Vol 19 (2022) - Issue 5

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The Austrian Restructuring Code (ReO)

Synopsis
With the Restructuring and Insolvency Directive Implementation Act (RIRUG), which entered into force on 17 July 2021, the Austrian legislator transposed the Directive (EU) 2019/1023 on restructuring and insolvency (Restructuring Directive) into Austrian national law. The core part of the RIRUG is the introduction of the new Restructuring Code (Restrukturierungsordnung
– ReO), providing for a pre-insolvency restructuring proceeding that allows debt relief by way of creditor majority decisions. Prior to the ReO, pre-insolvency debt relief required the consent of all affected creditors under Austrian law.
Under the ReO, companies in financial distress may avert insolvency by initiating a restructuring proceeding and securing the company’s economic viability.
The debtor may present a restructuring plan to certain (or all) of its creditors, which can be adopted by majority vote. The creditors are voting in classes, with a head-count majority and a 75% majority of claims being required in each creditor class. Under particular circumstances, a cross-class cramdown is possible. In general, the restructuring proceeding is not publicly published and therefore reduces reputational damage on the debtor. In contrast thereto, Austrian insolvency proceedings are published in the online insolvency edicts database (Insolvenz-Ediktsdatei). As a result, the new law intends to preserve jobs, restructure non-performing loans and promote the economy by averting insolvency.
In addition to the general restructuring proceeding, the ReO provides for two special proceedings: (1) the European restructuring proceeding, which is published in the Austrian edicts database (Ediktsdatei) and is recognised under the Regulation (EU) 2015/848 (European Insolvency Regulation); and (2) the simplified restructuring proceeding, which allows for a speedier proceeding involving only financial creditors.
This article shall provide a brief overview on the main aspects of the new ReO.