Insolvency and Creditor Rights

Questions and Answers

What happens when there are insufficient assets to cover the costs of opening insolvency proceedings?

The court will open proceedings regardless of assets.

The debtor will lose their trade license. (correct)

Creditors will receive their claims in full.

The company will automatically dissolve.

How are creditors treated when security interests like pledges or mortgages are not available?

They are treated equally with few exceptions. (correct)

They are treated unequally based on their claims.

They receive nothing if the debtor is insolvent.

They will receive a greater portion of their claims.

What is a significant difference between insolvency proceedings for companies and natural persons?

Natural persons can obtain debt discharge against creditors' wishes. (correct)

Natural persons lose their trade licenses immediately.

Insolvency proceedings for companies are more expensive.

Creditors have more rights with natural persons.

What is the maximum amount required for opening insolvency proceedings when assets are insufficient?

EUR 4,000 Signup and view all the answers

Which of the following statements regarding the trade license is correct during insolvency proceedings?

The debtor can register a new trade during the proceedings. Signup and view all the answers

What is a consequence for officers or shareholders of a company if they cannot pay the necessary amount to open insolvency proceedings?

The company will not be allowed to open proceedings. Signup and view all the answers

How long is the typical period after which a debtor's trade license is expunged if proceedings are not opened?

Three years Signup and view all the answers

What requirement might trigger the appointment of a manager under the Trade Act?

Insolvency proceedings are initiated. Signup and view all the answers

What is the primary aim of restructuring proceedings in Austria?

To rescue the company Signup and view all the answers

Which of the following options represents a situation that can lead to insolvency proceedings in Austria?

Inability to pay debts Signup and view all the answers

What must a debtor do if they are unable to pay debts in Austria?

Initiate proceedings within 60 days Signup and view all the answers

What distinguishes private insolvency proceedings from other types of insolvency in Austria?

They can be utilized by traders and consumers Signup and view all the answers

In what case can a creditor file a petition for insolvency proceedings?

Whenever the debtor has unpaid debts Signup and view all the answers

Who is responsible for administering the estate during bankruptcy proceedings?

An appointed insolvency practitioner Signup and view all the answers

What is a potential consequence for a debtor who fails to initiate insolvency proceedings within the 60-day period?

Personal liability or criminal charges Signup and view all the answers

What generally happens to claims filed by creditors in insolvency proceedings?

They are converted into monetary claims Signup and view all the answers

What is a key characteristic of sentences imposed for sexual crimes in relation to criminal records?

They are permanently listed on criminal records. Signup and view all the answers

What type of law is primarily applied by administrative authorities in Austria?

Administrative criminal law Signup and view all the answers

Which of the following is NOT true about fines imposed by administrative authorities?

They are recorded in the criminal records. Signup and view all the answers

In Austria, which criteria influence whether an offence is classified under judicial criminal law or administrative criminal law?

The severity of the offence. Signup and view all the answers

What is a consequence for companies that have a denial of opening insolvency proceedings due to insufficient assets?

They may have restricted options for registration. Signup and view all the answers

What is the primary focus of the Administrative Offence Act?

To address cross-cutting issues in administrative offences. Signup and view all the answers

How does insolvency affect creditors according to equal treatment principles?

All creditors must be treated equally. Signup and view all the answers

What distinguishes administrative offences from crimes under judicial criminal law?

Judicial crimes are treated more seriously. Signup and view all the answers

Study Notes

General Principles of Insolvency

Creditors without secured interests (pledge/mortgage) must be treated equally, receiving an equal share of claims after debt restructuring or asset liquidation.
Insolvency proceedings initiate only if there's a sufficient asset base to cover costs, or if an advance payment (up to EUR 4,000) is made by the applicant or company officers/shareholders.

Company vs. Individual Insolvency

If a company is insolvent with insufficient assets and cannot cover the initial cost, courts will refuse to open proceedings, leading to loss of trade license for at least three years.
For natural persons, private insolvency processes offer lower costs and potential debt discharge even against creditor opposition. Trade licenses remain unaffected during these proceedings.

Types of Insolvency Proceedings

Austria recognizes different types of bankruptcy:
- Restructuring Proceedings (Sanierungsverfahren): Aim to rescue the business.
- Bankruptcy Proceedings (Konkursverfahren): Focus on winding up the company and selling assets.
- Private Insolvency Proceedings (Privatinsolvenz): Available for both traders and consumers.

Initiating Insolvency

Insolvency occurs when a debtor cannot pay debts (Zahlungsunfähigkeit) or is over-indebted (Überschuldung).
Preventive restructuring proceedings were introduced in July 2021 for instances where insolvency is imminent.
A debtor or creditor can file for insolvency; the debtor must do so within 60 days to avoid personal liability.

Administration of Bankruptcy

Upon opening bankruptcy proceedings, an insolvency practitioner (receiver) is appointed to manage the debtor’s estate.
In restructuring and private insolvency proceedings, debtors may administer their estates under court and special administrator supervision.

Claim Filing and Conversion

Creditors must file their claims, which are usually converted to monetary claims, regardless of their original nature.

Criminal Law Context

Life sentences and certain long-term sentences for sexual crimes remain on criminal records and cannot be expunged.
Administrative criminal law addresses less severe offences, with cases being handled by administrative courts since 2014.
Administrative offences can incur fines without being recorded as crimes but may provoke severe penalties under particular statutes.
Discretion exists for the Austrian legislature to classify offences as judicial crimes or administrative ones, with more serious offences typically qualifying as judicial crimes.

Impact of Insolvency on Business Startups

Bankruptcy can disqualify a person from opening new business proceedings if past insolvency applications lacked sufficient assets unless the disqualification period has expired.
Individuals with minor infractions or fines (e.g., document forgery resulting in only a fine) may still pursue business opportunities.

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Description

Explore the principles of insolvency and the treatment of creditors who cannot rely on security interests like pledges or mortgages. This quiz covers the equal treatment of creditors and the conditions under which proceedings can be opened in insolvency cases. Test your understanding of how claims are managed in such scenarios.