An interview with Christian Kniescheck.
At Valtus, we draw on an international network of restructuring experts – because each country has its own legal framework and restructuring practices. In this interview, Maurizio Ria, Managing Partner at Duke & Kay in Milano, speaks with Christian Kniescheck, Partner at Management Factory in Vienna, about the particularities of the Austrian restructuring landscape.
Christian, in Austria, are court-supervised proceedings or out-of-court restructurings more common?
Christian: Fortunately, out-of-court restructuring (“Außergerichtliche Sanierung”) is the predominant form of restructuring in Austria. It is contractual, confidential, and based on creditor consensus. There is no formal legal procedure, but well-established practices.
If no out-of-court solution can be found, we can apply three court-supervised procedures with a precise legal framework:
- Restructuring procedure without self-administration (“Sanierungsverfahren ohne Eigenverwaltung”) for insolvent companies with a minimum quota of 20% repayment to unsecured creditors within 2 years.
- Restructuring procedure with self-administration (“Sanierungsverfahren mit Eigenverwaltung”) for insolvent companies with a minimum quota of 30% repayment to unsecured creditors within 2 years.
- Preventive restructuring framework (“Restrukturierungsverfahren”) for likely-to-become-insolvent companies, that allows for a majority-based debt restructuring with cross-class cram-downs with no need for unanimous creditor approval.
The legal framework for the court-supervised procedures is the Insolvency Code IO (“Insolvenzordnung”) and the restructuring order ReO (“Restrukturierungsordnung”).
You mentioned that out-of-court restructuring does not follow a formal legal procedure, but rather well-established practices. What exactly does that mean?
The restructuring community, i.e., banks, lawyers, and advisors, agreed many years ago to adhere to two legally not binding but well-accepted guidelines:
- The Guidelines for Going Concern Prognosis (“Fortbestehensprognose”) published by the Chamber of Chartered Accountants, the Chamber of Commerce and the Austrian Institute for SME Research
- The Principles for Restructuring in Austria (“Grundsätze für Restrukturierungen in Österreich”), published by Schönherr Attorneys at Law and major Austrian banks.
The Guidelines for Going Concern Prognosis set the minimum requirement for a restructuring plan. It became common knowledge and general practice that companies in crisis need such a going concern prognosis which includes an in depth analysis of the causes for the crisis, an assessment of the market and the company’s environment, a restructuring plan as well as an integrated financial planning on a monthly basis for at least 12 months (P&L, balance sheet, liquidity statement) and for the following 2 years on a yearly basis.
The Principles for Restructuring are kind of a gentlemen’s agreement between banks for a standstill that allows the company and its management and consultants to establish a sound restructuring plan. During the voluntary standstill period, the banks agree not to declare loans due and payable.
In Austria, all restructuring stakeholders – banks, lawyers, advisors, and interim managers – know these informal guidelines. Adhering to them greatly enhances the likelihood of a successful turnaround.
In your experience, what is the most common mistake companies make in the early stages of a liquidity crisis?
Hope and denial. Both lead to inaction. Valuable time is lost – and the longer a company waits, the more difficult and costly it becomes to implement an effective restructuring plan. The longer the delay, the greater the risk that creditors will suffer partial losses.
Do employees in your country continue to receive their salaries and bonuses in the event of insolvency, or do they lose the entire or part of their wages?
In Austria, employees are exceptionally well-protected in the event of employer insolvency. Their outstanding wages, salaries, and social security contributions are secured through a state-backed insolvency protection scheme called the Insolvency Remuneration Fund IEF (“Insolvenz-Entgelt-Fonds”). Employees will get not only the outstanding salaries, but also bonuses, overtime pay, unused vacation entitlements, severance payments and termination indemnities. These claims will be paid directly to the employees by the IEF, usually within a few weeks after filing. You see that Austrian employees are well-protected creditors in insolvency scenarios.
In cases of insolvency or bankruptcy, how do interim managers and consultants working in restructuring ensure they receive their remuneration?
Unexperienced advisors and managers sometimes find themselves in a position where they receive the same quota as all other creditors—typically only a fraction, such as 20%. In contrast, seasoned restructuring experts know how to apply the ‘Zug-um-Zug’[1] mechanism under Austrian civil law. If performance and remuneration occur simultaneously, the strict clawback provisions become ineffective, i.e. you can keep the money. In practice, this means working with a combination of prepayments and very short billing cycles—typically invoicing every second week. The ‘Zug-um-Zug’ principle ensures that restructuring professionals can support distressed companies without later facing legal disadvantages – thus enabling them to contribute effectively to the company’s rescue.
Could you describe a recent restructuring case in your country?
From November 2024 to May 2025, Management Factory provided comprehensive advice to @KTM AG and its restructuring administrator as part of the successful restructuring process. Our interdisciplinary team, led by @Christopher Klena and @Gerhard Wüest, was responsible for the following areas in the course of the restructuring:
- Review of the appropriateness of the restructuring plan quota
- Validation of the going-concern financial planning
- Analysis of the causes of losses
- Survey of economic facts for potential liability and avoidance claims
- Support for strategic divestments (including MV Agusta and X-Bow)
- Support in bank negotiations.
The creditors got a 30% quota, i.e., € 525 millions has been paid, mainly by Bajaj, an Indian motorcycle manufacturer. Bajaj is set to become the new majority owner of KTM.
Where did you personally learn the “art of restructuring”?
After 15 years in operational consulting, I had the privilege of learning the ‘art of restructuring’ directly from Dr. Erhard F. Grossnigg, widely regarded as the doyen of the Austrian restructuring scene. He taught me to approach corporate turnarounds through the balance sheet.
While typical turnaround managers begin with the profit and loss statement – focusing on measures like cost cuts and headcount reduction – true restructuring experts start with the balance sheet. The difference is fundamental: rather than merely restoring short-term profitability, the goal is to lay a solid and honest foundation for future business – by designing a sound and value-oriented new balance sheet.
In your jurisdiction, how efficient is the collaboration between management, creditors, and courts in formal restructuring proceedings?
I would say it is quite efficient. Austria is often regarded as one of Europe’s top performers in turnaround and recovery – thanks to a cooperative creditor culture, swift legal procedures, and a well-established restructuring community.
This community is relatively small, and most actors know one another, which fosters a spirit of fair play and a shared commitment: to save the distressed company while recovering as much value as possible for creditors and banks.
We even have a dedicated association called @ReTurn, which brings together restructuring professionals from banks, law firms, and advisory firms. We meet regularly to discuss legislative developments, case studies, and best practices.
This forum enhances both the quality of restructuring and mutual understanding. When banking professionals appreciate legal constraints and consultants understand the financial logic behind legal positions, it becomes far easier to reach fair, sustainable solutions.
What do you consider a fair and sustainable solution?
A fair solution is a restructuring plan that includes contributions from all stakeholders: owners, banks, creditors, customers, and employees.
A sustainable solution, in turn, provides sufficient headroom for deviations from the plan. Some measures may not unfold as intended, while new business opportunities may arise – and the company must have the flexibility to seize them.
How established is private equity in your country with regard to restructuring?
In Austria, bank loans remain the primary source of financing for small and medium-sized enterprises. Consequently, banks usually take the lead in restructuring cases. They are typically the largest creditors – whether national players like Raiffeisen, Erste Bank, with the Sparkassen, and UniCredit, or regional institutions such as Oberbank, BKS, and BTV.
Private equity (PE) involvement in restructuring is still relatively limited and selective, especially when compared to markets like Germany, the UK, or France.
Austria lacks domestic PE funds that focus exclusively on turnaround or special situations. However, some German funds – such as Orlando, Aurelius Mutares, Hannover Finanz, and Quantum Capital Partners – occasionally operate in the Austrian market.
Does your government support companies in crisis, e.g., through specific subsidies or state-backed loans?
Yes, although obtaining public grants or guarantees for distressed companies is possible, it is far from straightforward. Austria has a national agency – Austria Wirtschaftsservice GmbH (AWS) – which offers guarantees and subsidised loans for SMEs, particularly in restructuring or succession scenarios.
In addition, each federal state maintains its own regional economic development agency. Many of them support companies in financial distress – for example, the Kärntner Wirtschaftsförderungsfonds (KWF) in Carinthia.
Such public support can form part of a ‘big solution,’ in which all stakeholders – banks, owners, creditors, employees, and the public sector – contribute to rescuing the company.
However, access to these funds typically requires the backing of a bank, a detailed restructuring plan, and a formal going-concern prognosis.
Dear Christian! Thank you for this extensive insight into the Austrian restructuring landscape.
It has been a pleasure.
[1] Zug-um-Zug: Transaction occurs not instantaneously, but bit by bit, with each side waiting for the other to fulfil part of their obligation.