AUSTRIA Trends and Developments Contributed by: Markus Fellner, Florian Kranebitter, Elisabeth Fischer-Schwarz and Florian Henöckl, Fellner Wratzfeld & Partners
Fellner Wratzfeld & Partners Schottenring 12 1010 Vienna Austria
Tel: +43 1 537 700 Email: office@fwp.at Web: www.fwp.at/en
Easing of the Effects of Recent (Geopolitical) Crises Russia’s invasion of Ukraine and the war between Hamas and Israel no longer have such a massive impact on the global economy (or on the Austrian economy in particular), and new crisis factors are not as significant as those associated with these two events. The inflation rate is slowly falling and has now reached the target level of around 2% in the EU (though the inflation rate in Austria lies slightly above the target level of 2% and is expected reach about 3% for 2025), leading the European Central Bank (ECB) to lower its base rate to a neutral level. Although the positive effects are gradually becoming apparent, they have not yet reached all companies. Nevertheless, Austrian companies are still affected by the indirect effects of a deterioration in the overall economic situation. This continues to manifest itself in significant price increases in a wide variety of areas, triggered, above all, by rising energy prices. The domestic real estate market in particular is still heavily affected by the events of recent years, which led to the ECB increasing the base rate and the con - tinuing weakness of the market due to high financing requirements for end customers. High commodity prices, disrupted supply chains and international polit - ical instability are causing confidence in the real estate sector to decline. For this reason, property prices in Austria are currently stagnating after years of regular increases. However, there has been no collapse of the market, even though property prices are currently considered over-valued. While the real estate industry
has not yet collapsed, it is clear that it is under mas - sive strain due to the economic environment, and that there is a need to stabilise it. Further Rise in Out-of-Court Restructuring This trend is continuing, as practice in a not inconsid - erable number of insolvency proceedings has shown that formal insolvency proceedings can also lead to further destruction of value. Restructuring should take place as early as possible. First of all, the main stakeholders need to be iden- tified and negotiations started. The group of central stakeholders should be expanded from the “tradi - tional” participants (customers, suppliers and banks) to include the specific crisis-factor-indicated stake - holders. The company and these stakeholders should jointly agree on a package of measures that will lead the company out of the crisis in a targeted manner, tailored to the individual case. In order to find a tailor- made restructuring solution, out-of-court restructuring makes sense ‒ especially for international restructur - ing. In the international environment, restructuring measures can largely be chosen freely and disputes over jurisdiction can be avoided. Special factors that need to be considered include that companies are currently still under pressure from several geopolitical crises – especially, the war in Ukraine and Gaza – and are recovering from the COVID-19 pandemic and price increases. A package of measures must therefore also take these aspects into account. In addition to resorting to well-known and proven restructuring and reorganisation measures (deferrals and haircuts), this requires the inclusion of
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