Loan Agreements And The New Austrian Restructuring Code: How To Protect Against The Unknown

As of 17 July 2021 the EU restructuring directive¹ was implemented in Austria by the new Austrian Restructuring Code (ReC). The ReC allows debtors to enter formal restructuring proceedings before actually becoming insolvent. To minimise the disruption to debtor's operations, the proceedings are not public, a ban on enforcement of collateral can be implemented and the rights of counterparts to amend or terminate existing contracts are significantly curtailed.

The ReC does not foresee a substantial mandatory involvement of creditors. It is up to the debtor which creditors to involve early in the process. Given that the proceedings are not public, there is no way for a creditor to find out whether proceedings have been opened with respect to a debtor. As proceedings may also be opened pre-insolvency, the debtor may not even be under an obligation to report to its creditors that the conditions for opening restructuring proceedings are met. And once proceedings are