The Insolvency Service intends to publish a new guidance notice to address the issues faced by employers in dealing with collective consultation when a company is facing insolvency, following consultation with the industry last year.
The guidance note is expected to require insolvency practitioners to notify the government in advance of collective redundancy proposals and to comply with the requirement to consult when seeking to rescue or wind up a business.
It is no great surprise that following the collapse of Carillion and with other retail businesses teetering on the edge, insolvency and corporate recovery is back in the news.
Some of the biggest casualties of entities like Carillion are the employees. Luckily, in the Carillion failure many jobs have been saved, but there is still a residual cost to employees who have to submit claims to the National Insurance Fund and the liquidator to recover payments for unpaid wages, holiday and sick pay.
Directors of a company in financial distress will often turn to their professional advisors to assist in making decisions about the company’s future; whether that be their lawyers, accountants, bank, tax advisors or insolvency professionals.
Summary
The regulations governing personal insolvency in Austria will change on 1 November 2017. Whilst generally the regulations remain somewhat the same, some key debtor-friendly amendments have been effected.
The changes primarily concern mandatory quotas as well as the duration of the proceedings.
The following is an outline of the ‘new’ Austrian insolvency proceedings for natural persons.
Phase one – payment schedule
Background
Creditors of an insolvent entity file their claims against the entity with the insolvency administrator (Germany) or insolvency court (Austria). If a claim is accepted, it is registered in the insolvency table as an accepted claim and the creditor is listed as an insolvency creditor in the insolvency proceedings.
By order of the Commercial Court of Vienna from 30.11.2015, bankruptcy proceedings were opened against the assets of the food chain Zielpunkt GmbH. With liabilities amounting to approximately 237 million euros, the Zielpunkt insolvency is the biggest of 2015. Zielpunkt has 229 branches in total in Austria and employs 2708 employees. The insolvency administrator is trying to sell as many branches as possible. The acquisition of Zielpunkt branches by competitors, as by the two biggest grocers REWE and Spar, however, raises competition law concerns due to the large market share.
As can be read in the media, reorganization proceedings were opened on the assets of the Kärntner Landes- und Hypothekenbank-Holding.
The reason for the application for initiation of reorganization proceedings is the liability by virtue of law of the applicant for all current and future liabilities of the bad bank HETA Asset Resolution AG, universal successor of Hypo Alpe-Adria-Bank International AG.
Since 01 January 1995 natural persons in Austria have the possibility of debt relief within the framework of debt settlement proceedings. This is a special form of insolvency proceedings for natural persons, irrespective of whether they are consumers or individual entrepreneurs. The aim of the debt settlement proceedings is the ability to offer a person who is insolvent the chance to escape from an otherwise often endless cycle of constantly rising debt through accrued interest and new execution costs, and to become debt free after seven years.
Since 2000 public notices of documents and decisions in insolvency proceedings must be published in the Internet Insolvency Gazette (the Gazette) and are no longer made available on the court notice board. The Gazette plays a central role in insolvency proceedings in Austria.
Content
The Gazette contains details of insolvency edicts, court decisions on closing and reopening of proceedings for companies as well as on the distribution of available assets. The Gazette is updated Monday to Friday between 23:00 and midnight.