Associations for creditor protection are a central component of the Austrian insolvency landscape. As “privileged associations for creditor protection” legally anchored and equipped with so-called “preferential rights”, they are an inseparable part of all insolvency proceedings conducted in Austria, providing services to creditors, insolvency practitioners and insolvency courts alike.

In recent months, the US has seen a staggering increase in the number of retailers, both large and small, filing for bankruptcy. Among others, Dots, Alco Stores, Radio Shack, Deb Shops, Wet Seal, and Delia’s have each filed for bankruptcy protection in the past six months alone. There can be little doubt that these retailers and countless others, face tremendous challenges given consumers’ shift in preference to online shopping with expedited shipping over visiting a bricks-and-mortar store.

Like some other jurisdictions Austrian law does not provide a concrete legal framework for an out-of-court debt restructuring. However, the law does not prohibit the management of a company for extra-judicial restructuring; on the contrary, it grants 60 days for extra-judicial restructuring efforts if there is a reason for insolvency (inability to pay, over-indebtedness without a positive prognosis).

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE on the application of Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings The European Commission has published its report on the application of the EC Regulation on Insolvency Proceedings, together with proposals for amendments to the Regulation.

This year’s INSOL Europe conference set new standards, culminating in a truly extraordinary gala dinner at a spectacular Vienna palace, nowadays housing the Liechtenstein Museum, opera singing and Viennese waltzing. It is hard to imagine how any conference could top it; will next year’s venue in Venice manage it? No doubt Caroline Taylor’s team is already on the case.

By the Insolvency Law Amendment Act (“Insolvenzrechtsänderungsgesetz 2010, IRÄG 2010”), the Bankruptcy Act (“Konkursordnung”) has been amended fundamentally with regard to a better reorganisation of companies true to the slogan “saving instead of ruining”. It introduces uniform insolvency proceedings, which can be held as reorganisation proceedings (also with self-administration by the debtor) or bankruptcy proceedings. The new reorganisation plan (“Sanierungsplan”) replaces the composition proceeding (“Ausgleich”) and the former reorganisation proceeding (“Zwangsausgleich”).

EUROPEAN UPDATE: (citation: Adam Gallagher; The New Austrian Insolvency Law: A Leap Toward Better Debtor Protection, XXIX ABI Journal 7, 32-33, 82-83, September 2010) - Adam Gallagher