It has been more than two years since the introduction of the Restructuring Act (Restrukturierungsordnung), yet surprisingly little has been said or written about it. So far, there have been no restructuring proceedings that have been made public. In a recently published decision (6 R 200/22h), the Higher Regional Court of Vienna clarified a number of important points about the relationship between insolvency proceedings and proceedings under the Restructuring Act, as well as the court's duties when proceedings are initiated. The decision has at least injected some momentum into discussions about the legislation, which is still relatively new.
On 26 July 2021, the ReO (Restrukturierungsordnung), which transposed the requirements of the EU Directive on Restructuring and Insolvency ("RIRL") on a preventive restructuring framework in Austria, was published. The RIRL entered into force retroactively on 17 July 2021. The RIRL already met with criticism at the European level. In particular, it was debated whether it was needed at all.
The global economy continues to be firmly in the grip of the COVID-19 pandemic. In light of uncertain economic forecasts for the future, it is more important than ever for Austrian entrepreneurs operating in an international environment to take precautionary measures so as to protect themselves comprehensively against the potential insolvency of business partners.
The shareholders of a limited liability company frequently ask themselves what will become of the share held by a fellow shareholder should he suddenly find he is insolvent: can an unknown third party be prevented from acquiring the shareholding and suddenly becoming a new co-shareholder?
In the event of the insolvency of one partner, the partnership agreements of many limited liability companies grant the other partners a pre-emptive right to purchase the insolvent partner's share in the business.
In a highly anticipated decision, the Supreme Court (in case 17 Ob 6719k) examined for the first time the admissibility of an assignment of insolvency avoidance claims – and it ruled that avoidance claims can be assigned! In making this landmark ruling, which paves the way forward but is no less surprising, the Supreme Court has provided clarity where there previously was none.
Getting a second chance and bringing a business back to life with the help of effective restructuring procedures seems uncontroversial throughout the EU - however, until recently, an EU-wide legal framework for such procedures was still missing. After more than two years of negotiations, the EU Directive was received quite controversially with major concerns being that it would be too favourable for debtors. One thing however is clear: During the implementation process to be completed by 17 July 2021, lots of further issues and details will have to be brought to the table.
