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Bondholders' rights in case of insolvency restricted by 1874 law

February 2011 - Finance. Legal Developments by Moravcevic Vojnovic Zdravkovic OAD in cooperation .

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On October 20 2010 insolvency proceedings were opened against A-TEC Industries AG, the Austrian holding company of industrial group A-TEC. With outstanding debt of around €650 million (including contingent claims), this insolvency is set to be the third-largest insolvency in Austria to date. Claims included around €300 million of bond debt (two convertible bonds and a corporate bond) issued by the company.

Few of the bondholders would have imagined that they would be unable to pursue their rights in the course of these proceedings. On the day that the insolvency proceedings were opened, the insolvency court appointed three trustees to represent the bondholders and their collective interests against the company. This restraint of bondholders' rights caused uproar among the mainly international institutional investor base.

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Schoenherr Attorneys at Law
Ursula Rath and Stefan Paulmayer