In a recent decision, [1], the High Court decided that it was not in the public interest to wind up a business rates mitigation scheme under its Insolvency Act powers, as it found that this scheme did not subvert the intention of insolvency law.

Shareholders of Austrian limited liability companies usually want to have influence over whom they are associated with. That's why shareholders often agree on a pre-emptive right (Aufgriffsrecht) to purchase existing shares in certain cases, e.g. in case of insolvency proceedings against a shareholder. However, according to the recent case law of the Regional Court of Linz on limited liability companies, pre-emptive rights to purchase the shares of an insolvent shareholder are invalid and unenforceable.

Know your co-shareholders

The Austrian Supreme Court has recently found that insolvency related avoidance claims can be sold. This may open a whole new business segment and will most certainly have a material impact on defendants in avoidance proceedings.

Assignability of insolvency related avoidance claims

A financial crisis and situations where insolvency is imminent are not only challenging for a company and its management, but also entail significant liability risks for management in the case of subsequent insolvency proceedings. Payments made after a company has become materially insolvent (i.e. illiquid or overindebted under Austrian insolvency law), but before the 60-day deadline for filing for insolvency has expired, are risky. Which payments are allowed according to the Austrian Supreme Court?

Scope of liability

The list of successful restructurings outside insolvency proceedings is as long as it is confidential. Every year, companies of all sizes are stabilised and sustainably restructured without the stigma of insolvency proceedings. However, until now there has been no European legal framework for pre-insolvency restructurings and only a few national laws explicitly provide for the possibility of such preventive restructurings. This will change now.

The Austrian Insolvency Code provides for the possibility to challenge certain disadvantageous transactions carried out by the debtor after material insolvency has occurred, especially if the creditor knew or should have known of its debtor's material insolvency. This risk of legal actions being contested is of particularly high relevance for shareholders who are also creditors of the debtor company, as the Austrian Supreme Court recently decided that shareholders' information rights would result in an increased level of due diligence.

The Court of Appeal has ruled that the court does have jurisdiction to grant a licensee (as opposed to a tenant) relief from forfeiture provided that the licensee has possessory or proprietary rights (Manchester Ship Canal Company Ltd v Vauxhall Motors Ltd (formerly General Motors UK Ltd) [2018] EWCA Civ 1100).

Forfeiture and Relief from Forfeiture

On 25 April 2018 a new Insolvency Practice Direction came into force with immediate effect (PDIP 2018). Its purpose is to bring the insolvency practice directions into alignment with the procedural requirements under the Insolvency Rules 2016 and the new Business and Property Courts Practice Direction.

Following the opening of insolvency proceedings, the insolvency receiver typically tries to enlarge the insolvency estate by asserting voidance claims. Legal acts that occurred within certain suspect periods prior to the opening of insolvency proceedings might be declared void. Creditors may mitigate certain avoidance risks by investigating the debtor's financial situation when conducting legal transactions.

Responsibility to investigate

schönherr journal www.schoenherr.eu 02/2017 S  cílem harmonizovat a  posílit ochranu proti odcizení obchodního tajemství na úrovni EU byla minulý rok přijata Směrnice Evropského parlamentu a  Rady (EU) 2016/943 ze dne 8. června 2016 o  ochraně nezveřejněného know-how a  obchodních informací (obchodního tajemství) před jejich neoprávněným získáním, využitím a zpřístupněním (dále jen „Směrnice“). V návaznosti na zavádění Směrnice do českého právního řádu dozná určitých změn dosud platná právní ochrana obchodního tajemství.