When are you declared bankrupt in Austria?

The opening of insolvency proceedings presupposes the (imminent) economic collapse of an insolvent debtor. The decisive factor is the so-called “material insolvency”, which is reflected in the two insolvency facts of “Insolvenzordnung” (IO): insolvency means either that the debtor is unable to meet his due liabilities on time, or, on the other hand, insolvency-related
over-indebtedness, if the liabilities exceed the assets and there is no positive continuation prognosis.

How long does it take to process a petition for bankruptcy?

As a rule, the court processesthose petitions immediately, so within a few days of filing. Then, the insolvency judge prepares preliminary insolvency proceedings and a provisional insolvency administrator is appointed. He checks the economic and legal situation of the company and ensures that the company – as far as this is economically feasible and sensible – is continued.

What can you do if you disagree with the bankruptcy order by the court?

The court shall deliver the request to the debtor on his own behalf and interrogate him if this is possible in good time. Otherwise it is possible to appeal against the decision of the court. This possibility only exists if the petition comes from a creditor. But in most cases the petition comes from the debtor.

What happens if you are declared bankrupt?

There are 3 possibilities of procedures. In the first the debtor can process a “Sanierungsverfahren mit Eigenverwaltung”, in which legal acts are still to be made by the entrepreneur under the supervision of the reorganization administrator and the debtor has to pay a 30 % percentage of the debts. In the second one – “Sanierungsverfahren ohne Eigenverwaltung” – the administration takes over the reorganisation administrator and the debtor has to pay a 20 % percentage of the claims. In the third case – “Konkursverfahren” – the administration also takes over a trustee, but there is no percentage of debt to pay.

What duties and powers does the trustee have?

His main task is to identify the bankruptcy estate and to divide it among the creditors. For this he may also conclude contracts. He also prepares a list of creditors in which all creditors of the debtor are listed.

He may look closely at the debtor’s economic records and prepare a so-called bankruptcy plan, which he or the debtor can file with the court. This contains a fixed goal and serves the information of all participants. The supervision of the fulfillment of the insolvency plan is also the task of the administrator.

It is also its task to achieve the objectives set in the insolvency proceedings. In a broad sense, this means that he must take care to satisfy the creditors of a debtor. After all, a procedure serves the common satisfaction of the creditors.

What kind of obligations do I have as a bankrupt?

The bankrupt has several statutory obligations, including a duty to provide information to the trustee. If the bankrupt does not cooperate sufficiently, he may be forcibly summoned to court or arrested. After the opening of the proceedings, legal acts of the debtor against the creditors are ineffective. With the opening of the proceedings, a process and execution ban occurs ex lege, as long as the claims belonging to the insolvency estate are to be prosecuted and the debtor has to pay a percentage of the claims.

How can I monitor the progress of the bankruptcy?

The bankruptcy order is published by the court. On the website www.edikte.justiz.gv.at you can find the insolvency register on which the trustee will publish bankruptcy reports of legal entities only. There are continuous reports on this homepage announced.

How long does a bankruptcy last in Austria?

It depends because every bankruptcy is different. In the end, the bankruptcy generally ends due to insufficient funds or a (partial) payment of the creditors and the legal entity is dissolved. Usually it lasts a few weeks or months.

Can I make arrangements with my creditors?

Before the bankruptcy the debtor can offer a deal to the creditors whereby they are paid a percentage of their claims. During the bankruptcy, a composition with creditors is discussed at the verification meeting. The creditors must vote on this composition agreement. This agreement is submitted to the court, which may or may not approve it.

How can an employee collect outstanding salary from his bankrupt employer?

The outstanding claims from the employment relationship are secured in the event of insolvency by the Insolvency Fee Fund. This includes part of the outstanding salary, as well as overtime hours and holiday entitlement. The employees can register their claims in the insolvency proceedings.

What important advice can be given to a company director in the event of imminent bankruptcy?

I recommend to submit a positive going-concern invoice to the liquidator immediately through your accountant, if you intend to continue the business. It is also important that a proper administration has been kept and can be provided to the trustee.

Additionally, it is important that the annual accounts are filed with the Chamber of Commerce in good time. If this has not been complied with, the director of the company is guilty of mismanagement and may be held liable for all debts in the liquidation.

Is there a special arrangement for a private person who is in danger of going bankrupt?

Yes, the debtor can invoke the “außergerichtlichen Ausgleich”. Individuals seek to reduce their debt through out-of-court negotiations with creditors before filing for insolvency proceedings. It is necessary that all creditors are involved and informed of each other and the offer. Upon acceptance of the settlement, the creditors undertake to waive the remainder of their claims
to the debtor at the end of the payment period. The debtor, on the other hand, has a duty to pay as he has offered.