Introduction - The Austrian Perspective on Restructuring
The Austrian legislation on Reorganisation of Enterprises (Unternehmensreorganisationsgesetz (the “URG”)) seems to be a very ‘light touch’ restructuring process that seems quite similar to the Scheme of Arrangement insofar as it is essentially a restructuring process that can be used for a solvent restructuring or a restructuring where the company is likely to become insolvent. Within this, there seems to be some lack of clarity regarding what is meant by class formation. In most systems where differences between secured, unsecured and preferential creditors are acknowledged, this generates the formation of different classes. But this does not seem to be formally required. There is also no requirement for court confirmation of the scheme which is in contrast to the UK Scheme of Arrangement despite some similarities between these systems. There is no cross-class cram-down. In effect this would represent a minimum in terms of the requirements of the PRD. The Austrian legislative framework seems to be quite similar to the German legislative framework.
In terms of practise, and as described in the report, the legislative framework in Austria does provide for restructuring post formal insolvency. The Austrian Insolvency Code (Insolvenzordnung) contains two insolvent reorganisation procedures. One where the debtor remains in possession of, and in control of, the day to day administration of the business. The other where the debtor is not in possession (Sanierungsverfahren ohne Eigenverwaltung). In this case it is the insolvency trustee who becomes responsible for administering the debtor’s assets and assumes control of the business under the supervision of the court and sometimes a board of creditors.