Major reform of Austrian Enforcement Act (GREx) - What does it mean for enforcement in Austria?
On 1 July 2021, the long-awaited comprehensive reform of the Austrian Enforcement Act (GREx) entered into force and is applicable to all enforcement proceedings initiated after 30 June 2021. The reform focuses on allowing for more efficient and simpler enforcement of monetary claims into the debtor's movable assets. This is facilitated, in particular, by various so-called "enforcement packages", which, among other things, allow enforcement directed at the entire movable property without requiring the creditor to specifyi the debtor's assets. In addition, the role of an administrator (comparable to an insolvency administrator) was created to identify, seize and realise the debtor's assets. The connection between enforcement and insolvency law was also reformed to avoid unnecessary parallel proceedings.
2. Creditor can choose the appropriate enforcement package
In Austrian enforcement law, the so-called principle of speciality has been dominant up to now, according to which the enforcing creditor must specify exactly which of the debtor's assets are to be seized and realised. In practice, however, this is regularly anything but easy, as the enforcing creditor often simply does not know whether and what assets the debtor owns. This lack of information can lead to unsuccessful enforcement actions or simply to a situation where assets are no longer available when enforcement actions are finally taking place. Nevertheless, the creditor has to bear the costs of unsuccessful enforcement measures (at least temporarily).
These risks and disadvantages have been addressed by the legislator in the new reform bill by providing for so-called "enforcement packages". The creditor is generally free to choose whatever package is most suited for the specific enforcement.
If the creditor simply applies for enforcement without naming a means of enforcement, this automatically includes enforcement into moveable assets and salary as well as the preparation of a list of assets ("simple enforcement package"). This is intended to serve as an "entry-level solution" and is primarily aimed at creditors pursuing claims against natural persons.
If, on the other hand, the creditor applies for an "extended enforcement package", this basically includes all types of enforcement on movable assets, the preparation of a list of assets and the enforcement of certain rights to contest previous transactions. In addition, an administrator must be appointed who has to identify the debtor's assets. The debtor is obliged to cooperate, to provide all necessary documents and to allow inspection of books. The administrator is entitled to enter business premises and other property of the debtor in order to make enquiries there. The administrator shall record the assets in an inventory and, to the extent necessary to cover the creditor’s claim, seize and realise them. He may also conclude instalment agreements with the debtor if the creditor does not object to it in the enforcement applicationThe creditor must pay an advance on costs in the amount of at least EUR 500 which is the administrator's minimum remuneration.
It is still permitted to carry out enforcement without an administrator only into individual assets ("enforcement into specific assets"). If no administrator is to be appointed, this must be expressly stated in the enforcement application. If no administrator is appointed, however, there is a risk that the enforcement proceedings will be terminated at the debtor's request if the requested enforcement action does not constitute the least invasive means.
3. Enforcement court carries out enforcement actions ex officio
With the new enforcement law, the enforcing creditor no longer has to file new petitions in case of unsuccessful enforcement actions into claims held by the debtor against third parties. Instead, the enforcement court has to continue the enforcement proceedings ex officio until the creditor’s entire claim has been collected. Regarding enforcement into the debtor’s salary, the enforcement proceedings must be continued even if the debtor’s employer changes until the creditor is satisfied, whereby the enforcement court itself must identify the new employer.
4. No new enforcement approval required in case of extension of enforcement
The possibility of extending enforcement is also new. If enforcement proceedings for the recovery of a monetary claim are pending, enforcement does not have to be approved again in order to seize the movable property with further means of enforcement. Rather, the enforcement proceedings are extended at the request of the creditor.
5. Interface between enforcement and insolvency proceedings
Once the debtor is insolvent, all enforcement actions must generally be terminated. However, if the grounds for insolvency are discovered too late and the insolvency proceedings are thus not started in time, this can lead to inadmissible parallel enforcement actions. This is disadvantageous for the creditor in several respects: On the one hand, unnecessary costs are incurred and on the other hand, an inadmissible enforcement can be challenged under insolvency law and the creditor may be obliged to repay the recovered amounts.
To avoid futile and cost-intensive enforcement attempts, an obvious insolvency of the debtor shall now already be identified in pending enforcement proceedings and will be made public (official register; Ediktsdatei). This way, obvious cases of insolvency can be addressed in enforcement proceedings and hence, enforcement proceedings will be terminated.
Parallel to this, a so-called "Gesamtvollstreckungsverfahren" (comprehensive enforcement proceedings) was newly introduced to the Austrian Insolvency Code. A creditor may request the initiation of bankruptcy proceedings over the debtor's entire assets ("Gesamtvollstreckung"). This is intended to avoid unnecessary enforcement proceedings in case of insolvency. It also allows the creditor to recover claims in insolvency proceedings rather than in enforcement proceedings.
As of 1 July 2021, creditors have more possibilites to enforce monetary claims more and to choose an enforcement package that is most suitable for the respective individual case. After enforcement has been granted, the enforcement court generally conducts the proceedings ex officio without the creditor having to file further motions on an ongoing basis. If necessary, the enforcement court also appoints an administrator who identifies and realizes the debtor's assets. Finally, to avoid futile enforcement actions, the "transition" from enforcement to insolvency proceedings was improved.
What does the new enforcement law mean for your monetary claims and how can you as a creditor benefit from the new options? We are happy to advise you comprehensively on all questions of enforcement law.
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