Austria's upper house of parliament passed a law on Thursday that will wipe out the claims of subordinated debt holders in Hypo Alpe Adria, Reuters reported. The law, which enters uncharted territory for debt markets because the creditors had guarantees from Hypo's home province, had been expected to pass after being approved by the lower house of parliament earlier this month. Read more.

Austria and the World Bank may end up in court over the planned wipe-out of junior creditors of nationalised Hypo Alpe-Adria-Bank International , the Austrian finance minister said, the Irish Times reported. The Austrian government was “surprised” to see that the World Bank, through its International Bank for Reconstruction and Development unit, owns €150 million of subordinated Hypo Alpe bonds, Michael Spindelegger told Austrian state radio ORF today. The Washington-based lender’s claim that it can’t be expropriated is being reviewed, he said.

Austria must add about 8 billion euros ($11 billion) liabilities of state-owned KA Finanz AG to its accounts, the European Union said, putting further pressure on the country’s debt burden, Bloomberg News reported. The EU’s statistics office Eurostat told Austria to change the classification of KA Finanz, the wind-down unit for failed Kommunalkredit Austria AG, and revise government statistics for the past five years, according to a letter posted on Eurostat’s website.

Austria must add about 8 billion euros ($11 billion) liabilities of state-owned KA Finanz AG to its accounts, the European Union said, putting further pressure on the country’s debt burden, Bloomberg News reported. The EU’s statistics office Eurostat told Austria to change the classification of KA Finanz, the wind-down unit for failed Kommunalkredit Austria AG, and revise government statistics for the past five years, according to a letter posted on Eurostat’s website.

Austria's draft law on restructuring heavily indebted Hypo-Alpe-Adria Bank International AG could lead to higher financing costs for the country's banks and damage investors' trust if enacted, the president of the Austrian Bankers' Association said Tuesday, The Wall Street Journal reported.

A dangerous precedent could be set by Austria if its government goes ahead with a potential bail-in of Hypo Alpe-Adria's guaranteed subordinated debt, market participants said last week, Reuters reported. This small Austrian lender could be another test case for European authorities. Bail-in of bank subordinated debt has become commonplace over the last two years, but no country has retroactively removed a guarantee before. "The cost benefit of going down that route would be poor," said one analyst.

Austria's Verbund has offered to sell its stake in troubled Italian energy group Sorgenia as part of a debt restructuring plan with creditor banks, a spokeswoman for the state-owned utility said on Monday. "It's about sharing the burden... We are waiting for offers," the spokeswoman told Reuters. Loss-making Sorgenia, 52 percent controlled by Italian holding company CIR, has run up 1.8 billion euros ($2.5 billion) of debt - 600 million euros of which must be cleared to keep it afloat in the short term.

In a vast warehouse in the small town of Trumau near Vienna, some of the remnants of Austria's biggest post-war bankruptcy are laid out in thousands of neatly arranged lots. A handful of potential buyers pick over the piles of drills, saws, cables, buckets and pumps that are being auctioned off to make a few million euros for the creditors of Alpine Bau, a former unit of Spanish construction group FCC, Reuters reported.

The Austria government wants to ensure taxpayers do not end up footing the entire bill for winding down state lender Hypo Alpe Adria and could use special legislation to go after some creditors, government ministers said on Sunday. Austria, which nationalised Hypo in 2009 to avoid a failure that would have sent shockwaves across the region, finally ruled out on Friday letting it go bust. Instead it will wind it down via an expensive "bad bank".

Austria's finance minister Friday said debt-ridden bank Hypo-Alpe-Adria Bank AG will be wound down and not allowed to become insolvent, ending months of speculation on how to close the financial black hole, The Wall Street Journal reported. After years of repeated bailouts, a separate entity will be set up to wind the bank down, Michael Spindelegger said, with some creditors sharing the burden. "There were many reasons to seriously consider an insolvency, but in the end the risks weren't predictable," Mr. Spindelegger said.