9/9🌎 Insolvency Prevention and Capital Restructuring

Preamble

The Social-Libertarian Movement holds that the separation of ownership and entrepreneurial initiative constitutes a central problem behind economically harmful developments in companies, particularly in the public sector. Where ownership and operational responsibility diverge, direct incentives for entrepreneurial initiative, long-term value creation, and responsible risk management are often missing. This creates structural weaknesses that manifest in the risk factors set out in this Federal Act and ultimately threaten the solvency and operational viability of entire businesses.

An orderly restructuring when relevant risk factors are present therefore serves both the interest of the national economy and the interests of the employees concerned as well as the long-term satisfaction of customer demand. Preserving productive real capital, securing jobs with fair participation by the workforce, and maintaining a reliable supply of goods and services serve the common good and prevent macroeconomic losses caused by insolvencies or gradual erosion of substance.

For these reasons, the social-libertarian movement supports the present Federal Act as an appropriate and necessary instrument. It creates the legal conditions for a financed takeover of the business by the workforce, reconnects ownership with entrepreneurial responsibility, and enables a sustainable restructuring that brings all the interests mentioned into alignment.

Federal Act on the Prevention of Insolvencies and the Restructuring of Corporate Capital

(Insolvency Prevention and Capital Restructuring Act – IPCR Act)

The Congress and the Senate may resolve:

§ 1. Purpose and Objective

(1) The purpose of this Federal Act is to secure real capital in companies experiencing problematic solvency or operational functionality.

(2) The objective of this Federal Act is to promote a financed takeover of the business by the workforce.

§ 2. Scope of Application

(1) This Federal Act applies to all companies with their registered office or place of business in Austria, including companies owned by the public sector.

(2) The institutions listed in § 10 are excluded.

§ 3. Preconditions

(1) The measures provided for in this Federal Act shall apply if, following a comprehensive evaluative assessment, risk factors exist that indicate problematic solvency or operational functionality of the company.

(2) Risk factors shall include, in particular:

• fewer than five main sources of financing and no broadly diversified customer base, especially where clients belong exclusively to the public sector;

• a declared intention to leave on the part of at least one third of the workforce due to an unfavorable relationship between cost of living and wage levels;

• the operation of low-wage business models by non-profit or for-profit legal entities holding a monopolistic position on the demand side.

(3) In cases of doubt, a report by the Committee of Public Safety shall be decisive.

§ 4. Criteria for Redetermining Employee Participations

When redetermining employee participations, the dispersion of assets shall be limited. Higher participation for individual employees according to their function shall be permissible at most in a ratio of 2:1.

§ 5. Valuation Guideline

The valuation guideline shall be 1.5 times the average annual turnover of the last three years.

§ 6. Compensation for Previous Owners

(1) Previous owners shall be entitled to compensation equal to 50 % of the pre-crisis estimated value.

(2) This compensation shall first be used to satisfy existing creditors on a pro-rata basis. Any surplus shall be paid to the owners or other entitled parties.

§ 7. Conversion of Ownership Status

(1) Upon application of this Federal Act, the previous ownership status shall be converted into ownership by the workforce.

(2) In the case of companies in state ownership, there shall additionally be a conversion from ownership status to the status of contracting authority/client.

§ 8. Support Measures

To promote the takeover by the workforce, the Federal Government shall provide interest-free loans with liability limited solely to the assets of the acquired company.

§ 9. Procedure

(1) If the preconditions under § 3 are met, the workforce or a representative authorised by it may apply to the competent authority to initiate a restructuring procedure.

(2) The competent authority shall examine the preconditions and, where appropriate, initiate the procedure. In this procedure, the takeover by the workforce, the valuation of the company, and the compensation of the previous owners shall be determined.

(3) The workforce shall acquire the company as the new owner under the conditions laid down in this Federal Act.

§ 10. Exceptions

This Federal Act shall not apply to the military, the police, the courts, or the general administrative authorities.

§ 11. Entry into Force

This Federal Act shall enter into force on the day following its promulgation.

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