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Statement on the proposal for a directive of the European Parliament an of the Council harmonisation certain aspects of insolvency law

on the proposal published by the European Commission on 07.12.2022 for a Directive on the harmonisation of certain aspects of insolvency law [COM(2022) 702]


The meeting of the Austrian Insolvency Law Reform Commission held at the Federal Ministry of Justice on the 26nd of January 2023 showed that all present members (including judges, creditor protection associations, banks, social insurance institutions, lawyers and the Financial Procurator’s Office) unanimously rejected large parts of this proposal for a directive. The reason for this rejection is that it would undermine Austrian insolvency law, which is uniquely successful throughout Europe with extremely high restructuring shares and quotas. The recovery and rehabilitation rates are well above the European average.

Since the Insolvency Law amendment in 2010, Austrian insolvency law has been even strongly focused on restructuring and business continuation. At the latest 90 days after the opening of insolvency proceedings, an court appointed insolvency administrator (and not the debtor) has to report in a creditors‘ meeting (report meeting) if the conditions for a continuation are met and whether a restructuring plan aimed at debt relief is in the common interest of the insolvency creditors and whether its fulfilment is likely to be possible. According to this report and after hearing the creditors, the insolvency court decides on the further course of action (continuation or closure with realisation or sale). In the case of continuation, companies then can also submit restructuring plans at short notice, which have been discussed in advance with the insolvency administrator and the creditor protection associations.

Furthermore, under Austrian Insolvency law, a company must be continued during the examination phase until the report meeting, unless it is obvious that the continuation would lead to losses and thus to an increase in the default.

If a restructuring plan is submitted during a pending insolvency proceeding, it is usually voted on within 90 days; in the case of restructuring proceedings with self-administration, such a restructuring plan must already be accepted within 90 days. The majority of the creditors are present and thus actively involved in the voting, because the exercise of voting rights is mainly transferred to the state-preferred creditor protection associations, as shown in the following table:

filed claims in the proceeding thereof present at voting thereof voting rights exercised via reditor protection associations thereof voted in person or by attorney
equity 64,70 % 63,47 % 36,53 %
heads 88,58 % 97,37 % 2,63 %

The advantages of Austrian insolvency law therefore lead to a short duration of proceedings and to an involvement of the general interests of creditors, which the insolvency courts, the insolvency administrators and the creditor protection associations are obliged to protect. This results in a high proportion of restructurings and extremely high quotas for unsecured creditors. This is shown by the following data, which are taken from the insolvency statistics of the AKV:


Cancellations after accepted restructuring plans accepted payment plans initiation of income levy prodeedings
Corporate insolvency 28,25 % 7,98 % 1,23 %
Private insolvency 0,46 % 66,91 % 30,92 %
  Arithmetic meanvalue Medianvalue
Rate of payment plan 26,86 % 16,76 %
Rate of restructuring plan 42,97 % 25 %

In 28.25 % of Austrian corporate insolvencies, restructuring plans were approved by the majority of the creditors in 2022. In 7.98 % of cases, individual entrepreneurs concluded payment plans with creditors after closing their business, using the provisions of consumer insolvency law. So debt relief proposals were accepted in more than one third of the opened corporate insolvency proceedings. This score is an internationally outstanding figure that is unmatched in the other EU member states.

The average ratios of the completed restructuring plans also show the achievement of Austrian insolvency law and a functioning insolvency practice. In approximately one fifth of the restructuring plans concluded in 2022, a quota of 100% was accomplished. It should be added that the restructuring plan quota only concerns unsecured creditor claims, while the secured claims are to be adjusted entirely. The total recovery rate is thus even higher. The recovery value of corporate loans assumed in the explanatory memorandum of the proposed directive, which had been 40% in 2018, is also exceeded in Austrian insolvency practice.

Insolvency proceedings in Austria are handled professionally, quickly and efficiently. It is successfully proven that specialised insolvency administrators are appointed in all company insolvency proceedings, whereby the start-up costs in Austria amount to € 4,000. It is not the start-up cost that reduce the quota prospects, but late insolvency applications or applications not submitted at all by the company itself. The assumption that self-administration is supposed to lead to higher quotas misses the point of insolvency practice, because especially in the case of insolvent small businesses considerable deficits in the area of accounting can be observed in practice.

In this context, we would like to make the following detailed comments on the proposals:


It is to be welcomed that insolvency administrators are to have direct or indirect access to information stored in non-public databases in order to safeguard the insolvency estate. A restriction of access in the sense of direct data retrieval via the insolvency court is justifiable. However, banking secrecy should not subsequently stand in the way of a query from central bank account registers, especially when assets are traced.


According to the Directive, the purpose of a pre-pack procedure is to ensure that the sale of the debtor’s business (or part of it) is prepared and negotiated before the formal opening of insolvency proceedings (preparation phase), while the liquidation or approval and distribution shall take place in the context of formal insolvency proceedings (liquidation phase). Therefore a going concern agreement shall be negotiated confidentially under the supervision of a court appointed monitor and self-administration shall remain.

The proposed directive fails to explain why a process outside of formal insolvency proceedings should lead to a higher quota. Rather, it is to be feared that secured creditors, for whom the person acting in self-administration might also assumed personal liability, will influence the pricing within the scope of justifiable valuation leeway. It is to be feared that this will lead to a purchase price that is disadvantageous for the unsecured creditors because assets encumbered with collateral (e.g. with liens) will be generously taken into account when splitting up the purchase price. Following the German insolvency practice we fear that shortly after the opening of formal insolvency proceedings, a purchase agreement will be approved that hardly allows a distribution of a quota to the unsecured creditors.

This contradicts the directive’s own objectives, according to which the creditors as a whole should be more involved in the proceedings within the framework of creditors‘ committees. The preparation phase should also be part of formal insolvency proceedings.

The Austrian model has proven itself in this context. In every case, after the opening of insolvency proceedings, the insolvency administrator examines whether a restructuring or a sale is more advantageous. For the sake of transparency an intended sale must subsequently be published in the edict file and a purchase agreement must be concluded by the insolvency administrator (!) also requires the approval of the creditors‘ committee and the insolvency court.

The insolvency administrator, the creditors‘ committee, as well as the insolvency court are obliged to serve the general interests of creditors, so that the interests of unsecured creditors are always taken into account accordingly.

It should also be critically noted in this context that in the event of a sale negotiated in the preparation phase, this will take place before the expiry of a notification period for the creditors according to the planned procedure in the liquidation phase, so that any consultation rights under Article 34 may not even be exercised. Considering that someone may only become a creditor through the dissolution of non-transferable contracts due to the resulting claims for damages.

In this context, it should also be noted that Article 27 interferes with substantive law and provides regulations that would deviate from Austrian civil law because contracts are to be transferred without the consent of the creditor or the contractual partner. It does not even differentiate whether the creditor`s services to be rendered or already rendered before the opening of insolvency proceedings are divisible. Even in the case of divisible services, the purchaser would also assume old liabilities. However, this contradicts Article 28 of the proposed directive. The voluntary assumption of liabilities granted in Article 28 also opens up the danger of inadmissible preferential treatment of creditors.


From the perspective of insolvency practice, the simplified liquidation procedure for microentrepreneurs needs to be rejected.

Following the Commission Recommendation 2003/361/EC, these would be enterprises with less than 10 employees and an annual turnover or balance sheet total of less than € 2 million.

In Austria, more than 90% of the insolvency proceedings opened (!) concern such defined microenterprises, for which, contrary to the assumptions of the proposed directive, the start-up costs of EUR 4,000 are not an obstacle to the opening of proceedings. On the contrary, experience has shown that a liquidation without an insolvency administrator intended under Art. 39 is disadvantageous for creditors. According to the AKV insolvency statistics, two-thirds of the opened company insolvency proceedings in 2022 took place via creditor petition because the debtor company itself was not aware of the material insolvency or ignored it. In many cases, there is not even an orderly accounting system and the investigation of avoidance claims is illusory without the involvement of an insolvency administrator. In practice even an orderly notification of creditors fails due to the lack of creditor lists.

An objective recording and valuation of the insolvency estate is not only an indispensable prerequisite for the economic handling of insolvency proceedings, but also for the approval of sales contracts on the part of the insolvency court. Shifting the monitoring activity from an insolvency administrator to the insolvency court already fails due to the capacities of the insolvency courts and is exacerbated by the fact that all communication under Article 40 has to be electronically. These actually nonsupervisable self-administrations would run counter to the actual objective of the Directive, because the achievement of lower or no quotas is to be feared as a result.

The approaches in Article 46 regarding an „automatic“ filing of claims are also unrealistic. Insolvency practice shows the following picture: In corporate insolvencies, the claims filed by creditors are usually higher than the debtor assumed in the insolvency petition. In practice, instead of the claims filings that are no longer provided for, the insolvency courts receive claims adjustments from the creditors, which would make it difficult to obtain an overview. By eliminating the filing of claims, no documents would have to be submitted to prove the claims, as long as the debtor states the claim. This makes it virtually impossible for other creditors to examine claims.

The situation is different for consumer insolvencies, which (under Austrian law) are also open to former failed entrepreneurs who are no longer operating a business at the time of filing the petition. They are to be given the second chance and debt relief within 3 years provided for in the Restructuring and Insolvency Directive (Directive 2019/1023 of the European Parliament and of the Council of 20 June 2019)…. According to the AKV insolvency statistics, in these proceedings of former entrepreneurs only one third of the creditors file their claims anymore due to the low quotas offered. In order to be able to avoid low quota allocations and high accounting costs, it must be at the discretion of the creditors to file their claims, so that they are not subject to an automatism under Article 46.


The anchoring of the obligation to file for insolvency, including a civil liability, in Articles 36 and 37 and the extension of liability to de facto managing directors is welcomed. We have already explained above that in Austria two thirds of corporate insolvencies are opened via creditor applications and that these cases indicate the violation of insolvency filing obligations.

In cases of the violation of insolvency filing obligations, it would be desirable to provide an extension of the debt relief period in insolvency proceedings, since civil liability often comes to nothing economically due to already existing liability assumptions.

In addition, the directive should clarify whether the obligation to file for insolvency is interrupted during a pre-pack proceeding.


The intended installation of creditors‘ committees according to Articles 58 ff is welcomed. In Austria, the members of the creditors‘ committee are regularly representatives of the privileged creditor protection associations, which also inform the affected creditors objectively and, among other things, achieve the highest possible quotas by creating a balance of interests.

In Austria, the confidentiality of creditors‘ committee meetings and the confidentiality obligations of creditors‘ committee members have proven their worth. These confidentiality which is anchored in the Austrian insolvency law and has been further developed by the judiciary, is to be prefered to a duty
to inform under Article 64(1)(e) of the proposed directive. A creditors‘ committee member should also be obliged exclusively to serve the general interests of creditors, so that representation of the interests of individual creditors (Art 60(1)) is excluded, in the context of a creditors‘ committee.


The proposed Directive aims to remove obstacles to the free movement of capital markets. The assumption in the proposed Directive that the lack of harmonized insolvency regimes has long been seen as one of the main obstacles to the free movement of capital markets in the EU should be questioned. Achieving the highest possible quota from insolvency proceedings will be a secondary motive in the investment decision-making process. Moreover, micro-enterprises will rarely be a target for cross-border investors. The Union’s justification that the proposal in question is necessary to strengthen the Capital Markets Union is questionable. After all, in more than 90% of Austrian corporate insolvencies involving micro-enterprises, the opposite effect would be achieved with lower quota prospects, as the above explanations have shown. Instead, a proposal for a directive should be based on Austrian insolvency law, which in practice is characterized by short proceedings and high quotas, in the sense of „best practice“.

Bei Veröffentlichung wird um Quellenangabe gebeten.  


Alpenländischer Kreditorenverband

Mag. Franz Blantz
Leiter Insolvenzbereich
Tel: 05 04 100 – 8000

Dr. Cornelia Wesenauer
Insolvenzabteilung Wien/NÖ/Bgld
Tel: 05 04 100 – 1193

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