On Monday, 16th March 2020, the Federal Act on provisional measures to prevent the dissemination of COVID-19 (COVID-19-Measures Act) came into effect in Austria.
On 28 June 2017 the Austrian Parliament passed the government's legislative proposal on insolvency law (Insolvenzrechtsänderungsesetz 2017). After lengthy negotiations, the government finally agreed to shorten personal insolvency proceedings to a maximum five years and to abolish the minimum insolvency quota of 10 % under certain conditions. The amendments will be applicable as of 1 November 2017.
Personal bankruptcy in Austria
Pearson v. Primeo Fund (Cayman Islands) [2017] UKPC 19
The Privy Council sitting as the final court of appeal for the Cayman Islands recently considered a case concerning prioritisation in a Liquidation between feeder hedge funds where the investment medium was redeemable shares.
Background
Introduction
On 4 September 2017, Her Honour Hazel Marshall Q.C., Lieutenant Bailiff, handed down judgment in the case of Carlyle Capital Corporation Limited (in Liquidation) and others v. Conway and others [2017] Civil Action No. 1510, one of the most anticipated judgments in recent Guernsey jurisprudence, and the first time that a Guernsey court has memorialised certain fundamental legal principles affecting directors and the companies they serve.
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
Summary
In a very recent avoidance law decision the Austrian Supreme Court held that shareholders of Austrian limited liability companies, even if they are only small minority shareholders, can under certain circumstances be under a specific duty to investigate the company’s financial situation because of their statutory information and book inspection rights. If they fail to do so, they may have to return received payments if challenged by the insolvency administrator (Supreme Court file no. 3 Ob 117/18d).
Legal framework
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.
ALBANIA AUSTRIA BOSNIA & HERZEGOVINA BULGARIA CROATIA CZECH REPUBLIC HUNGARY POLAND ROMANIA SERBIA SLOVAK REPUBLIC SLOVENIA UKRAINE 1 TO OUR READERS Welcome to the 6th edition of the DRInsider, the quarterly Newsletter of the Wolf Theiss Dispute Resolution Practice Group. We are happy to once again provide you with interesting news covering the various CEE/SEE jurisdictions in which we practice.
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.
Recent case law from the Supreme Court(1) demonstrates once again that lenders can be held liable by creditors of an insolvent borrower under certain conditions. In particular, a lender may be held liable where it has significant influence over the borrower's management. However, only a few cases have met the necessary level of influence. The case discussed below shows that total disregard of this risk can have severe consequences for lenders.