proceedings in general, but rather only if a surplus for distribution is generated. However, in practice, a high degree of diligence is required in drafting subordination agree - ments to determine the extent of full or part subordi - nation and scenarios in which it takes effect. In comparison, the new Restructuring Act provides that debtors ‒ with the exception of small and medi - um-sized enterprises (SMEs) ‒ are obliged to divide their creditors into specific classes and all creditors of the same class must be treated equally (if permis - sible and no classes are formed, all creditors must be treated equally). The categories of classes are manda - tory and are as follows. • Secured creditors (ie, creditors with claims for which a pledge or a comparable security has been granted from the debtor’s assets) – claims of
secured creditors are to be included in this class with the amount covered by the security. Any unsecured part of the claim falls into the class of creditors with unsecured claims, meaning that, as a general principle, one and the same creditor may fall into more than one class depending on their type of claim. • Unsecured creditors. • Vulnerable creditors – this class includes, in par - ticular, creditors whose claim does not exceed EUR10,000 and it is the intention of the law to cover in this class the claims of creditors who do not have, as a matter of fact or as a consequence of the nature of their business, the possibility of spreading their risk (eg, suppliers of a debtor). • Bondholders – provided that in such class not only bondholders but, more generally, holders of securi - tised titles will be covered. • Creditors of subordinate claims. 2.2 Priority Claims in Restructuring and Insolvency Proceedings In insolvency proceedings, claims are classified and ranked in the order of priority as described in 2.1 Types of Creditors . 2.3 Secured Creditors Liens/Security In accordance with statutory provisions, Austrian law recognises the following as security instruments over assets: • pledges ( Pfande ); • transfers of securities ( Sicherungsübereignungen ); • assignments of securities ( Sicherungszessionen ); and • reservations of title ( Eigentumsvorbehalte ). Rights and Remedies While pledges are intended to secure the individual claim of a creditor and the ownership of an asset remains with the debtor, a transfer of security aims to transfer the ownership of the asset to the creditor, who will only transfer the asset back to the debtor once the debt is fully paid. These two types of securities require registration with the land register where the asset concerned is real property. Priority is granted according to chronological entry in the land register.
25 CHAMBERS.COM
Powered by FlippingBook