17 April 2020
The Austrian insolvency act (Insolvenzordnung) provides that companies usually have to file for insolvency within 60 days (at the latest) of becoming insolvent. If the company (represented by the management) fails to file for insolvency in time, the management faces liabilities for any damages caused by the failure to file in time. The liabilities include the total losses of all creditors that have claims arising after the business had to file for insolvency.
The Austrian insolvency act defines insolvent as:
Due to the current COVID 19 crisis, a special provision in the Austrian insolvency act – added after a major flood in 2002 - will now become applicable on a national scale for the first time ever.
Section 69 of the Austrian insolvency act provides that when a natural disaster (including pandemics) was cause for the illiquidity, the deadline for filing for insolvency is extended to 120 days.
In an additional effort to grant business more "breathing room" to combat the current crisis, Austria partially suspended the obligation to file for insolvency:
Since the obligation to file for insolvency is, in a way, only deferred, we advise managing directors and board members of over-indebted companies to use the time until 30 June 2020 to prepare forecasts based on the premise of the "re-start" of the economy.