Insolvency

Insolvency proceedings briefly explained

Insolvency describes a business in a situation of illiquidity or excessive debt, the presence of which requires insolvency proceedings to be opened. The debtor is obligated to file for insolvency proceedings with a court within 60 days after the onset of insolvency. To report a business as insolvent, there are various options for insolvency proceedings, depending on the economic capacity of the business:

• Bankruptcy proceedings
• Restructuring proceedings with the debtor in possession
• Restructuring proceedings with the debtor not in possession

Former entrepreneurs also have the option of filing for personal bankruptcy as an over-indebted private individual.

The opening of insolvency proceedings is made public by edict in the "Insolvenzdatei". In addition, an entry is made in the companies register if applicable.

The costs vary depending on the revenue attained during disposal of assets and depending on the amount of the debts. Court costs, the insolvency administrator and the creditor must be paid. 

• Illiquidity is a situation in which payments due cannot be made

• Excessive debt is a situation in which liabilities exceed assets and there is no positive prognosis for continued existence

Reorganisation procedure

If the situation is not yet one of insolvency, there is the option of initiating a reorganisation procedure in accordance with the Unternehmensreorganisationsgesetz (Enterprise Reorganisation Act). The Chambers of Commerce in the Federal Provinces can provide information. 

Out-of-court settlement

Out-of-court settlement involves an agreement being reached between the debtor and their creditors without the involvement of a court. Such settlements are contracts under private law.

• Advantages are that no court fees are incurred and there is no public announcement of the company's illiquidity
• It is also possible to reach a settlement before the company actually becomes insolvent
• It is possible to negotiate out-of-court settlement up until 60 days after the company becomes insolvent or excessively indebted
• Companies must submit an application for institution of insolvency proceedings no later than 60 days after becoming insolvent or excessively indebted, if no settlement is reached

Further links

• Personal bankruptcy reform (discharge of debt) (→ ASB)
• Chambers of Labour (→ AK)^{German text}
• Austrian Chamber of Commerce (→ WKO)^{German text}
• Safeguarding businesses and crisis management (Austrian Chamber of Commerce) (→ WKO)^{German text}
• Minimum subsistence level – debtor counselling (Vienna Social Fund) (→ FSW)^{German text}
• IEF Service GmbH (→ IEF)^{German text}
• Vienna Debtor Counselling Service (Vienna Social Fund) (→ FSW)^{German text}

Legal bases

• Insolvenzordnung (IO)
• Unternehmensreorganisationsgesetz (URG)