01 July 2021 – need2know
The overall reform of the execution law (GREx) came into force on 01.07.2021. It provides for a number of changes, in particular with regard to the execution options relating to movable assets. The amendment will be applicable to execution applications received by the court after 30.06.2021.
The execution of movable property for the collection of monetary claims shall be facilitated by the execution packages listed below (simple execution package pursuant to § 19 of the Austrian Execution Act (EO) and extended execution package pursuant to § 20 EO). The petitioning creditors now have the opportunity to make use of the new execution packages.
1. Simple execution package according to § 19 EO
The simple execution package, which does not have to be applied for separately but is always applied if no explicit means of execution is mentioned in the application for execution, now comprises several means of execution at the same time, namely execution on movable assets, the salary execution and the inclusion of a list of assets. This formalizes the common combination of execution on movable assets and execution on receivables, and also preserves the priority of the execution against salaries (§ 249a EO).
2. Extended execution package according to § 20 EO
The extended execution package includes, in addition to the simple package, all other types of execution on movable assets. However, execution on immovable assets (such as real estate) must be applied for separately, as was previously the case. Within the framework of the extended execution package, an administrator is now appointed officially, who is responsible for identifying the assets, selecting suitable objects and carrying out the proceedings, including realization. The downside, however, is the costs to be borne by the creditor. The administrator shall be appointed by the court only after the creditor has paid an advance on costs to cover the minimum remuneration of the administrator. Since the minimum remuneration of the administrator amounts to EUR 500.00, it is to be assumed that at least this amount will also be prescribed by the court as an advance on costs. Any further remuneration of the administrator shall be calculated on the basis of the gross proceeds obtained in the course of the liquidation; in this respect, the creditor making the request for payment does not have to make any advance payments.
As before, however, the executing creditor is free to name a specific object of execution to be attached in the application for execution. In the case of execution on a property right, an administrator is nevertheless appointed (despite the explicit naming of an object of execution). § 330 EO provides for an exceptional case with regard to the execution on economic rights (“Vermögensrechte” pursuant to § 326 EO), in that the executing creditor is granted the possibility of refraining from the appointment of an administrator. If the administrator is not appointed, however, there is a risk that the execution proceedings will be discontinued unless the requested realization represents the least invasive means (i.e., taking into account the interests of the obligated party, it brings the most comprehensive and quickest satisfaction) and the execution without the appointment of an administrator, taking into account the costs, can be expected to bring higher proceeds than with the appointment of an administrator. If these criteria are not met, the obligated party may therefore request the termination of the execution.
If the claim to be collected does not exceed EUR 10,000.00, the granting of the extended execution package requires that the execution on movable assets within the framework of a simple execution package has remained unsuccessful (§ 20 (2) EO); this is to be assumed if no attachable objects were found during an execution attempt and further execution attempts are not promising (§ 252e (3) EO). Whether the extended execution package can be applied for immediately in the case of a claim in excess of EUR 10,000.00 can currently be inferred neither from the law nor from the explanatory notes. However, this could be assumed in reverse.
If the debtor has several creditors and an extended execution package has already been granted in favor of one creditor, the following creditors shall join the proceedings in the usual manner.
3. Interface between execution and insolvency law
A new feature is the further interface between execution and insolvency law pursuant to § 49a EO. If, in the course of the determination of the assets, it becomes apparent during the execution proceedings that the debtor is manifestly insolvent, the executing body or the administrator shall immediately stop the execution and the execution court may subsequently determine the insolvency by way of a resolution. This circumstance shall then also be publicly announced in the insolvency file, thus creating an easily accessible and transparent source of information for everyone on the one hand and enabling a quick and easy transition to insolvency proceedings on the other.
Parallel to this, the Insolvency Code (IO) creates a so-called “Gesamtvollstreckungsverfahren” (bankruptcy proceedings). The creditors concerned have the option of filing an application with the insolvency court for the initiation of debt settlement proceedings against the assets of the obligated party. In this case, the debt settlement proceedings are to be designated as “Gesamtvollstreckung”, i.e. “total execution” in the insolvency file pursuant to § 184a IO. This is intended to avoid further hopeless execution proceedings and, in the event of insolvency, claims shall no longer be enforced in execution proceedings but in insolvency proceedings.
The total execution proceedings (“Gesamtvollstreckung”) shall be terminated as soon as the debtor applies for the acceptance of a reorganization plan or payment plan or for the initiation of proceedings for a levy on income. This is intended to exert a certain pressure on the petitioning creditor to file for insolvency. Furthermore, it is intended to avoid futile and cost-intensive attempts at execution due to the debtor’s obvious inability to pay.
Overall, the amendment to execution law is intended to increase the efficiency of execution proceedings for the collection of claims and reduce the number of execution applications. Another important objective of the reform package concerns, among other things, the interfaces between execution and insolvency law.
Authors: Sezen Koc, Georg Rupprecht
If you have any questions, please contact us:
Practice group: Execution law
If you would like to receive future issues of need2know follow us on LinkedIn or please send an email to firstname.lastname@example.org.