In principle, there is an obligation to file for insolvency as soon as the company is either illiquid or, alternatively, in the case of legal persons (or legal entities for which no natural person has unlimited liability, such as a GmbH & Co KG) as soon as the requirements for over-indebtedness are met. In both cases, the application must be filed by the debtor or the body authorised to represent the debtor without undue delay, but no later than sixty days after it becomes insolvent or over-indebted (Section 69 (2) of the Insolvency Act).
Illiquidity is deemed to exist if a debtor is unable to settle all debts due within a reasonable period of time in terms of good economic performance, in particular if more than five percent of payments can no longer be made on the due date (Supreme Court decision of 19 January2011 in case 3 Ob 99/10w). Over-indebtedness is defined as a situation where liabilities exceed assets and there is no positive outlook for the company to continue as a going concern.
The outbreak of the coronavirus pandemic does not change anything in terms of the obligation to file for insolvency on its merits. However, Austrian insolvency law provides for an extension of the 60-day period in exceptional situations. § Section 69 para 2a Austrian Insolvency Act extends the 60-day period to 120 days in the case of “natural disasters” – the act previously cited as examples “floods, avalanches, snow pressure, landslides, landslides, hurricanes, earthquakes or similar disasters of comparable magnitude“. This catalogue was expanded last weekend to include the terms “epidemic and pandemic”, which is why an exceptional situation created by illness is now also covered. The applicability of § 69 para. 2a IO is therefore to be affirmed, which means that there is no longer any doubt that the obligation to file for insolvency will double to 120 days.
It should be noted, however, that the extension of the deadline is only applicable to those cases in which the insolvency or over-indebtedness only occurred as a result of the exceptional situation. If an obligation to file for insolvency existed before exceptional situation came into being, the filing period will not be extended. Rather, it is a prerequisite that the exceptional situation is responsible for causing the illiqudity or over-indebtedness. If the company would have been insolvent even if the exceptional situation had not occurred, the period applicable to the obligation to apply for insolvency is not extended and the 60-day maximum period remains unchanged. If the illiquidity or over-indebtedness was caused by the pandemic or the measures taken as a result, the deadline is extended to 120 days.
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