The Austrian implementation of the PRD 2019 was performed through a new Restructuring Code (“ReO"). It is broadly discussed whether the ReO is a real improvement within the existing Austrian restructuring and insolvency landscape. Nevertheless, it may still provide tools and instruments which could help in the desired strengthening of a preventive restructuring and rescue culture. This paper tries to highlight the most promising aspects of the ReO. In order to set the frame, it does first briefly describe the Austrian pre-ReO restructuring and insolvency landscape and then point out the main aspects and characteristics of the ReO.
The Austrian implementation of the PRD 2019 was performed through the new ReO, the Austrian Restructuring Code (Restrukturierungsordnung), Federal Law Gazette Nr. I 2021/147, which entered into force with effect from 17 July 2021. By now, it was broadly discussed whether the ReO is a real improvement within the existing Austrian restructuring and insolvency landscape. Especially practitioners remain critical or at least sceptical about the potential of the ReO. Nevertheless, this new law may in our eyes still provide tools and instruments which could help in the desired strengthening of a preventive restructuring and rescue culture. This paper tries to highlight the most promising aspects of the ReO and whether and how they may change existing dynamics. In order to set the frame, it will first briefly describe the Austrian restructuring and insolvency landscape existing prior to the ReO (Section 2) and then point out the main aspects and characteristics of the ReO (Sections 3 and 4). The paper will be rounded off with an outlook (Section 5) and a conclusion (Section 6).
2. Overview of the Austrian pre-reform restructuring and insolvency law regime
2.1. Long tradition of legislative initiatives on restructuring
Restructuring culture is not new in Austria. Back in 1914 – actually, a comparable procedure had even already existed since 1862 – the Austrian legislator implemented the Austrian Settlement Code (Ausgleichsordnung, “AO”), which allowed the debtor to restructure its debt in collective proceedings by reaching a settlement with the creditor majority. The AO provided for a concept of debtor in possession supervised by a court appointed administrator, for a moratorium and a minimum quota of 40%. Unfortunately, and presumably due to the high minimum quota, such proceedings were rarely applied in practice. In 2010, the legislator replaced the AO through so-called “rehabilitation proceedings with self-administration” (see below Section 2.3.2).
In another legal initiative, the Austrian legislator introduced the so-called “reorganisation proceeding” through the Business Reorganisation Act (Unternehmensreorganisationsgesetz, “URG”) in 1997. The URG was introduced to encourage timely and well considered reorganisation measures by allowing for confidential reorganisation proceedings of debtors facing reorganisation need. Despite the ambitions of the URG-legislator, which are in its essence comparable to the idea standing behind the PRD 2019, reorganisation proceedings under the URG have never been accepted in practice. This is probably because the proceedings are arguably too costly and do neither provide for a moratorium nor for an option to force and cram-down dissenting (holdout) creditors into restructuring measures (such as debt haircuts). Nevertheless, the URG is still in effect.
2.2. Restructurings mainly performed through private workouts
Not least due to this lack of well-established formalised restructuring instruments, the vast majority of restructurings was (and still is) performed through private workouts. Such processes benefit from a by and large well-functioning Austrian out-of-court restructuring practice. Relevant “players” such as banks, credit insurers and advisers mostly act professionally, reasonably and in line with (non-binding) restructuring principles contributing to an established framework for successful restructurings.
As such workouts must still rely on a contractual and consensual basis, risks of failure – especially due to holdout creditors – can still not be excluded. Other obvious disadvantages are avoidance/clawback risks and the lack of a moratorium, including liability concerns of the acting directors. Therefore, also private workouts do not satisfy all aspects required for an effective (!) formalised restructuring process.
2.3. Proceedings available under the Austrian Insolvency Code
2.3.1. Structure of the Insolvency Code
The Austrian Insolvency Code (Insolvenzordnung, “IO”) has its origin in the Austrian Bankruptcy Code from 1914 (Konkursordnung, “KO”). It has been broadly updated during the last century with the most important reform in 2010 which merged and updated the KO and AO (see above Section 2.1) into one Code, the IO. The IO now provides for three different types of insolvency proceedings for companies:
- rehabilitation proceedings without self-administration (Sanierungsverfahren ohne Eigenverwaltung)
- rehabilitation proceedings with self-administration (Sanierungsverfahren mit Eigenverwaltung)
- bankruptcy proceedings (Konkursverfahren)
All these proceedings can serve as a tool to restructure as well as to wind up/liquidate a business (even rehabilitation proceedings can in principle be used to wind-down a business).
2.3.2. Rehabilitation proceedings (Sanierungsverfahren)
Rehabilitation proceedings are addressed in Sections 166 et seq. IO and can only be applied by the debtor. The debtor must be either (i) imminently illiquid (drohend zahlungsunfähig) according to Section 167 (2) IO or (ii) illiquid (zahlungsunfähig) according to Section 66 IO and/or (iii) over-indebted (überschuldet) according to Section 67 IO. At the core of every rehabilitation proceeding is the rehabilitation plan (Sanierungsplan). Depending on the conditions offered in this plan, the debtor can choose between rehabilitation proceedings with or without self-administration.
- If the debtor wishes to stay in possession and therefore applies for proceedings with self-administration, a rehabilitation plan with a minimum quota of 30 % (leading to a debt haircut of up to 70 %) to be paid to the creditors within two years at the latest must be presented together with a detailed set of further documents already together with the initial application (Section 169 IO). Still, a rehabilitation administrator (Sanierungsverwalter) must be appointed by the insolvency court, who must supervise the debtor and is in control of certain exclusive actions such as avoidance actions or the sale of certain assets, e.g. properties or the enterprise itself, to be approved by the insolvency court (Sections 171 et seq. IO).
- An alternative are rehabilitation proceedings without self-administration which require a rehabilitation plan with a minimum quota of “only” 20 % (leading to a debt haircut of up to 80 %) to be paid within at the latest two years (Section 167 IO in connection with Sections 140 et seq. IO). In such proceedings, an insolvency administrator (“Insolvenzverwalter”) is appointed who is fully in charge to administrate and dispose of the debtor’s assets.
Rehabilitation proceedings with self-administration are rather rare in practice, particularly because of related costs for preparation and the 30 % minimum quota. Rehabilitation proceedings without self-administration are commenced more often but are still relatively rare compared to the overall numbers of proceedings opened in Austria. However, rehabilitation plans as such are still relatively common as such can also be applied in bankruptcy proceedings (see the following Section).
2.3.3. Bankruptcy proceedings (Konkursverfahren)
If the debtor does not apply for rehabilitation proceedings including a rehabilitation plan in its initial application, the insolvency proceedings are called bankruptcy proceedings. Such proceedings require material insolvency (materielle Insolvenz), i.e. illiquidity and/or over-indebtedness of the debtor (see for the relevant Sections of the IO already above Section 2.3.2). Bankruptcy proceedings can be applied not only by the debtor (Section 69 IO) but also by its creditors (Section 70 IO). Together with the commencement order, the insolvency court appoints an insolvency administrator (in that case called a “Masseverwalter”) who – same as in rehabilitation proceedings without self-administration – takes control over the assets of the debtor.
Although bankruptcy proceedings originally aimed at liquidating the debtor’s assets in order to satisfy the creditors, nowadays the IO encourages debtors to strive for a restructuring and rescue of the business even in bankruptcy proceedings. Therefore, the debtor can present a rehabilitation plan with a minimum quota of 20 % to be paid within two years at the latest (see above Section 2.3.2. for rehabilitation proceedings without self-administration) at any time. What is not possible in bankruptcy proceedings is the subsequent approval of self-administration (this is only possible in rehabilitation proceedings with self-administration). Also, quasi as an alternative to a rehabilitation plan, the business (or at least viable business parts) can be rescued by selling it to a new entity (so called “übertragende Sanierung“).Selling the business is even possible if the debtor has filed a rehabilitation plan as long as this option is more advantageous to the creditors.
3. PRD 2019: implementation through the ReO
Kickstarter for the legislative initiative of the ReO was certainly the implementation need caused by the PRD 2019. As this was more or less simultaneously with the outbreak of the COVID-19 pandemic, it was argued that the new law should also help in order to fight the economic effects of the pandemic. In our eyes it still seems very unlikely that a comprehensive reform such as the ReO would have taken place without the external momentum such as the one caused by the PRD 2019.
The first legislative draft for the ReO was published on 22 February 2021 and led to around 50 published (partly very critical) statements during the six-week evaluation period. Although the general idea of strengthening preventive restructuring and therefore also the initiative as such was broadly welcomed, strong criticism was voiced on the general structure of the law as well as in the details. In the following, some particularly relevant reservations raised by experts from academia and practice are listed:
- Structural and conceptual weaknesses and generally the doubtful practical usability of the proceedings;
- uncertainties on the scope of measures allowed under a restructuring plan;
- a missing link between corporate/company and insolvency law necessary for a well-functioning modern restructuring law;
- the lack of provisions of a debt equity swap or alternative shareholder contributions to the restructuring against the will of the shareholders;
- the continued application of the URG.
Even international observers concluded that the Austrian legislator has shown no ambitions to join the European “competition of legislations”.
Although the legislator has considered some of the criticism raised, the by now implemented ReO still largely corresponds with its first draft published in February 2021. Part of the criticism therefore still continues, and we will address some of the most important aspects in the following.
4. Main features introduced by the ReO
4.1. Objective and scope of the proceedings
Objective of the proceedings under the ReO is to allow companies and entrepreneurs to restructure in order to prevent illiquidity and ensure viability of the business (Section 1 (1) ReO). The proceedings are basically available for all companies and entrepreneurs but exclude specific businesses such as financial institutions or insurance companies (Section 2 (1) ReO) as well as non-entrepreneurs (Section 2 (1) n 10).
There are no specific provisions for enterprise groups. A court supported “group restructuring” therefore still requires separate restructuring proceedings for every affected group member. In contrast to other EU member states (such as e.g. Germany or the Netherlands), Austrian law does further not offer options to include intragroup guarantees in the restructuring of the primary debtor.
The ReO allows the debtor to file for:
- Regular restructuring proceedings (ordentliches Restrukturierungsverfahren)
- European restructuring proceedings (Europäisches Restrukturierungsverfahren)
- Simplified restructuring proceedings (vereinfachtes Restrukturierungsverfahren)
Regular and simplified restructuring proceedings are confidential, European restructuring proceedings are public. In the following Sections 4.2. to 4.9., the provisions of the regular proceedings are described. European and simplified restructuring proceedings are addressed separately in Sections 4.10. and 4.11.
4.2. Criteria to enter the proceedings
Restructuring proceedings can only be applied for by the debtor. In case of companies, the person(s) authorised to represent the company (e.g. director(s) of a limited liability company) are entitled to apply for restructuring proceedings. Creditors, shareholders (see on their role in Section 4.7 below) or others are not entitled to do so.
The ReO (in particular Sections 6 to 8) provides for several criteria and formal requirements linked to the application for and the access to restructuring proceedings. The following aspects seem to be particularly relevant to us:
- Likelihood of insolvency (wahrscheinliche Insolvenz): the application requires the debtor’s likelihood of insolvency which must be presented by the debtor in the initial application (Section 6 (1) in connection with 7 (1) ReO). A debtor is considered likely insolvent if its viability would be threatened without restructuring, in particular in case of imminent illiquidity (Section 6 (2) ReO). Likelihood of insolvency is assumed if the financial figures under Sections 23 and 24 URG are met (see already footnote 7 above). Although the ReO mentions likelihood of insolvency as a requirement to access restructuring proceedings, its threshold is still rather low as the debtor is only obliged to present but not to evidence this requirement (Section 7 (1) ReO). The court can only reject the application if likelihood of insolvency is obviously not met (Section 7 (3) ReO).
- Viability (Bestandfähigkeit): the ReO does not provide for an explicit viability test. As the debtor must together with the initial application either present (i) a fully prepared restructuring plan including evidence on the viability of the debtor (see below Section 4.5) (Section 7 (1) n 1 ReO) or (ii) at least a restructuring concept showing that the viability of the debtor can be achieved with such concept (Section 7 (2) ReO), the threshold to enter proceedings seems prima vista relatively high. But again, the application is only impermissible if the restructuring plan respectively the restructuring concept is obviously unsuitable to ensure the viability of the debtor. Only in such cases, the court can reject the opening of the proceedings because of non-viability (Section 7 (3) ReO).
- No illiquidity (keine Zahlungsunfähigkeit): the application for the opening of restructuring proceedings is in any case impermissible if the debtor is illiquid (Section 7 (3) ReO). The liquidity of the debtor for at least the following 90 days of the proceedings must be presented by the debtor in the initial application through a liquidity plan (Finanzplan) (Section 7 (1) n 2 ReO). Besides that, the court is not obliged to examine the liquidity of the debtor. It shall only reject the opening of the proceedings if the debtor is obviously illiquid (Section 7 (3) ReO).
Nota bene: The debtor may still be over-indebted (überschuldet) within the meaning of the IO, provided that the restructuring proceedings can eliminate such over-indebtedness. Accordingly, the ReO provides, at least to some extent, an alternative to the IO for debtors which are already materially insolvent within the meaning of the IO.
The court has to examine all of these criteria – to the extent described above – ex officio. If the criteria are met the court commences the restructuring proceedings. The commencement decision is not published because regular restructuring proceedings are, other than European restructuring proceedings, conducted in camera. Creditors are not entitled to challenge the commencement decision.
4.3. Involved actors
The ReO basically follows the structure of the PRD 2019 leading to the following roles and positions:
- The debtor (in possession): as a general rule, the debtor shall stay in possession and therefore keep control over the assets and the business operations (Section 16 (1) ReO). There are still several exceptions to this rule as (i) certain tasks or responsibilities can be transferred to an appointed restructuring expert or (ii) the court can decide that certain measures are only allowed if the court or the restructuring experts consent (Section 16 (2) ReO). As the ReO provides for a large number of cases which require or allow the appointment of a restructuring expert (see the following Section), we expect that in practice the debtor in possession will not be applied as extensively as Article 5 PRD 2019 would have allowed.
- Restructuring expert: restructuring experts (Restrukturierungsbeauftragte) must be sufficiently experienced, including special knowledge in restructuring and insolvency laws, business law and business administration (Section 11 (1) ReO) which is why we expect that mostly lawyers will be appointed. Furthermore, restructuring experts must be independent (Section 11 (2) ReO). The selection is done by the restructuring court and neither the debtor nor creditors have a formal right to influence the selection process. There is also a public list in which restructuring experts can be registered. The involvement of restructuring experts can be basically split into the following categories:
- Appointment is mandatory to support the debtor as well as the creditors in the negotiations and preparations of the restructuring plan if one of the requirements in Article 5 (3) PRD 2019 is met (the provisions are identically implemented in Section 9 (1) ReO).
- It is further mandatory if (i) there are circumstances which lead to the expectation that the debtor staying in possession may lead to disadvantages of the creditors, in particular if the debtor (ii) violates duties to collaborate and communicate, (iii) acts to the detriment of the creditors, (iv) the debtor or a member of its board of directors is subject to criminal proceedings related to the business operations, (v) the information in the liquidity plan must be tested in the interests of the creditors or (vi) the debtor does not pay liabilities occurred after the initiation of the proceedings (Section 9 (2) ReO).
- The court may finally appoint a restructuring expert if required, for instance (i) to examine whether to approve an interim or new financing, (ii) for a report about the expected results of an alternative insolvency proceeding (which shall likely serve as a basis for the determination of the best-interest of creditors test as further addressed in Section 4.6.3 below), (iii) in case of restrictions of the debtor in possession or (iv) to review creditor claims which have been contested (Section 9 (3) ReO).
With this list, the ReO legislator goes far beyond the list of the exceptions of the debtor in possession in Article 5 (3) PRD 2019. This may be seen critically.
- Restructuring court: the court competent for restructuring proceedings is the same court which would be competent for insolvency proceedings under the IO (Section 4 ReO in connection with Section 63 IO). This is the first instance court where the debtor operates the business at the time of the application. This concept corresponds by and large to that of the centre of main interests (COMI) under Article 3 of the European Insolvency Regulation (EIR 2015). Still, practical problems may arise as Section 63 (2) IO also allows the opening of proceedings where the debtor operates a branch or simply owns property.
- Creditors: as mentioned previously, creditors are not entitled to file for restructuring proceedings or present a restructuring plan. Creditors are still, of course, parties to the proceedings if they are affected by the restructuring plan (and can therefore e.g. exercise their right to vote according to Section 32 (1) ReO). Creditors must be split in predefined creditor classes (see below Section 4.5.2).
- Workers: claims of workers are excluded from restructuring proceedings (Section 3 (1) ReO) and the rights of workers under individual or collective agreements under labour law may not be affected by the restructuring proceedings or the restructuring plan (Section 43 ReO). However, the debtor has to inform its employees’ representatives according to Article 13 PRD 2019.
- Equity holders/shareholders: although equity holders always play an important role for the success of restructuring proceedings under the ReO, the ReO only provides very few provisions addressing them (see details below in Section 4.7).
- Directors: in case of companies, the ReO also provides for specific duties of directors linked to the likelihood of insolvency (Section 1 (3) ReO). Those duties broadly correspond to Article 19 PRD 2019. In the legislative materials the legislator made clear that with this provision no new liability framework should be implemented but rather existing company law principles for directors of limited liability companies should be “concretised”. This means in a nutshell that in case of a likelihood of insolvency, directors must take steps to avoid insolvency and to ensure viability. The “right” steps depend on the individual case and applying for restructuring proceedings under the ReO might but does not have to be the right choice (there is no automatism for restructuring proceedings). It is therefore expected that this provision does not lead to major changes in the Austrian legislative landscape, but it may raise further awareness amongst company directors.
4.4.1. Stay of individual enforcement actions (Vollstreckungssperre)
The provisions in Articles 6 and 7 PRD 2019 have been implemented through Sections 19 et seq ReO. A stay of individual enforcement actions is not granted automatically, but only upon application of the debtor. Creditors, the restructuring expert or others cannot apply for a stay.
The stay shall support negotiations on a restructuring plan. Therefore, the application for a stay is impermissible if the stay is not necessary to achieve the restructuring goal, not suitable to support the negotiations on the restructuring plan or if the debtor is illiquid (Section 19 (2) ReO).
Similar to Article 6 PRD 2019, the stay can focus on individual creditors as well as creditor classes, who must in any case be informed about the stay (Section 21 (2) ReO). The stay can include all kinds of creditors and therefore also secured creditors (Section 20 (1) ReO). However, stronger requirements have to be met in order to also include secured creditors (Section 20 (1) ReO in connection with Section 11 (2, 3) IO). Furthermore, there is no stay for creditors whose claims cannot be part of the restructuring plan, e.g. workers’ claims. A general stay is only possible in the so called “European restructuring proceeding” (see on those proceedings below Section 4.10) and therefore requires publicity of the proceedings.
The application for a stay can be made together with the initial application for the proceedings as well as at a later stage. The initial duration of the stay may not exceed three months (Section 22 (1) ReO). Upon application of the debtor or the restructuring expert the stay can be extended or also a new stay can be granted, as long as it does not exceed a total duration of six months (Section 22 (2) in connection with (4) ReO).
4.4.2. “Insolvency stay” (Insolvenzsperre)
Further, the above-mentioned stay of individual enforcement actions – even if it is just granted against a single creditor – leads to a limited “insolvency stay”. On the one hand, the duty of the debtor (respectively its directors) to file for insolvency (Insolvenzantragspflicht) linked to the insolvency ground of over-indebtedness is suspended (Section 24 (1) ReO in implementation of Article 7 (1) PRD 2019). On the other hand, the insolvency court shall not decide upon creditor applications linked to the insolvency ground of over-indebtedness (Section 24 (2) ReO in implementation of Article 7 (2) PRD 2019). The Austrian legislator therefore made use of the option of Article 7 (3) PRD 2019 and limited this “insolvency stay” to cases of over-indebtedness. The debtor’s duty as well as the creditors’ right to file for insolvency linked to illiquidity therefore remain untouched. However, Section 24 (3) ReO still provides that even in case of illiquidity the insolvency court can refrain from opening insolvency proceedings upon application of the debtor or a creditor if such opening would not be in the general interest of the creditors.
4.4.3. Protection of executory contracts
Finally, in implementation of Article 7 (4) and (5) PRD 2019, Section 26 ReO provides for a protection of executory contracts which shall secure the continuation of the debtor business. The protection of executory contracts in Section 26 (1) ReO is limited to essential executory contracts (wesentliche, noch zu erfüllende Verträge) which are defined as contracts necessary for the continuation of the day-to-day operations of the business (Section 26 (2) ReO). Besides, even essential contracts are only “protected” if they (meaning the respective contractual claims standing behind) are at all subject to the stay.
Creditors subject to this protection shall not be entitled to withhold performance or terminate, accelerate or in any other way modify such contracts to the detriment of the debtor solely because of debts not paid by the debtor deriving from the time prior to the stay. This provision can generally cover all types of contracts. Still, the debtor’s right to claim disbursements of loans (Section 26 (5) ReO) as well as contracts which are generally out of the scope of the ReO such as employment agreements are excluded.
4.4.4. Ban on ipso facto clauses (not linked to a stay)
Finally, ipso facto clauses are unenforceable according to Section 26 (3) ReO. The ReO provides for a list of impermissible clauses very similar to Article 7 (5) PRD 2019. Although this provision is included in the fifth Section of the ReO overall dealing with the stay, the impermissibility of ipso facto clauses applies notwithstanding of whether a stay was granted to the relevant contractual party or whether a stay was granted at all. It applies to all types of contracts and creditors except for the types listed in Section 26 (4) ReO implementing the list also included in Article 7 (6) PRD 2019 such as netting arrangements.
4.5. The restructuring plan
4.5.1. Formal requirements
Only the debtor can present a restructuring plan to the restructuring court (see above Section 4.2). The plan can be submitted either together with the application to the proceedings or within a deadline set by the court of no longer than 60 days (Section 27 (1) in connection with Section 8 (2) ReO). There is an extensive list of information which must be included in the plan (see Section 27 (2) ReO) and which is similar to the list in Article 8 (1) PRD 2019.
Besides the obvious necessity to list the terms of the plan (Section 27 (2) n 7 ReO), another key information required is an explanation on how the plan is going to guarantee the viability of the business (bedingte Fortbestehensprognose) (Section 27 (2) n 8 ReO). A remarkable, because in practice potentially costly (usually requiring the support of external advisors) “invention” of the ReO legislator is the requirement to compare the effects of the plan to (all?) alternative scenarios under the IO (Section 27 (2) n 9 ReO).
4.5.2. Class formation
- secured creditors,
- unsecured creditors,
- vulnerable creditors (particularly such with claims of less than EUR 10.000) and
- subordinated creditors.
Shareholders are not listed and their legal position can therefore not be affected by the plan without their consent (see further below Section 4.7).
If creditors belong to more than one creditor class (e.g. partly secured creditors), they can also be allocated to more than one class (Section 29 (2) ReO). Within classes, the principal of equal treatment of creditors applies (Section 34 (1) n 2 ReO). Furthermore, the class formation must be appropriate (sachgemäß). However, the conclusiveness of the list makes it impermissible to form further classes of creditors within the existing classes (e.g. by splitting the unsecured creditors in classes of “financial creditors” and “suppliers”). This rule restricts flexibility and may therefore be seen critically.
SME debtors can choose whether to follow the above rules or whether to present a restructuring plan without creditor classes (Section 29 (3) ReO).
4.5.3. Creditor selection
The debtor can generally choose which creditors to include in a restructuring. This gives some room for the debtor to find individualised solutions. Still, the selection of creditors to be included in the plan must be justified (Section 27 (2) n 6 ReO) and appropriate (sachgemäß) (Section 30 (1) n 4 ReO). This may e.g. be the case if only financial creditors are included in the plan and suppliers or customers shall remain unaffected by the plan.
4.5.4. Pre-review of the plan (Vorprüfungsverfahren)
Upon plan presentation, the court reviews whether the plan meets the formal statutory requirements as well as whether key requirements such as the class formation or the selection of creditors are met (see in the previous Sections). The court can ask the restructuring expert or an external expert to review the plausibility of the plan’s reasoning on the viability of the business (bedingte Fortbestehensprognose) (Section 30 (1), last sentence, ReO). If the statutory requirements are not met, the court can set a deadline to the debtor to improve the plan (Section 30 (2) ReO). This option to review the presented plan prior to the voting and confirmation decision shall allow to remove obstacles as early as possible and is therefore to be welcomed.
Other than e.g. the Netherlands, the ReO still does not provide for interim court decisions where (potential) disputes between parties can already be resolved before the plan voting and confirmation.
4.5.5. Plan measures
In terms of possible plan measures becoming effective solely as a result of the plan confirmation, the ReO is far more restrictive than the broad definition of restructuring included in Article 1 (1) PRD 2019 (and also more restrictive than Section 1 (2) ReO might indicate). Only financial restructuring measures can be implemented against the will of dissenting parties through an intra-class and a cross-class cram-down mechanism. Any other restructuring measures require the consent of the affected party (Section 39 (3) ReO).
- Financial restructuring measures: plan measures under the ReO are basically focused on (I) the reduction (haircut) of creditor claims (Sections 28 sentence 1 and 4 ReO, 29 (1) ReO) and (II) the amendment of (re-)payment modalities (Section 28 sentence 3 ReO), especially the granting of moratoria. In addition, interest provisions can be amended or covenants Further amendments of contractual terms such as a debt exchange (e.g. exchange offers) or a transfer of debts to another debtor/entity cannot be imposed through a restructuring plan and therefore still require the consent of the affected parties.
- Operational and other restructuring measures: other measures such as the termination of (onerous) operational and other contracts, refinancing measures, capital increases, corporate law measures (including debt-equity swaps, see below Section 4.7) and many more can be included in the overall restructuring plan but still follow the general rules of contract (and if relevant corporate) law. This very limited scope especially for operational restructuring measures will in our expectation lead to the fact that debtors requiring such measures (such as store closures, employment cuts etc.) will either still restructure through (public) insolvency proceeding under the IO (see above Section 2.3.1) or such measures will not be taken at all (especially if also the IO does not provide more options, which is e.g. the case for corporate law measures).
- Interim and new financings: interim and new financings can be mentioned in the plan. But same as the abovementioned “other measures” they do, of course, require an agreement with the financier (so there is no possibility to force or cram-down new financiers to grant a financing). To still enhance the willingness to grant interim and new financings, the Austrian legislator implemented the avoidance protection of Article 17 PRD 2019. However, the implementation was made in a very restrictive way. Therefore, it is unlikely that this protection will stimulate the willingness of financiers to participate in a restructuring.
4.5.6. Permissibility of a liquidation plan doubtful
The ReO does neither provide nor exclude the option of a so called “liquidation plan”. Also, the legislative materials do not refer to such an option. Whether a restructuring plan may be used for the liquidation respectively winding up of a debtor’s business will remain to be seen. As every restructuring plan must mandatorily include a forecast on the viability of the business (bedingte Fortbestehensprognose), it is rather doubtful that the use of a plan for liquidation of the business is permissible.
4.6. Adoption and confirmation of the plan
Voting on the restructuring plan is made in a court hearing to be scheduled 30 to 60 days after the debtor presented the plan (Section 31 (1) ReO). The pre-review of the plan (see above Section 4.5.4) has to be successfully concluded before such hearing. Furthermore, the debtor must send the restructuring plan to the creditors voting on the plan at the latest within two weeks before the restructuring plan hearing.
In the hearing only affected creditors are entitled to vote. The voting right is calculated based on the claims included in the restructuring plan plus interest until the day the restructuring plan was presented (Section 32 (1) ReO). Affected creditors can raise concerns (Einwendungen) against the voting rights of other creditors by contesting their claims included in the restructuring plan (Section 32 (2) ReO). However, the court only decides on such contestations if the consideration of the contested claims would have an effect on the positive or negative outcome of the voting. The court can appoint a restructuring expert to examine such concerns (Section 9 (3) n 4 in connection with 32 (3) ReO).
The plan is adopted by the creditors if in every creditor class, (i) the simple majority in number and (ii) a majority of at least 75 % in value (both calculated based on the creditors present at the hearing) vote in favour of the plan (Section 33 (1) ReO). If one or more creditor classes dissent, there is still the possibility to substitute their consent via a cross-class cram-down (see below Section 4.6.4).
When deciding on sanctioning the plan the court must examine whether the statutory requirements such as (i) the above-mentioned majorities or (ii) the requirements for the class formation or the creditor selection are met, and (iii) whether none of the grounds for refusal (Versagungsgründe) according to Section 34 (3) ReO apply. Such grounds for refusal correspond to the impermissibility reasons which are already relevant at the beginning of the proceedings, such as the fact that the plan is not suitable to ensure the viability of the business, the non-existence of likelihood of insolvency or the existence of illiquidity of the debtor (see above Section 4.2).
Further particularly relevant confirmation requirements to be considered by the court ex officio are the equal treatment of creditors within every class (Section 34 (1) n 2 ReO), and the prohibition of special benefits (Sonderbegünstigung) granted to individual creditors in connection with the restructuring plan (Section 34 (3) n 2 ReO). To sum up, the list of possible grounds for refusal in Section 34 ReO is rather long. This might conflict with the principle of efficiency intended by the PRD 2019 and reduce the practical attractiveness of the ReO.
4.6.3. Best interest of creditors test
The best interest of creditors test (Kriterium des Gläubigerinteresses) is a further key confirmation requirement but must only be examined by the court upon application of a dissenting creditor (Section 33 (2) ReO). The test is defined very similar to the PRD 2019 stating that a dissenting creditor shall not be treated worse than in the next best alternative scenario. This scenario can be a rehabilitation plan (Sanierungsplan) under the IO, the sale of the entire business or its liquidation in an insolvency proceeding.
4.6.4. Cross-class cram-down (fairness test)
If the required majority is not reached in every class, Section 36 ReO also allows for a cross-class cram-down (klassenübergreifender Cram-down). According to this provision a plan can still be confirmed if (i) the majority of classes including the secured creditors or the majority of the “in the money” classes voted in favour of the plan, and (ii) dissenting creditor classes are not treated worse than same ranking and treated better than subordinated classes. In this context, the Austrian legislator has explicitly implemented the relative priority rule (and not the absolute priority rule) and justified this with the fact that already the IO allows for the relative priority rule when dealing with statutorily subordinated creditors. Other than in other countries where a so-called “relaxed absolute priority rule” (meaning possible exceptions from the absolute priority rule) is applied, the ReO goes a different route setting the relative priority rule as the standard rule to be respected.
If a dissenting creditor raises a breach of the best interest test or the fairness test ( requirements of a cross-class cram-down) within or at the latest seven days after the restructuring plan hearing, the debtor’s business must be evaluated in order to assess whether such breach does in fact exist (Section 38 ReO). The court can appoint an external expert or ask the restructuring expert to perform this evaluation (Section 38 (2) ReO).
If the court confirms the plan, any dissenting creditor can file an appeal against the decision which has as a general rule no suspensive effect (Section 40 (2) ReO). The same applies for the debtor and any creditor voting in favour of the plan in relation to a negative court decision.
In case of a successful appeal against the sanctioned plan the court can still uphold its decision if this is in the best interest of the creditors. However, in such a case, the debtor must pay compensation to the successfully challenging dissenting creditor (Section 40 (5) ReO). The option to uphold challenged court decisions is to be welcomed, but the way the ReO legislator has implemented it is partly inconsistent, for instance, why not generally give the restructuring court more flexibility in upholding decisions being in the best interest of creditors despite minor grounds for refusal? In addition to that, this approach will likely bring about more disputes (especially on the determination of the amount of compensation).
4.6.6. Effects of a restructuring plan
The sanctioned and effective plan is binding on all affected creditors, regardless of their consenting or dissenting vote. As mentioned previously, only those creditors whose claims are reduced or extended may be referred to as “affected creditors”. Naturally, creditors not included in the plan are not bound by the plan (Section 39 (1) ReO).
Security granted by third parties is not affected and can also not be included in the plan against the will of the secured creditor. Still, from the perspective of the debtor the “principle of single payment” applies, meaning that payment of the agreed restructuring plan quota by the debtor to “its” creditor also releases the debtor from recourse claims towards third-party guarantors, pledgors etc. (Section 39 (4) ReO in connection with Section 156 (2) IO).
4.7. (Missing) possibilities for a debt-for-equity swap and other corporate measures
The ReO does not provide for the option of a debt-for-equity swap against the will of the equity holders. Section 37 ReO more or less quotes Article 12 and recital 57 PRD 2019, stating that equity holders shall not be allowed to unreasonably prevent or create obstacles to the adoption and confirmation and implementation of a restructuring plan. At the same time, Section 37 (1) ReO states that if the restructuring plan provides measures which require the consent of the equity holders, the provisions of corporate law must be respected. Only if the plan does not interfere with the legal or economic position (rechtliche oder wirtschaftliche Stellung) of the equity holder, the court can be asked to replace the consent of a non-consenting equity holder. As in practice, most measures relating to the debtor company will directly or at least indirectly interfere with the legal or economic position of shareholders, in most of the cases any restructuring may be at the risk of the equity holders taking potential hold-out positions. Furthermore, it remains uncertain if this replacement of the shareholders’ consent is applicable to all individual plan measures or only to the initiation of restructuring proceedings.
The lack of innovation of the ReO legislator has also been criticised during the legislative process. This “self-restraint” was still not entirely surprising as already in the last large insolvency reform in 2010, the inclusion of a debt-for-equity swap was discussed and partly demanded, but at the end not implemented. It remains to be seen whether and how this discussion will develop in the future.
4.8. Executory contracts
As already mentioned in Section 4.5.5 under “plan measures”, a restructuring plan cannot provide for a forced amendment and/or termination of executory contracts without the consent of the other party. Contract law still applies. On this point, Austrian law therefore lacks behind other jurisdictions such as the Netherlands. This was partly addressed throughout the legislative process but as far as can be seen no substantive discussion on the implementation of such termination rights has taken place yet.
4.9. International jurisdiction and recognition
As stated above (Section 4.3), the jurisdiction for ReO-proceedings follows the rules for insolvency proceedings (Section 4 ReO in connection with Section 63 IO). The competent court is therefore the court where the debtor operates its business at the time of filing the application. This rule determines the jurisdiction within Austria. Whether it also determines the international jurisdiction is not clear yet. The EIR 2015 is without any doubt not applicable to restructuring proceedings due to their confidentiality (except for European restructuring proceedings, see below Section 4.10). Still, it can be argued that the Brussels Ia Regulation applies. The opposite view denies the applicability of the Brussels Ia Regulation with good arguments and determines the international jurisdiction based on Austrian autonomous law. In that case, international jurisdiction of Austrian courts is given if the debtor operates its business in Austria (Section 27a of the Austrian “Jurisdiktionsnorm” in connection with Section 63 IO). Nevertheless, a clarification by the European Court of Justice seems necessary.
The recognition of confidential restructuring proceedings in the EU is neither addressed in the ReO nor in the PRD 2019; especially the latter is hardly understandable to us. Similar to the international jurisdiction, the applicability of the Brussels Ia Regulation comes into question. Right now, as mentioned above the tendency in the Austrian literature convincingly argues that confidential restructuring proceedings cannot fall within the scope of Brussels Ia based on the exception of Article 1 (2) lit b of the Regulation. As a result, recognition would depend on autonomous Austrian law and here most likely Section 240 IO applies per analogiam. Again, a clarification by the European Court of Justice seems unavoidable. Until then, not only in the Austrian context significant uncertainty remains in confidential restructurings with cross-border implications.
4.10. European restructuring proceedings
In contrast to regular and “simplified” restructuring proceedings (on the latter see below Section 4.11) the initiation of so-called European restructuring proceedings (Section 44 ReO) is announced publicly upon request of the debtor. The prevailing opinion is that the European restructuring proceedings are a separate type of procedure. It may also offer several advantages to the debtor:
- To start with, the EIR 2015 is applicable in case of cross-border implications because the procedure is not conducted in camera (other than regular proceedings, see above Section 4.2). Meanwhile, the European restructuring procedure is already part of Annex A EIR 2015. Therefore, European restructuring proceedings can be opened in Austria if the debtor has an Austrian COMI (Article3 para 1 EIR 2015); consequently, an establishment in Austria also allows secondary / territorial proceedings (Article 3 para 2 EIR 2015). Moreover, automatic mutual recognition of (foreign) court decisions is guaranteed (see especially Article 19 EIR 2015 et seq).
- Furthermore, the debtor can ask the court to publish a request to the creditors to file their claims (Forderungsanmeldung) (Section 44 para 4 ReO). Creditors who do not file their claim in time may not participate in the proceedings, yet the restructuring plan can be binding on them(!).
- Also, a stay of enforcement actions may be extended to all creditors (Section 44 para 3 ReO), which is only permissible within this type of procedure (see above Section 4.4.1).
4.11. Simplified restructuring proceedings
The arguably most innovative invention of the ReO legislator are the so-called simplified restructuring proceedings (Vereinfachtes Restrukturierungsverfahren) which are addressed in only one Section (Section 45). If only financial creditors are affected (the term may be interpreted in a broad way and can include any claims with financing nature such as e.g. supply loans), most aspects of the regular proceedings can be short-tracked.
- Instead of the voting on a restructuring plan, the debtor shall already present a restructuring agreement signed by the necessary creditor majorities (Section 45 (4) n1 ReO, see below).
- The proceedings are always debtor in possession, no restructuring expert can be appointed (Section 45 (5) ReO).
- Safeguards such as the appropriateness of the class formation or the best-interest test shall be ensured through an expert opinion confirming that all statutory requirements are met (Section 45 (8) ReO).
- Through this slim process, such proceedings can in fact be fast-track proceedings; they can be performed and become legally effective within only a few weeks. Furthermore, the outsourcing of some criteria to an expert opinion might contribute to a higher planning (and deal) security. It therefore does not come as a surprise that the proceedings were also broadly welcomed especially by practitioners, presumably closing a gap in private workouts and potentially taking the wind out of the sails of hold-out creditors.
However, there are still some points worth criticising:
- The majority requirements are higher than in normal proceedings as 75% of the claims in value in every creditor class must agree to the plan (Section 45 (3) n 3 ReO). With this majority requirement in every class, the option of a cross-class cram-down is excluded for simplified proceedings. This is not comprehensible, has also been criticised in the legislative process and it may even be questioned whether this was in fact intended by the legislator.
- Simplified proceedings do finally not allow for a stay (Section 45 (6) ReO) which may also be seen critically.
Notwithstanding this criticism, we expect that already the existence of the simplified proceedings can and will change the negotiation powers in restructurings which is why this invention of the legislator is to be absolutely welcomed.
All in all, the analysis made in this article shows that there is certainly need to still improve the ReO in several aspects. Nevertheless, there are also positive points. The fast-tack proceedings for financial restructurings show the innovative capacity of the Austrian legislator. Also, the pragmatic and clear commitment to applying the relative priority rule is, considering the partly controversial discussion amongst European scholars, in our eyes remarkable. In addition to that, the fact that debtors can choose between confidential (regular and fast-track) as well as published (European) proceedings brings more options and flexibilities to rescue businesses in financial difficulties.
Still, the fact that the ReO legislator included partly unclear and in our eyes in some aspects also excessive protection mechanisms as well as cost-intensive documentation and examination requirements takes away attractiveness of the ReO proceedings. This brings significant uncertainty for debtors and makes the proceedings at the same time costly, likely too costly for most of the SMEs.
Also, the limited scope of restructuring measures which can actually be imposed against dissenting creditors takes away a lot of flexibility. Finally, the more or less entirely missing link between the ReO and Austrian corporate law leads to the very unsatisfying result that in practice, restructurings must also in future still be “structured around” non-constructive equity holders, who may even be able to get an unjustified “free ride”.
Reading this, it may not come as a surprise that until the finalisation of this paper, not a single case of a restructuring proceeding under the ReO is known yet. The fact that generally also the number of insolvencies is just recovering from an all-time low caused by the public COVID-19 support measures may have contributed to this. Still, in summary we expect that at least the simplified restructuring proceeding will find its place in the market for financial restructurings. Furthermore, the mere possibility to cram-down dissenting creditors in formal restructuring proceedings might be useful to negotiate private workouts. Whether regular and European restructuring proceedings in the current form will be frequently used is, however, more than doubtful.
In summary the Austrian implementation of the PRD 2019 through the ReO has brought several aspects which might facilitate the desired strengthening of a preventive restructuring culture as well as a general further development of relevant aspects of Austrian law. In order to become a success model and a real game changer, the ReO should still in the details be fundamentally revised, simplified and shortened. Otherwise, it is to be expected that for the large number of Austrian companies and entrepreneurs, the proceedings will be too complicated, uncertain and expensive, leaving the practical scope of application for larger and especially financial restructurings. The opportunity to implement proceedings practicable and attractive for the broader Austrian business landscape has therefore so far been missed.
 This paper was finalised on 6 June 2022.
 Directive (EU) 2019/1023 of the European Parliament and of the Council of 20 June 2019 on preventive restructuring frameworks, on discharge of debt and disqualifications, and on measures to increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt, and amending Directive (EU) 2017/1132 (Directive on restructuring and insolvency).
 This paper does only focus on the Austrian implementation of Preventive Restructuring Frameworks under Title II of PRD 2019. The implementation of other aspects of the PRD 2019 (such as the Title III on the Discharge of Debt and Disqualifications) are not addressed.
 National Law Gazette Nr. 1915/337.
 Federal Law Gazette Nr. I 1997/114.
 See Legislative Materials, Regierungsvorlage 734/XX. 10 June 1997 p. 75.
 Such reorganisation need is presumed (Section 22 (1) n 1 URG) if certain financial figures are met (equity ratio according to Section 23 URG below 8 % and fictional debt repayment period according to Section 24 URG exceeding 15 years).
 See e.g. G. Wabl, ‘Preventive Restructuring Mechanisms in Austria: More Flexibility Needed? A Practical Analysis of Existing Tools and Possible International Impacts’, International Corporate Rescue, 2017, 14(4), p. 249.
 These points were already raised in the legislative process preceding the URG (see Legislative Materials, Regierungsvorlage 734/XX. 10 June 1997 p. 75-76); see also G. Wabl above note 8.
 Because of its very low practical relevance it was expected that the implementation of the PRD 2019 would either lead to an amendment or a repeal of the URG. Surprisingly, neither of that happened (this was criticised through the legislative process on the ReO e.g. by M. Trenker & M. Lutschounig, Statement of the University of Innsbruck, available at: <https://www.parlament.gv.at/PAKT/VHG/XXVII/SNME/SNME_78341/index.shtml> [last viewed 12 April 2022]).
 See e.g. G. Gassner & G. Wabl, ‘The new EU Directive on restructuring and insolvency and its implications for Austria’, Insolvency and Restructuring International, 13(2), p. 8. Such restructuring principles are based on eight principals on out-of-court restructurings basically comparable to the eight international associations of restructuring, insolvency and bankruptcy professionals (INSOL Global Principles for Multi-Creditor Workouts).
 See further G. Wabl, above note 8, p. 247 et seq.
 See for further considerations G. Wabl, above note 8, p. 251 et seq.
 Insolvency Law Amendment Act 2010, Federal Law Gazette Nr. I 2010/29. A. Konecny, ‘Das Verfahrensgebäude der Insolvenzordnung‘, in A. Konecny (ed): ZIK Spezial: IRÄG 2010, LexisNexis: Wien, 2010, p. 1-21 (p. 5-6) („einheitliches Insolvenzverfahren“); see also G. Kodek in C. Koller, E. Lovrek & M. Spitzer (eds), IO – Insolvenzordnung, Österreich: Wien, 2019, § 1 para 14-15.
 E.g. through a „Liquidationstreuhandschaft“ (Section 157m IO), see S. Riel, ‘Verfahrensrechtliche Fragen beim Treuhandsanierungsplan‘, Österreichisches Bankarchiv, 2015, 63 (12), p. 880-889 (p. 881); M. Trenker, Treuhänderüberwachung der Sanierungsplanerfüllung, Manz: Wien, 2017, p. 219-220.
 See further G. Wabl, above note 8 p. 249 et seq.
 Out of the 3,044 insolvency proceedings initiated in 2019 (last published statistics not influenced by the COVID-19-pandemic) as regards companies only a total of 32 were rehabilitation proceedings with self-administration (see KSV1870, Insolvenzentwicklung Unternehmen 2019, available at: <https://www.ksv.at/KSV1870_Insolvenzstatistik_Unternehmen_2019_final> [last viewed 12 April 2022]).
 In 2019, the overall number of rehabilitation proceedings without self-administration was 342 (see ibid).
 See e.g. an interview given by the Austrian Minister of Justice, Ms. Alma Zadic, in October 2020, available at <https://www.wienerzeitung.at/nachrichten/wirtschaft/oesterreich/2080337-Justizministerin-will-Insolvenzrecht-bis-Ende-Jaenner-reformieren.html> (last viewed 12 April 2022), according to which an "overall reform of insolvency law" containing the requirements of the PRD 20119 should serve to avoid a "wave of bankruptcies” caused by COVID-19.
 See Ministerial Draft Nr. 96/XXVII. 22 February 2021; this was followed by a second draft Legislative Materials, Regierungsvorlage 950/XXVII 16 June 2021.
 The draft was the result of numerous meetings of a working group set up by the Austrian Ministry of Justice consisting of experts from the ministry, judiciary, academia and practice (see e.g. A. Konecny, ‘ZIK AKTUELL’, Zeitschrift für Insolvenzrecht und Kreditschutz, 2019, 25 (5), p. 161).
 The statements are publicly available on the website of the Parliament of The Republic of Austria (last viewed 12 April 2022); see further G. Gassner, E. Welten & G. Wabl, ‘Austrian Restructuring Code in force’, Hero 2021 B-069: 18 August 2021.
 M. Trenker & M. Lutschounig, above note 10, p. 2.
 R. Wolff, Statement of the Austrian Bar Association (expert S. Riel), available at: <https://www.parlament.gv.at/PAKT/VHG/XXV/SN/SN_00535/imfname_633912.pdf> (last viewed 12 April 2022).
 G. Wabl & G. Gassner, PRD-Implementation Act: Statement to the draft proposal, accessible at: <https://www.parlament.gv.at/PAKT/VHG/XXVII/ME/ME_00096/index.shtml>; M. Trenker & M. Lutschounig, above note 10, p. 2 (both last viewed 12 April 2022).
 A. Isola, S. Weileder, D. Seidl & J. Schnur, Statement on the draft proposal 96/ME XXVII. GP, available at: <https://www.parlament.gv.at/PAKT/VHG/XXVII/SNME/SNME_78259/index.shtml> (last viewed 12 April 2022).
 See A. Isola, S. Weileder, D. Seidl & J. Schnur above note 27, p. 2 et seq; G. Wabl & G. Gassner, above note 26, p. 4 et seq.; M. Trenker & M. Lutschounig, above note 10, p. 66; similar also R. Wolff, above note 25, p. 20.
 M. Trenker & M. Lutschounig, above note 10, p. 19.
 S. Madaus, Österreichs Entwurf einer Restrukturierungsordnung – das Planverfahren der InsO 1999, accessible at: <https://stephanmadaus.de/2021/02/24/oesterreichs-entwurf-einer-restrukturierungsordnung-das-planverfahren-der-inso-1999/> (last viewed 12 April 2022) (dealing the first draft of the ReO).
 See G. Gassner, E. Welten & G. Wabl, above note 23.
 See for Germany e.g. S. Madaus & D. Ehmke, ‘Germany: Still Waiting for the Revolution in Restructuring to Come?’, HERO 2022 / W-004 and for the Netherlands e.g. J.M.G.J. Boon, R.D. Vriesendorp & H. Koster, ‘The WHOA: the Breakthrough for a Dutch Business Rescue Culture’, HERO 2022, forthcoming.
 M. Schimka, ‘Gesellschaftsrechtliche Überlegungen zur Restrukturierungsordnung‘, Der Gesellschafter, 2021, 50(6), p. 374-379 (p. 378); M. Trenker in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), ReO – Restrukturierungsordnung und die weiteren Bestimmungen des RIRUG, Manz: Wien, 2022, ReO § 27 para 6; see also F. Mohr, ‘Einleitung und Ablauf des Restrukturierungsverfahrens‘, in: A. Konecny (ed), ZIK-Spezial: RIRUG – Neuerungen im Restrukturierungs- und Insolvenzrecht, LexisNexis: Wien, 2021, p. 67-84 (p. 70).
 M. Trenker above note 33.
 Imminent illiquidity also allows the debtor to apply for rehabilitation proceedings (see Section 167 (2) IO and above Section 2.3.2).
 M. Trenker, ‘Was will und kann die ReO? – Anwendungsbereich, Zweck und Mittel von Restrukturierungsverfahren’, in: A. Konecny (ed), ZIK-Spezial: RIRUG – Neuerungen im Restrukturierungs- und Insolvenzrecht, LexisNexis: Wien, 2021, p. 33-49 (p. 37).
 If the debtor only presents a restructuring concept in the application for the opening of restructuring proceedings, a formalised restructuring plan is generally to be presented at the latest within 60 days after the opening of the proceedings (Section 8 (2) ReO).
 See for the relevance of the concept of viability in the ReO further M. Trenker, above note 36, p. 37.
 Legislative Materials above note 21, p. 1; M. Trenker, above note 36, p. 37-38; D. Aigner in: D. Aigner, D. Gerstberger, N. Mooseder & T. Zeitler (eds), Praxishandbuch Restrukturierungsordnung I ReO, Linde: Wien, 2022, p. 38-39.
 Legislative Materials above note 21, p. 7.
 Section 16 (2) last sentence ReO still makes clear that any restrictions ruled by the restructuring court may still not lead to the same extent of restrictions which are mandatory in Austrian bankruptcy proceedings (i.e. basically the replacement of the debtor by an administrator). For further details see S. Riel in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 16 para 11; I. Kapetanovic in: S. Mock & M. Zoppel (eds), ReO I Restrukturierungsordnung, Linde: Wien, 2022, ReO § 16 para 14; S. Riel, ‘Der Restrukturierungsbeauftragte‘, in: A. Konecny (ed), ZIK-Spezial: RIRUG – Neuerungen im Restrukturierungs- und Insolvenzrecht, LexisNexis: Wien, 2021, p. 85-114 (p. 104).
 Regulation (EU) 2015/878 of the European Parliament and the Council of 20 May 2015 on insolvency proceedings (recast).
 Already criticised by M. Trenker & M. Lutschounig, above note 10, p. 30-31.
 The debtor has the monopoly on initiative (Initiativmonopol) (M. Trenker above note 33, ReO § 27 para 6; see further P. Fidler in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 1 para 37; S. Mock in: S. Mock & M. Zoppel (eds), above note 41, ReO § 1 para 4).
 M. Trenker above note 33, ReO § 43 para 6 et seq.
 Legislative Materials above note 21, p. 4.
 G. Wabl & G. Gassner, ‘Geschäftsleitung und Anteilsinhaber‘, in: A. Konecny (ed), ZIK-Spezial: RIRUG – Neuerungen im Restrukturierungs- und Insolvenzrecht, LexisNexis: Wien, 2021, p. 201-219 (p. 206); P. Fidler in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 1 para 62; M. Schimka, above note 33, p. 376.
 See further including a critical assessment G. Wabl & G. Gassner, above note 47, p. 201-202; for a general overview of the relevant aspects of the liability regime see already G. Wabl ‘Duties of Directors Where there is a Likelihood of Insolvency - Results of an empirical survey of 107 Austrian insolvency administrators’ in: Gant INSOL Europe Booklet: Copenhagen, 2018, p. 206 et seq.
 A. Reckenzaun, ‘Vollstreckungssperre und Insolvenzschutz‘, in: A. Konecny (ed), ZIK-Spezial: RIRUG – Neuerungen im Restrukturierungs- und Insolvenzrecht, LexisNexis: Wien, 2021, p. 115-126 (p. 115).
 Legislative Materials above note 21, p. 11 (similar purpose as Article 6 PRD).
 A. Reckenzaun, above note 49, p. 116-117; N. Mooseder & D. Gerstberger in: D. Aigner, D. Gerstberger, N. Mooseder & T. Zeitler (eds), above note 39, p. 159.
 A. Konecny in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 19 para 5 and 44; M. Simsa & C. Stegner in: S. Mock & M. Zoppel (eds), above note 41, ReO § 24 para 9.
 In the context of to the suspension of a duty to file linked to over-indebtedness, Section 25 (1) ReO provides for a further liability release for directors linked to the so called “payment ban” (Zahlungsverbot) under Austrian corporate law, which ban shall ensure the equal treatment of creditors when a company is already materially insolvent; see G. Wabl & G. Gassner, above note 47, p. 212; see further P. Fidler, above note 33, ReO § 25 para 5 et seq.; M. Trenker & M. Lutschounig, above note 10, p. 52-53.
 G. Wabl & G. Gassner, above note 47, p. 211; dissenting (in our eyes incorrectly) P. Fidler in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 24 para 19.
 P. Fidler in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 24 para 22 et seq; M. Simsa & C. Stegner in: S. Mock & M. Zoppel (eds), above note 41, ReO § 24 para 16; A. Reckenzaun, above note 49, p. 123.
 P. Anzenberger, ‘Vertragsschutz und unwirksame Vereinbarungen nach der ReO‘, in: A. Konecny (ed), ZIK-Spezial: RIRUG – Neuerungen im Restrukturierungs- und Insolvenzrecht, LexisNexis: Wien, 2021, p. 127-141 (p. 127).
 The Austrian legislator therefore follows the understanding of essential executory contracts in Article 7 (4) PRD 2019.
 M. Trenker in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 26 para 8 et seq.
 P. Anzenberger, above note 56, p. 131 with reference to Section 3 (1) ReO.
 P. Anzenberger, above note 56, p. 139; M. Trenker in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 26 para 33.
 M. Trenker, above note 33, § 27 ReO para 2 and 38.
 Legislative Materials above note 21, p. 17; M. Trenker in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 29 para 2, 6; M. Fellner in: S. Mock & M. Zoppel (eds), above note 41, ReO § 29 para 15.
 If certain creditor classes are in the respective case not existing or shall not be affected by the plan, also no class for such creditors must be formed (M. Trenker in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 29 para 7).
 U. Reisch, ‘Restrukturierungsverfahren – Planinhalte, Planwirkungen‘, in: A. Konecny (ed), ZIK-Spezial: RIRUG – Neuerungen im Restrukturierungs- und Insolvenzrecht, LexisNexis: Wien, 2021, p. 143-162 (p. 149); M. Trenker in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 28 para 44, § 34 para 13 et seq.
 M. Trenker in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 29 para 6; see also U. Reisch, above note 64, p. 149.
 See e.g. M. Trenker in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 29 para 6 e.g. referring to scenarios of different types of secured creditors.
 Legislative Materials above note 21p. 2.
 See M. Trenker in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 30 para 15 et seq.
 Partly critical M. Trenker in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 30 para 16 with reference to Legislative Materials above note 21, p. 16.
 See also M. Trenker in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 30 para 1.
 See e.g. J.M.G.J. Boon, R.D. Vriesendorp & H. Koster, ‘The WHOA: the Breakthrough for a Dutch Business Rescue Culture’, HERO 2022, forthcoming.
 See also M. Trenker in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 28 para 4 (“Minimalkonzept“).
 See for the general differentiation also M. Trenker, above note 36, p. 41-42; M. Trenker in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 27 para 9.
 Legislative Materials, above note 21, p. 17.
 Legislative Materials, above note 21, p. 4.
 See in detail M. Trenker in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 29 para 4, 6-7.
 See also M. Trenker in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 28 para 5.
 See details M. Trenker, above note 36, p. 48-49; M. Trenker in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 27 para 9; M. Nitsche, Lexis Briefing Restrukturierungsplan, available at LexisNexis: (last viewed 12 April 2022).
 See for considerations on the selection of the “right” procedure also A. Isola, S. Weileder & D. Seidl, ‘Strategische Sanierungsplanung – Kriterien für die Verfahrenswahl‘, in: A. Konecny (ed), ZIK-Spezial: RIRUG – Neuerungen im Restrukturierungs- und Insolvenzrecht, LexisNexis: Wien, 2021, p. 19-32 (p. 19-20).
 See in detail M. Trenker in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO §§ 36a, 36b IO para 16 et seq; see also C. Jaufer & A. Painsi, ‘Restrukturierungsverfahren: (Neu-)Finanzierungen und Transaktionen‘, in: A. Konecny (ed), ZIK-Spezial: RIRUG – Neuerungen im Restrukturierungs- und Insolvenzrecht, LexisNexis: Wien, 2021, p. 163-172 (p. 167-168).
 See in detail M. Trenker in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 32 para 12; see further N. Mooseder & D. Gerstberger in: D. Aigner, D. Gerstberger, N. Mooseder & T. Zeitler (eds), above note 39, p. 237-238.
 M. Trenker in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 34 para 13.
 See in detail M. Trenker in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 39 para 28-29.
 M. Trenker in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 34 para 4.
 M. Nitsche above note 78; U. Reisch, above note 64, p. 157; P. Fidler in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 35 para 8 et seq, see particularly para 23-24; see also Legislative Materials above note 21 p. 20.
 The “ranking” follows the hierarchy in insolvency proceedings (Legislative Materials above note 21 p. 20); see in detail M. Lutschounig in: M. Zoppel & S. Mock (eds), above note 41, ReO § 36 para 8-9.
 Legislative Materials above note 21 p. 20.
 See e.g. for the Netherlands J.M.G.J. Boon, R.D. Vriesendorp & H. Koster, ‘The WHOA: the Breakthrough for a Dutch Business Rescue Culture’, HERO 2022, forthcoming.
 See P. Fidler in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 38 para 33 et seq; M. Lutschounig in: M. Zoppel & S. Mock (eds), above note 41, ReO § 35 para 14.
 The legal nature of this compensation is unfortunately not addressed in the ReO; for further reflections on this compensation see M. Trenker in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 40 para 45-48.
 See M. Trenker in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 40 para 1-2.
 See in detail M. Trenker in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 39 para 1-2.
 M. Trenker in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 39 para 18 (Grundsatz der einmaligen Zahlungspflicht).
 G. Wabl & G. Gassner, above note 47, p. 213 et seq and p. 218 (also arguing that because of the very limited scope of the safeguards in Section 37 ReO the Austrian legislator might have failed the requirements of Article 12 PRD 2019).
 Whereas G. Wabl & G. Gassner, above note 47, p. 215 et seq, and P. Fidler in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 37 para 50 et seq, argue that this provision applies to all corporate measures, Legislative Materials above note 21p. 21 indicate the latter; see also M. Trenker & M. Lutschounig, above note 10, p. 65; M. Lutschounig in: M. Zoppel & S. Mock (eds), above note 41, ReO § 37 para 14.
 See sources above note 26.
 At that time the legislator stated in the materials that there was no need for such debt equity swap in practice (Legislative Materials Regierungsvorlage 612/XXIV. 21 April 2010 p. 3).
 See also G. Wabl & G. Gassner, above note 47, p. 218.
 See e.g. J.M.G.J. Boon, R.D. Vriesendorp & H. Koster , ‘The WHOA: the Breakthrough for a Dutch Business Rescue Culture’, HERO 2022, forthcoming; on the Dutch WHOA see also G. Wabl & G.-J. Boon ‘Das neue “Dutch scheme” – die Niederlande am Weg zum neuen Restrukturierungshub?‘, ZIK 2020, 173(4) p. 151-156.
 See e.g. G. Wabl & G. Gassner above note 26, p. 2 et seq.
 R. Weber-Wilfert, ‘Das Europäische Restrukturierungsverfahren‘, in: A. Konecny (ed), ZIK-Spezial: RIRUG – Neuerungen im Restrukturierungs- und Insolvenzrecht, LexisNexis: Wien, 2021, p. 173-185 (p. 181, 183); A. Konecny in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 4 para 11 et seq, 14.
 Regulation (EU) 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast).
 See e.g. D. Skauradszun, ‘Die Restrukturierungsrichtlinie und das „verschwitzte“ internationale Zivilverfahrensrecht‘, Zeitschrift für Wirtschaftsrecht, 2019, 40(32), p. 1501-1507 (p. 1503); J. Schmidt, ‘Präventiver Restrukturierungsrahmen: Internationale Zuständigkeit, Anerkennung und anwendbares Recht‘, Zeitschrift für das gesamte Insolvenzrecht, 2021, 24 (13-14), p. 654-661 (p. 656 et seq).
 A. Konecny in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 4 para 16; R. Weber-Wilfert, above note 101, p. 183; M. Trenker & M. Lutschounig, above note 10, p. 29 et seq; see also C. Thole, ‘Vertrauliche Restrukturierungsverfahren: Internationale Zuständigkeit, anwendbares Recht und Anerkennung‘, Zeitschrift für Wirtschaftsrecht, 2021, 42 (42), p. 2153-2162 (p. 2156).
 R. Weber-Wilfert, above note 101, p. 183; A. Konecny in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 4 para 16.
 R. Weber-Wilfert, above note 101, p. 181-182; A. Konecny in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 4 para 15; for Germany see C. Thole, above note 104, p. 2154-2155.
 In this respect, the designation “European” is misleading as a cross-border reference is not a procedural requirement; see A. Konecny, ‘Die neuen Verfahrensgebäude im Restrukturierungs- und Insolvenzrecht‘, in: A. Konecny (ed), ZIK-Spezial: RIRUG – Neuerungen im Restrukturierungs- und Insolvenzrecht, LexisNexis: Wien, 2021, p. 1-18 (p. 11); M. Trenker & M. Lutschounig, above note 10, p. 18-19.
 A. Konecny, above note 107, p. 6; A. Konecny in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 44 para 1; dissenting R. Weber-Wilfert, above note 101, p. 174.
 A. Konecny in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 4 para 12; R. Weber-Wilfert, above note 101, p. 179-180.
 See Regulation (EU) 2021/2260 of the European Parliament and of the Council of 15 December 2021 amending Regulation (EU) 2015/848 on insolvency proceedings to replace its Annexes A and B.
 A. Konecny in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 4 para 13.
 R. Weber-Wilfert, above note 101, p. 179.
 More detailed A. Konecny in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 44 para 67 et seq.
 See A. Konecny in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 44 para 55 et seq.
 Legislative Materials above note 21p. 25; W. Höller, M. Simsa & P. Wetter, ‘Das vereinfachte Restrukturierungsverfahren‘ in: A. Konecny (ed), ZIK-Spezial: RIRUG – Neuerungen im Restrukturierungs- und Insolvenzrecht, LexisNexis: Wien, 2021, p. 187-200 (p. 190); P. Fidler in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 45 para 12 et seq.
 G. Gassner, E. Welten & G. Wabl, above note 23; W. Höller, M. Simsa & P. Wetter, above note 115, p. 187-188, 200.
 W. Höller, M. Simsa & P. Wetter, above note 115, p. 193; P. Fidler in: P. Fidler, A. Konecny, S. Riel & M. Trenker (eds), above note 33, ReO § 45 para 51.
 See G. Wabl & G. Gassner, above note 26, p. 8 et seq.
 See G. Wabl & G. Gassner, above note 26, p. 7 et seq.
 G. Gassner, E. Welten & G. Wabl, above note 23.