Corporate / M&A

Austria: Demergers – Creditors’ Right to Securing

In the course of the 2011 Company Law Amendment Act (Gesellschaftsrechts-Änderungsgesetz 2011; GesRÄG 2011)1, the securing regime for demergers has been amended so that creditors now have a legally enforceable right to securing if satisfaction of their claims is at risk.

Legal situation before the GesRÄG 2011

Before the amend­ment in 2011, cred­i­tors of the trans­fer­ring com­pa­ny – if the sat­is­fac­tion of their claims was at risk – could demand secu­ri­ty of the involved com­pa­nies by giv­ing notice with­in six months after pub­li­ca­tion of the demerg­er’s reg­is­tra­tion in the com­mer­cial reg­is­ter. If no agree­ment between the cred­i­tors and the involved com­pa­nies regard­ing the secu­ri­ty, or no joint appoint­ment of a secu­ri­ty was achieved with­in nine months from pub­li­ca­tion of the demerg­er’s reg­is­tra­tion, all com­pa­nies involved in the demerg­er were joint­ly and sev­er­al­ly liable. This lia­bil­i­ty could be avoid­ed only if a court stat­ed that (i) the claim was not threat­ened by the demerg­er, so that no risk was giv­en, or (ii) an appoint­ed secu­ri­ty was suf­fi­cient.2

New legal situation

Since the Ges­RÄG 2011 came into effect, Sec 15 of the Aus­tri­an Demerg­er Act (Spal­tungs­ge­setz; SpaltG) pro­vides for a cred­i­tors’ right to secur­ing that is legal­ly enforce­able in con­tentious pro­ceed­ings.

Entitled creditors/covered claims

Cred­i­tors of the trans­fer­ring com­pa­ny whose claims were con­sti­tut­ed before the demerg­er’s reg­is­tra­tion (Sec 15 para 1 SpaltG) and for which they can­not demand sat­is­fac­tion are enti­tled to demand secu­ri­ty under Sec 15 para 2 SpaltG. It is not rel­e­vant whether these claims are trans­ferred to the receiv­ing com­pa­ny togeth­er with the demerg­er cap­i­tal or if they remain with the trans­fer­ring com­pa­ny.

No secu­ri­ty can be demand­ed for claims due. Also, the right to secur­ing is not pro­vid­ed for claims in dis­pute. The exis­tence of a cred­i­tor’s claim is thus a pre-con­di­tion to a pro­ceed­ing.

Claim opponents

Cred­i­tors of the trans­fer­ring com­pa­ny can enforce their claim against every com­pa­ny involved in the demerg­er. Secur­ing is still a joint and sev­er­al oblig­a­tion and affects all par­ties involved in the demerg­er equal­ly, regard­less to which com­pa­ny involved the claim is assigned in the course of the demerg­er.

With respect to the amend­ment in 2011, it was expect­ed that only the com­pa­ny to which the claim is assigned in the course of the demerg­er need pro­vide secu­ri­ty. The secur­ing regime, how­ev­er, was not amend­ed this way. There­fore, all com­pa­nies involved in the demerg­er must pro­vide secu­ri­ty. From the view of cred­i­tors’ pro­tec­tion, this is a high­ly pos­i­tive devel­op­ment, as there is a sub­stan­tial risk that the free assign­a­bil­i­ty of assets and lia­bil­i­ties with the demerg­er will lead to an unbal­anced cap­i­tal­i­sa­tion of the com­pa­nies involved in the demerg­er. The cred­i­tor could then face only a finan­cial­ly weak prin­ci­pal debtor.

The SpaltG pro­vides no recourse reg­u­la­tions for the com­pa­nies involved in the demerg­er. So the demerg­er plan or the demerg­er and takeover agree­ment should deal with this aspect.

Requirements/contents of the right to securing

Accord­ing to § 15 Abs 2 SpaltG, cred­i­tors may demand secu­ri­ty only if the demerg­er puts the ful­fil­ment of their claim at risk. The cred­i­tors must show a cred­i­ble risk; a mere state­ment is no longer enough.

Regard­ing the amount of the right to secur­ing, ref­er­ence is made to the the­o­ry devel­oped in Sec 226 Abs 1 of the Aus­tri­an Cor­po­ra­tion Act (Aktienge­setz; AktG). Thus, the amount of the secu­ri­ty to be appoint­ed must com­ply with the “opin­ion of care­ful and dili­gent entre­pre­neurs con­sid­er­ing the risks involved”.3

Legal enforcement/liability

The most sig­nif­i­cant amend­ment with regard to the pre­vi­ous legal sit­u­a­tion is that the deci­sion whether a secu­ri­ty is appoint­ed or if unlim­it­ed joint lia­bil­i­ty enters in force is not left to the dis­cre­tion of the com­pa­nies involved in the demerg­er. Now, if secur­ing is legal­ly enforced with­in six months after the pub­li­ca­tion of the demerg­er’s reg­is­tra­tion in the com­mer­cial reg­is­ter, all involved com­pa­nies are liable for the claim unlim­it­ed as joint debtors from that moment on (tem­po­rary), until (i) the secu­ri­ty is pro­vid­ed or (ii) the claim is final­ly dis­missed. The legal enforce­ment and the point of time start­ing the six months peri­od for the demand­ing of secur­ing are now con­sis­tent with the sit­u­a­tion for merg­ers under Sec 226 para 1 AktG.4

Com­pared with the pre­vi­ous legal sit­u­a­tion (expiry of nine months peri­od), the unlim­it­ed joint lia­bil­i­ty of the involved com­pa­nies implies the ini­ti­a­tion of a judi­cial pro­ceed­ing. A mere “noti­fi­ca­tion” of the involved com­pa­nies or the expi­ra­tion of the peri­od does not trig­ger such a legal con­se­quence any more.

Creditors of the transferring company can enforce their claim against every company involved in the demerger. Securing is still a joint and several obligation and affects all parties involved in the demerger equally, regardless to which company involved the claim is assigned in the course of the demerger.

Gesellschaft­srechts-Änderungs­ge­setz 2011 (Ges­RÄG 2011), BGBl I 201153.
OLG Wien 4. 9. 2006, 28 R 76/06m.
ErläutRV 1252 BlgNR 24. GP 19 with ref­er­ence to Kalss, VSU2 Sec 226 AktG No 20.
ErläutRV 1252 BlgNR 24. GP 19.

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