Austria has had a new federal government since the beginning of March. The new government's programme, which sets out its planned initiatives, includes a number of surprises that suggest an eventful time ahead for Austrian insolvency law.

Pledge register

Probably the most significant planned measure is the introduction of a register for pledges of movable assets. Previous efforts to introduce a pledge register in Austria in the 1970s and 2000s ultimately failed without coming close to actual implementation.

In Austria, a pledge needs to be 'made public' to be effective. What this means in practice is different for each type of asset – where feasible, movable assets need to be handed over to the pledgee, where this is not feasible (eg for large scale machines) the pledge must be made evident by some form of sign fixed to the pledged asset. This requirement repeatedly creates unpleasant surprises for creditors in insolvency proceedings, for example where the signs showing that large scale production machines are pledged, get 'misplaced' leading to the pledge becoming arguably ineffective in insolvency proceedings. 

What's next?

It remains to be seen whether the government will actually manage to prevent these unpleasant surprises for creditors by introducing a pledge register.

Find out more

To discuss the issues raised in this article in more detail, please contact a member of our Restructuring and Insolvency team.