THE INSOLVENT COMPANY
2011-02-23 – by Attorney Dr. Stefan Lausegger (Column)
In the last issue of Am Puls, the situation of the contractual partner of an insolvent company was discussed here. However, the 2010 amendment to the insolvency law has also significantly changed the legal situation of the insolvent company itself. The company seeking restructuring now has the main option of "restructuring proceedings". This instrument corresponds to the - former and now abolished - compulsory settlement, with the following notable changes:
The minimum quota is 20%. If the company is seeking so-called “self-administration” (the insolvency administrator has, roughly speaking, a supervisory function, while management remains able to act), it must submit a restructuring plan with precise status, asset inventory and financial plan, and offer at least a 30% quota.
The restructuring process has also been streamlined considerably. The restructuring plan meeting, which is used to vote on the restructuring plan, is now to be combined with the final accounts meeting and is normally scheduled when the restructuring process begins (approximately 60 to 90 days later).
The capital majority was reduced from 75% to 50%, and this majority requirement is also sufficient in terms of the head majority. The amount of ongoing interest in favor of separate creditors (usually mortgage creditors = banks) is now limited to the amount agreed upon in the event of contractual payment, which is intended to prevent excessive interest accruing in favor of major creditors and banks. If the restructuring plan is not fulfilled, only those claims that have not yet been satisfied will be fully reinstated. In the event of partial payment, on the other hand, only a quota will be reinstated; an agreement to the contrary is not permitted with a few exceptions.
In summary:
With a well-prepared and serious restructuring procedure, it will be possible in the future to restructure the company as a going concern, relatively quickly, without major interventions by the insolvency administrator, and without the stigma of bankruptcy proceedings. However, the usefulness and, above all, the economic viability of a restructuring procedure will continue to depend on the consent of the major creditors, who will also bear the cost of the significant changes to the restructuring procedure.
Further information on the topic Insolvency law.