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Felix Kernbichler

This chapter presents an overview of the Austrian Insolvency Code (Insolvenzordnung – IO). It focuses on insolvent businesses and introduces their possibilities to reorganize or to orderly liquidate in an Austrian insolvency proceeding. After providing the legal framework of the Austrian Insolvency Code, the chapter puts its main emphasis on the treatment of executory contracts in insolvency. The latest major reform of Austrian corporate insolvency law in 2010 altered the approach towards executory contracts in a quite spectacular fashion: in light of the worldwide economic crisis, the Austrian legislature made an attempt to aid businesses in their efforts to reorganize after they have filed for insolvency. In order to achieve its goal, it put an automatic stay of contracts in insolvency proceedings in place. At the moment, however, it is fairly easy for counterparties to avoid such automatic stay. The current provisions simply contain too many loopholes. The good news is: they can be marked quite accurately. For the Austrian Insolvency Code, this gives every reason to hope that the legislature will see the next insolvency law reform as a chance to close those loopholes. For foreign legislatures, this can serve as an inspiration for modelling their own regulations in the future.