Restructuring proceedings
Requirements with and without self-administration, the minimum quota, the procedure up to the creditors’ vote and the effect of the confirmed restructuring plan.
For entrepreneurs, managing directors and creditors
Bankruptcy proceedings in Austria
In bankruptcy proceedings (Konkursverfahren) an insolvency administrator (Masseverwalter) administers the debtor’s assets, realises them and distributes the proceeds pro rata among the creditors. This is the name given to insolvency proceedings where the requirements for restructuring proceedings (Sanierungsverfahren) are not met or later cease to apply (sections 180 and 167(3) of the Austrian Insolvency Code, Insolvenzordnung, ‘IO’). If the debtor is a natural person who does not operate a business, the district court conducts debt settlement proceedings (Schuldenregulierungsverfahren, section 182 IO). Bankruptcy proceedings need not mean the end of the business: the administrator must initially continue it, and a restructuring plan can be applied for until the proceedings are terminated. I represent debtors and creditors in bankruptcy proceedings; the court also appoints me insolvency administrator.
How bankruptcy proceedings come about and what the opening entails
Proceedings are opened on the application of the debtor or of a creditor. The creditor must furnish prima facie evidence that the claim exists and that the debtor is unable to pay. For legal persons, for registered partnerships in which no natural person has unlimited liability (such as a GmbH & Co KG) and for the estates of deceased persons, over-indebtedness is a further ground for opening the proceedings (sections 67 and 70 IO). The application is served on the debtor, and the court hears the debtor on it. At this stage it has to be clarified whether inability to pay actually exists and whether the debtor will itself apply for restructuring proceedings.
A further requirement is assets sufficient to cover the costs: they must at least cover the initial costs of the proceedings (section 71 IO). If they are lacking and no advance on costs is paid, as a rule, the proceedings are not opened; that decision is published with a reference to the inability to pay (section 71b IO). Debt settlement proceedings for persons who do not operate a business are different (see Personal bankruptcy): there the debtor’s own application is not dismissed for lack of assets if the debtor submits a detailed asset register and an admissible payment plan, applies for its acceptance and shows prima facie that he or she will fulfil the payment plan and that his or her income will probably cover the costs of the proceedings (section 183 IO); no advance on costs is then needed.
The effects of the opening begin at the start of the day following publication in the insolvency database (Insolvenzdatei; section 2 IO). From then on the debtor can no longer freely dispose of the insolvency estate, and the debtor’s legal acts concerning the estate are unenforceable against the insolvency creditors (section 3 IO). The estate is administered by the insolvency administrator. The debtor must give him all necessary information (section 99 IO), and mail initially goes to him as well (section 78 IO).
I describe the duty to file in time and the liability for delay on the Corporate insolvency page, and the proceedings for persons who do not operate a business on the Personal bankruptcy page.
The procedure in five steps
- Opening and appointment of the administrator: the court publishes the opening in the insolvency database, appoints the insolvency administrator and sets the time limit for lodging claims and schedules the hearings. The administrator immediately acquaints himself with the economic situation, the previous management and the causes of the financial decline (section 81a IO).
- Continuation or closure: until the report hearing the administrator must continue the business unless continuation would obviously increase the creditors’ shortfall; he may close it only with the court’s approval (section 114a IO). The report hearing takes place no later than ninety days after the opening. Decisions on continuation, closure or a restructuring plan are taken there (sections 91a and 114b IO).
- Lodging and verification of claims: creditors lodge their claims with the court (see Lodging a claim). At the verification hearing the administrator makes a statement on each claim; a creditor whose claim is disputed may have it established by court action within the period set by the court; if the claim is enforceable, the party disputing it must bring the action (section 110 IO).
- Realisation: the administrator realises the assets, be it the business as a whole or in parts, real estate, movables or receivables. The estate also includes claims arising from insolvency avoidance (Anfechtung) and claims against the officers, if the debtor is a company.
- Distribution and termination: the proceeds are first used to pay the claims against the estate; the remainder is distributed pro rata among the insolvency creditors. Once completion of the final distribution has been proven, the court terminates the proceedings (section 139 IO). If a restructuring plan comes about before that, the proceedings are terminated once its confirmation is final, and the debtor is released from the part of the claims that goes beyond the quota (sections 152b(2) and 156(1) IO).
What remains after bankruptcy proceedings
Bankruptcy proceedings alone do not release the debtor from its debts: whatever the distribution does not cover remains owing. For a corporation this no longer matters: if it has no assets left, it may be struck off the company register (section 40 FBG). In a general partnership (OG), however, the partners remain personally and fully liable for the uncovered remainder, as do the general partners (Komplementäre) in a limited partnership (KG) (sections 128 and 161 UGB); limited partners (Kommanditisten) are liable only up to their registered liability amount (Haftsumme), to the extent that they have not paid in their contribution (section 171(1) UGB). For the officers of a company, the insolvency may still have financial and possibly criminal consequences; I describe directors’ liability on the Corporate insolvency page. For an entrepreneur who is a natural person, what counts is how the proceedings end.
Release from the remaining liabilities can be obtained through a restructuring plan (sections 140 and 156(1) IO), through a payment plan, which can likewise be applied for until the proceedings are terminated (section 193 IO), or, if the payment plan does not come about, through skim-off proceedings (section 200(1) IO). Which of these routes is open depends on income, assets and the creditors’ stance. I clarify this with you early on, because it determines what has to be done in the proceedings.
The proceedings may also end earlier: if it emerges that the assets do not cover the costs of the proceedings (section 123a IO), or if all creditors consent to termination (section 123b IO).
What I handle for you
I represent debtors throughout the proceedings: at the hearing on a creditor’s application, when they file their own application, at the hearings and in an appeal (Rekurs) against the opening where it is well-founded and expedient. If a restructuring plan is an option, I work it out with you; I describe how on the Restructuring proceedings page.
I represent your interests vis-à-vis the insolvency administrator, for example regarding continuation of the business, your duties to inform and cooperate, claims against you that he is examining and the question of what remains for your maintenance. In most proceedings I work together with him in doing so and coordinate the steps with him, because orderly proceedings are in the interest of both sides.
I advise and represent managing directors and shareholders when the administrator examines or brings claims, for instance from officers’ liability or from avoidance. I am familiar with these claims from both roles: as insolvency administrator I bring them myself, and as counsel I advise and represent clients against whom they are brought.
I represent creditors in lodging and enforcing their claims, in actions to establish their claims, regarding rights to separation and separate satisfaction, and at creditors’ meetings.
Courts regularly appoint me insolvency administrator. I therefore know from my own work how an administrator proceeds and what the court and the creditors look for.
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Frequently asked questions about bankruptcy proceedings
Is the business closed immediately in bankruptcy proceedings?
No. The administrator must continue the business until the report hearing unless continuation would obviously increase the creditors’ shortfall (section 114a IO). The court approves closure only if an increase in the shortfall cannot otherwise be avoided (section 115 IO).
Can I still submit a restructuring plan in bankruptcy proceedings?
Yes, until the proceedings are terminated (section 140 IO). If the debtor submits the restructuring plan together with the application to open proceedings, they are restructuring proceedings from the outset (section 167(1) IO). Creditors must be offered at least 20 % of their claims within two years. At the report hearing the administrator reports on whether a restructuring plan is in the common interest of the creditors and whether it is likely to be fulfilled (section 114b IO).
What may I still do myself after the opening?
You can no longer dispose of the insolvency estate; legal acts concerning the estate are unenforceable against the creditors (section 3 IO). The estate comprises the assets subject to enforcement; what is exempt from attachment, such as the attachment-free minimum of your earnings, remains with you. If you continue to work as a self-employed sole trader, the income from that activity also falls into the estate; you are left with what is indispensable for a modest standard of living for you and those you are legally obliged to maintain (section 5(1) IO). The court leaves you the tenancy of the home that you and your family need (section 5(4) IO). You are obliged to give the administrator information (section 99 IO).
Can the opening of insolvency proceedings be challenged?
Yes, the opening decision can be appealed (Rekurs). The time limit is fourteen days (section 260(1) IO). It is triggered by the public announcement in the insolvency database, not only by personal service (section 257(2) IO). It cannot be extended, and there is no restitution for a missed time limit in insolvency proceedings (section 259(1) and (4) IO). The effects of the opening remain in force during the appeal, because an appeal against the opening has no suspensive effect (section 71c(2) IO).
If the appeal proceedings are inter partes, the receipt of the appeal is announced in the insolvency database, and the respondents may reply within fourteen days of that announcement (section 260(6) IO).
Many entrepreneurs come to me with precisely this wish. I examine the prospects thoroughly and critically: if the appeal is well-founded and expedient, I file it; if not, I tell you so and we examine whether a restructuring plan is an option.
If a creditor has so far only applied for the opening, the court serves the application on you and summons you to a hearing at which it hears you on it. What has to be clarified then is whether the claim exists and whether you are actually unable to pay; if you are, you should consider applying for restructuring proceedings yourself. Attend that hearing: applications, statements and objections for which it has been scheduled cannot be made afterwards (section 259(2) IO). Call me as soon as you learn of the application or of the opening.
What happens if the assets do not cover the costs of the proceedings?
Then the proceedings are not opened unless an advance on costs is paid; the decision dismissing the application and the fact that it has become final are published with a reference to the inability to pay (section 71b(1) IO). That entry stays visible in the insolvency database for three years (section 256(4) IO). If the shortfall only emerges during the proceedings, they are terminated unless an adequate advance on costs is paid (section 123a IO). In both cases a company entered in the company register is dissolved once the decision becomes final (section 39 FBG).
What do bankruptcy proceedings cost?
The costs depend on the course of the proceedings: the flat court fee (Pauschalgebühr), the administrator’s remuneration (sections 82 and 82a IO) and the remuneration of the privileged creditor protection associations (section 87a IO) follow statutory rates and are paid from the estate. I calculate an initial estimate for your case with my InsoRechner app; I will tell you the costs of my representation in advance. A figure of EUR 4,000 is often mentioned. That is not the cost of the proceedings but the advance on the initial costs which the regional courts (Landesgerichte) and the Vienna Commercial Court (Handelsgericht Wien) require in practice where assets sufficient to cover the costs are lacking: only with this advance are the proceedings opened at all (section 71a IO). In the case of a legal person its officers are jointly and severally liable to pay it, up to a maximum of EUR 4,000, as are those who held office within the three months before the application (section 72a IO), and, in addition, any shareholder holding a stake of more than 50 % (section 72d IO).
Other proceedings
Debt settlement proceedings (personal bankruptcy)
Requirements, procedure, duration and costs of the debt settlement proceedings, plus the most frequently asked questions.
Note This page presents the proceedings in a greatly simplified and abridged form. It is no substitute for comprehensive legal advice and representation in a specific case. The provisions of the Austrian Insolvency Code cited here can be found in their current version in the Federal Legal Information System (RIS).
Dr. Lukas Peichl, attorney at law in Vienna · As at October 2026