AUSTRIA Trends and Developments Contributed by: Markus Fellner, Florian Kranebitter, Elisabeth Fischer-Schwarz and Florian Henöckl, Fellner Wratzfeld & Partners
In addition to helping the debtor or the creditors in the negotiation of a restructuring plan and to monitor the debtor’s activities during the negotiations, the restruc - turing officer is obliged to regularly report to the court. At the debtor’s request, the court may order a stay of execution proceedings for a period of up to three months (extendable to a maximum of six months) to support negotiations on a restructuring plan. Dur - ing this stay of execution proceedings, the debtor’s obligation to apply for the opening of insolvency pro - ceedings due to over-indebtedness is suspended. Moreover, no decision may be passed on a creditor’s application for commencement of insolvency pro - ceedings during the period of the restructuring pro - ceedings. Directive (EU) 2019/1023 acknowledges that one of the most important factors for a successful restructur - ing plan is financial assistance. Financial assistance needs to be protected, especially from voidance actions. According to the EU legislature, “financial assistance” should be understood in a broad sense as provision of money, third-party guarantees, and the supply of stock as well as inventory, raw materials and utilities. This leads to the protection of two forms of restructuring procedures often being used ‒ namely, financial measures both from private equity investors (with subordinated loans) and banks (with new bank loans). Following this broad definition, “new financing” and “interim financing” are bound to be differentiated. “New financing” means financial measures taken to implement a restructuring plan, whereas “interim financing” refers to financial measures necessary to continue the day-to-day business during the negotia - tions of a restructuring plan. Both new financing and interim financing are protected from voidance claims ( Anfechtung ) by Section 36a and Section 36b of the Austrian Insolvency Act. Section 45 of the Austrian Restructuring Act provides for a special form of a restructuring process if only financial creditors are involved. The debtor needs a restructuring agreement with the same content as a restructuring plan, which must be signed by the finan - cial creditors before opening the proceedings. The
restructuring agreement is adopted, provided that at least 75% of the total sum of the claims of the credi - tors included is agreed. Following the COVID-19 pandemic, it has not yet been shown whether the new restructuring mechanism is an alternative to the previous debt relief mechanism. Proposal for a European Parliament Directive Harmonising Certain Aspects of Insolvency Law In order to further reduce any deficits in formal insol - vency proceedings and to establish a minimum stand - ard across Europe, the EU legislature is also making efforts that now need to be implemented at a national level. On 7 December 2022, the European Commission put forward a proposal for a Directive aimed at enhancing and harmonising insolvency law in the EU. It sought to make it easier to recover assets from a liquidated insolvency estate, render insolvency proceedings more efficient and ensure a predictable and fair dis - tribution of recovered value among creditors. It sug - gested common rules for the following. • All aspects related to insolvency proceedings, including: (a) the annulment of transactions entered into by the debtor prior to the opening of insolvency proceedings (avoidance actions); (b) the tracing of assets belonging to the insol - vency estate; and (c) the duty of directors to submit a request for the opening of insolvency proceedings. • Simplified winding-up proceedings for micro-enter - prises. • Creditors’ committees. The proposal also provided that EU member states should draw up an information fact sheet on their domestic laws on insolvency proceedings. However, the future rules would not apply to proceedings relat - ed to financial institutions, including insurance and re- insurance companies, credit institutions, investment firms or collective investment undertakings, central counterparties, and other financial institutions.
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