Newsroom / News / Media / Info Magazine LGP NEWS 01/2021 / Restructuring procedures as a way out of the crisis

Restructuring procedures as a way out of the crisis

Restructuring procedures as a way out of the crisis

Since 16 July 2019, it has been clear that the main parts of the EU Directive on Restructuring and Insolvency (Directive (EU) 2019/1023) need to be transposed into national law by 17 July 2021. Now, a ministerial draft of an implementation law is available – better late than never. 

The core of the directive is to create a preventive restructuring framework that can effectively prevent companies that are fundamentally viable from having to be unnecessarily liquidated, even before they become insolvent. Insolvencies are to be prevented by taking measures in good time. Overall, the focus is on securing jobs throughout Europe, reducing non-performing loans and supporting the economy. Austrian insolvency law already provides for the possibility of a formal restructuring procedure. In practice, however, this has remained almost insignificant, primarily because as a public procedure it entails the stigma of an existing company crisis for the debtor, which is often detrimental to the business. 

Many disadvantages of the previous legal situation from the debtors’ point of view (with this party only being threatened with insolvency) are to be eliminated with the new restructuring procedure that is now provided for. For example, it may be handled as a non-public procedure, or it may be limited to certain classes of creditors, meaning that not all the creditors need to know about the restructuring. 

This prevents – while maintaining solvency – suppliers or employees who are essential to the business from being alarmed and the ensuing damages. Honest debtors should be given a second chance by being able to get out of debt within three years, even without having to formally enter into insolvency. 

That said, the ministerial draft does not completely abandon the current five-year period in the skimming procedure (skimming plan): instead, it supplements the existing regulations with the option of an amortisation plan, which enables debts to be relieved in three years. However, this repayment plan is only available if a higher standard of probity is applied than in the ordinary levy procedure. The reduction to three years for private individuals, which was also discussed in this regard, seems to be off the table according to the current draft: the ministerial draft provides for a validity for natural persons only if they are entrepreneurs. 

A good argument for shortening this period even for non-entrepreneurs could be that private individuals are also affected by insolvencies caused by the pandemic and that starting afresh at an early stage with good conduct seems desirable. After all, the main cause of private insolvencies will not change in the future: a reduction in income or, in the worst case, unemployment. The new restructuring procedure will probably benefit those companies that had previously done well and who are facing a crisis due to the pandemic. 

It is to be hoped that based on the forthcoming amendment to insolvency law, companies shaken by the coronavirus crisis can be relieved of their debts by way of an orderly restructuring. Companies must be given this opportunity as soon as possible: because once they have entered into insolvency, it is too late for them to be restructured. 


AUTHOR:

Mag. Valentin Neuser, Attorney-at-Law and Managing Partner at LANSKY, GANZGER + partner

My documents

Add page

There are currently no documents in your basket.