Restructuring proceedings with the debtor not in possession

General information

Debtors must submit an application for institution of insolvency proceedings no later than 60 days after becoming insolvent or excessively indebted. Restructuring proceedings with the debtor not in possession fall under the supervision of a liquidator. It gives debtors the opportunity to free themselves from their remaining debts and to reorganise their company.

In addition to filing for insolvency, they must also apply for the acceptance of a restructuring plan. The plan states the rate at which they will settle their debts. They must be able to pay at least 20 percent of the debts within two years at the latest.

The most important features of the restructuring procedure without self-administration are:

• The court appoints a liquidator who has control over the debtor's assets and manages the business.
• The debtor loses the power of disposal over his/her own assets.
• The insolvency proceedings end when the creditors have accepted the restructuring plan and the court confirms it with legal effect.
• If the debtor fulfils the restructuring plan, he/she is released from the remaining debts.
• The company can only be liquidated if the restructuring proposal is not accepted within 90 days.

The institution of restructuring proceedings is publicly announced via the online insolvency register.

Requirements

In order to be eligible: 

• the restructuring plan must have been submitted before insolvency proceedings are instituted and
• it must be possible for at least 20 percent of the debt to be paid off within two years.

After the insolvency procedures are instituted by the court , the majority of creditors must agree to the restructuring plan. This creditor majority must hold more than half of all debts. Only those creditors present at the insolvency meeting will have their votes counted.

Deadlines

Companies must submit an application for institution of insolvency proceedings and the application for acceptance of a restructuring plan no later than 60 days after becoming insolvent or excessively indebted.

If a creditor has filed for insolvency, the debtor will be served with the petition. If she/he submits a restructuring plan to the court in time, the court can still open restructuring proceedings.

Competent authority

The Regional Court (→ BMJ)^{German text}

•  in Vienna the Commercial Court Vienna (→ BMJ)^{German text}
•  in Graz the Regional Court for Civil Matters Graz (→ BMJ)^{German text}

Procedure

The restructuring proceedings are instituted by the court, which appoints a liquidator. The debtor loses the power of disposal over his/her assets and may not continue the business himself/herself.

The liquidator

• checks for the court whether the restructuring plan can be fulfilled
• takes over the management of the company.

If the creditors accept the restructuring plan and the court subsequently confirms it, the insolvency proceedings are discontinued. The liquidator is relieved of their duties. The debtor regains power of disposition over their assets and can manage its company. After fulfilment of the restructuring plan, she/he is also released from the remaining debts.

If the restructuring plan is not accepted within 90 days from institution of restructuring proceedings, the company can be liquidated.

The proceedings turn into bankruptcy proceedings (whereby this change of status also appears on the online insolvency register) if:

• the trader withdraws the restructuring plan;
• the restructuring plan is rejected by the court;
• the restructuring plan is rejected by creditors at the insolvency meeting;
• it becomes apparent that the insolvency assets are insufficient to cover preferential debts.

Required documents

• Application for institution of insolvency proceedings
• Application for acceptance of a restructuring plan
• Restructuring plan, in which the creditors are offered at least 20 percent of the debt to be paid off within two years after the acceptance of the restructuring plan.

Further information

The institution of restructuring proceedings is announced via the online insolvency register, including whether the proceedings are being instituted with the debtor in possession or not.

Once the restructuring plan has been implemented in full, the debtor has the option to have the mention of insolvency proceedings removed from the insolvency register and the register of companies.

Further links

• Insolvency register (→ BMJ)^{German text}
• Find a lawyer tool (→ ÖRAK)^{German text}

Legal bases

Sections 140 to 168 of the Insolvenzordnung (IO)