Austria: Security With An Expiration Date - A Recent Decision On Set-Off In Austrian Insolvency Proceedings And Highlights On Set-Off In Insolvency Proceedings In Other CEE Countries

Last Updated: 5 April 2016
Article by Miriam Simsa
Most Read Contributor in Austria, September 2019

The right to set-off claims and obligations in insolvency proceedings is an important tool for creditors in order to protect themselves against the insolvency risk of a contractual counterparty. This article gives a short overview of the rules for set-off in insolvency proceedings in Austria and certain CEE jurisdictions not taking into account special provisions for close-out netting and similar transactions.  


Set-off in insolvency proceedings

Austrian law allows creditors to set-off obligations owed by them to an insolvent debtor, against their claims against the relevant insolvency estate. This right to set-off claims in insolvency proceedings provides creditors of insolvent debtors with de facto security. As long as the creditors' obligations towards the insolvent debtor are at least equal to their claims against the insolvent debtor, they are protected from any loss in insolvency proceedings. However, a recent decision of the Austrian Supreme Court (OGH) sets an expiration date to this right.

Other than outside of insolvency proceedings, set-off is also possible if the relevant claims and obligations (i) have not yet fallen due; (ii) are contingent; or (iii) in the case of a creditor's claims, are not monetary claims. This is due to the provision that all claims against the insolvent debtor, but not claims of the insolvent debtor, are converted into monetary claims and become due upon the opening of insolvency proceedings.

A creditor does not even have to file the claims he wants to set-off against his obligations against the insolvent debtor during insolvency proceedings. Thus, even if insolvency proceedings are opened with regard to a creditor's debtor, the creditor does not have to participate in the insolvency proceedings at all.

Restriction on set-off

The law, however, restricts set-off of claims obtained or obligations which arose prior to the opening of insolvency proceedings, against obligations which arose or claims obtained after the opening of such proceedings. The restriction applies in particular to claims acquired and obligations assumed by the relevant creditor from a third party. In addition, a creditor may not set-off claims obtained in the last six months prior to opening of insolvency proceedings if, at the time of the acquisition, he knew or ought to have known of the debtor's insolvency. The aim of this provision is to protect creditors dealing with a later insolvent debtor and relying, in good faith, on their right to set-off while preventing the right to set-off being abused depleting the insolvency estate.

Especially where different members of a group deal with one counterparty, this restriction has to be borne in mind. In the event of the insolvency of the counterparty, the group may be left with claims and obligations which they are unable to set off because claims are owned and obligations are owed by different members of the group. Careful structuring of the contractual relationship may help to mitigate this risk.

Security with an expiration date

Until recently it was unclear whether a creditor could also rely on its right to set-off, in the case where a restructuring plan (Sanierungsplan) had been accepted and confirmed by the court. If a restructuring plan becomes effective, unsecured claims are reduced to the quota provided for in the restructuring plan. For a creditor who also has obligations towards the insolvent debtor, this poses a crucial question: can he still set-off his entire claim against his obligations, or is his claim reduced in line with the quota for purposes of set-off?

Past decisions by the Supreme Court were not coherent on this question. While in some cases the Supreme Court argued that it would be unjust to deprive the creditor of his right to full set-off, in other cases it was held that creditors could set-off their obligations against the entire claim prior to the effectiveness of a restructuring plan but only against the quota after effectiveness of such plan.

In its decision 6 Ob 179/14p, the Supreme Court, by way of a reinforced senate decision, ruled that an effective restructuring plan reduces claims for purposes of a later declared set-off. This means that where a creditor waits too long with declaring set-off, he may find himself in a position where he cannot set-off against his whole claim anymore but against a quota only.
Thus, creditors intending to declare set-off can no longer just lean back and ignore the insolvency proceedings. From now on, they will have to take care not to wait until it is too late if they want to avoid paying in full but receiving only a quota.

...and beyond


In Croatian insolvency proceedings, claims can generally be set-off if the Civil law requirements for set-off are met. Only claims acquired and obligations incurred before the opening of insolvency proceedings may be set-off against each other. Set-off is not possible if the relevant claim has been acquired in the last six months preceding the opening of the insolvency proceedings, if the creditor knew or ought to have known that the debtor was unable to make payments, or that an application for insolvency had been filed. Claims resulting from a voidable legal act cannot be used for set-off.

Czech Republic

Creditors are generally also permitted to set-off claims during insolvency proceedings if the Civil law requirements for set-off were met prior to the opening of the proceedings. In addition, the creditor may only declare set-off if he has registered his claim, the claim has been obtained by valid and enforceable legal action, and most importantly, the creditor had not been aware of the debtor's insolvency when acquiring the claim. The court may order further limitations on set-off.

Set-off is generally not permitted during a moratorium or in reorganisation proceedings.


Set-off is not allowed during a moratorium in reorganisations. During liquidation, only claims that have been recognised by the liquidation administrator may be set-off. Further, only claims and obligations existing and owned at the time of opening of liquidation may be set-off against each other. Finally, a creditor cannot set-off if he participates in the sale of the assets of the debtor as buyer.


Creditors in Polish bankruptcy proceedings may set-off their claims with their obligations against the debtor provided such claims and obligations existed prior to the opening of the bankruptcy proceedings. Set-off is facilitated in bankruptcy proceedings as all claims against the insolvent debtor are converted into monetary claims, and all such claims become due upon the opening of bankruptcy proceedings.

Set-off is not permitted if the creditor incurred its obligation against the insolvent debtor after the opening of insolvency proceedings. Furthermore, set-off is not permitted where a claim against the insolvent debtor has been acquired by means of assignment or endorsement subsequent to the declaration of bankruptcy, or acquired during the last year before the date of the declaration of bankruptcy if the acquirer was aware of the existence of a ground for the declaration of bankruptcy.


Set-off is generally allowed in Serbian insolvency proceedings if Civil law requirements for set-off are fulfilled.

All creditors' claims will be deemed due, and all non-monetary claims are converted into monetary claims upon the opening of insolvency proceedings. Set-off is thus facilitated in insolvency proceedings. Generally, set-off may only be declared if the requirements for set-off have been met prior to filing of the petition for insolvency. Set-off is not permitted where the creditor acquired or became entitled to the relevant claim within six months prior to filing of the petition for insolvency proceedings, if the creditor knew or ought to have known that the debtor was insolvent or over-indebted, and if the creditor acquired the right to set-off through a voidable preferential transaction.

However, in practice, set-off is not used regularly in Serbian proceedings.


While set-off is not permitted in restructuring proceedings, claims can be set-off in bankruptcy proceedings if the Civil law requirements for set-off are met. Set-off is facilitated somewhat as all receivables and obligations of the debtor become due upon the opening of insolvency proceedings.

Claims obtained, including by way of acquisition after the opening of insolvency proceedings, cannot be set-off against obligations which arose before such proceedings were opened. Receivables have to be registered with the insolvency administrator before set-off can be declared. Claims resulting from a voidable legal act cannot be used for set-off.


Slovenian law distinguishes between compulsory settlement proceedings and bankruptcy proceedings.

In compulsory settlement proceedings, all non-monetary claims against the insolvent debtor are automatically converted into monetary claims denominated in EUR. Where the insolvent debtor has a counterclaim, set-off is declared ex lege. This also applies if claims have not yet fallen due. Automatic set-off does not apply to secured or priority claims.

In bankruptcy proceedings the same principles apply in general, however, claims against the insolvent debtor acquired after opening of bankruptcy proceedings may not be used for set-off. Further, contingent claims will only be set-off upon the request by the creditor and subject to the consent of the relevant court.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions