Background

Voting rights in Austrian restructuring proceedings (which require the approval of more than half the creditors holding more than half of the company's debt) are often contested, as the company's assets are liquidated if the creditors vote against the proposed restructuring or debt cut.

Secured creditors may only participate in the vote with the unsecured part of their claim and must file an application for the right to vote. It was unclear whether such an application for a voting right for a specific amount could subsequently be changed.

In this case, if the secured creditor was unable to increase its vote, the restructuring would not be approved. The Austrian Supreme Court held:

  • If the application for the voting right contains a specific amount, the voting right shall in principle be limited to this amount.
  • The creditor may apply for a "higher" voting right until the vote on the proposed debt cut is taken.
  • The insolvency court may not grant the creditor a "higher" voting right without a corresponding application by the creditor, even if the court is satisfied that the voting right applied for is factually too low.

Key takeaways

The decision shows the importance of seeking professional preparation of a debt relief application.