Under the Business Re-organisation Act, companies undergoing re-organisation can avoid insolvency provided that this is not imminent.
Insolvency remuneration assurance guarantees the means of subsistence of employees and their dependants should their employer be unable to pay them due to insolvency. It is based on the principle of insurance and is regulated by the Insolvency (Remuneration Assurance) Act (IESG).
Stabilising a business
The aim of business re-organisation is to improve the assets position, financial situation or profit situation of companies in danger of becoming insolvent and to allow them to continue on a sustainable basis.
This is an extrajudicial agreement between the debtor and the creditor. It can be viewed as a type of contract under private law. The advantages of this procedure are that no legal expenses are incurred and the insolvency of the company is not made public. The debtor must file for insolvency proceedings no later than 60 days after insolvency has been determined.
Access to different sources of finance can help overcome financial difficulties.
When filing for bankruptcy is the only option left for a business owner, it pays to cut your losses, initiate proceedings sooner rather than later, and move on to a new project.
Companies that are not yet insolvent and wish to carry out a re-organisation can submit an application for re-organisation to the relevant regional court (in the case of Vienna, this is the Commercial Court of Vienna).
The court must then initiate the re-organisation procedure, arrange for a re-organisation inspector and submit a request for advance payment to the applicant. If a re-organisation plan has not been submitted to the court, the court will set a 60-day time limit (extendable by 30 days) for the submission of a plan.
The re-organisation plan of the company in danger of going into insolvency must detail the causes of the crisis and the remedial action to be taken (e.g. re-organisation loans, measures affecting the workforce) together with the prospects for success. A two year time limit should be envisaged for re-organisation.
Online Insolvency Check for small and medium-sized businesses provides information about possible risk factors and suggestions for mitigating potential sources of danger.
The Austrian Federal Economic Chamber provides its members with comprehensive information about insolvency.
The Unternehmer in Not (Companies in Distress) platform provides field reports, information on crisis prevention, liquidity, loans, creditors and a best-practice example among other things.
Useful information for people living and working in Austria is available from HELP, the Austrian government help service or the Business Service Portal USP.
The Carinthian Economic Promotion Fund supports the redevelopment, re-organisation and restructuring requirements of Carinthian companies via the KSG Kärntner Sanierungsgesellschaft mbH (Carinthian Redevelopment Company Ltd.)