On 01.01.2021, the new Liechtenstein Insolvency Code came into force in Liechtenstein.
This total revision of insolvency law focused on standardizing insolvency law for natural persons and legal entities, creating an attractive restructuring procedure, achieving the best possible satisfaction for creditors and at the same time promoting the continuation and restructuring of companies.
In addition, Liechtenstein was the first country to introduce the option of debt relief for consumers and former entrepreneurs, which had long existed in other countries, in order to give them the opportunity to start again (“Fresh Start” or “Second Chance”).
When drafting the Insolvency Code, Liechtenstein was largely guided by the already reformed Austrian legislation, which is why the corresponding doctrine and case law from Austria must be taken into account. Insolvency proceedings are now conducted either as “bankruptcy proceedings” or as “restructuring proceedings” and correspond to the terminology of the Austrian Insolvency Code.
The core element of the reform was to establish the facilitation and promotion of company restructuring in Liechtenstein instead of the break-up and liquidation of companies. This is intended to make it easier for a bona fide debtor to make a fresh economic start. The new insolvency law provides for the possibility of restructuring proceedings with and without self-administration.
The new restructuring procedure with self-administration in particular, which provides for the submission of a restructuring plan before insolvency proceedings are opened, is intended to motivate the debtor to apply for restructuring in good time and prevent the delay in filing for insolvency.
Furthermore, the debtor can submit the restructuring plan not only before the opening of insolvency proceedings, but until the insolvency proceedings are terminated. This is intended to safeguard the chance of restructuring throughout the insolvency proceedings.
The minimum quota to be offered in the restructuring plan within two years was also reduced from 40% to 20% and the acceptance of the restructuring plan was made easier by reducing the approval requirement from two thirds to a simple majority of creditors.
If the debtor is convicted of fraudulent crida within two years of confirmation of the reorganization plan, the reorganization plan becomes null and void and all claims are revived. If the restructuring plan was brought about by fraudulent actions or inadmissible special advantages for creditors, the restructuring plan can also be revoked by a court decision within three years of confirmation of the restructuring plan.
The Insolvency Code abolished the existing creditor claim classes and granted all insolvency creditors the same position. Furthermore, the rights of creditors were strengthened by the establishment of a creditors’ committee.
Another significant innovation is the introduction of a separate debt relief procedure for natural persons. Within this framework, an honest debtor should generally be able to achieve a residual debt discharge within five years and thus a fresh economic start. The residual debt is discharged without the consent of the creditors. However, the new provisions for natural persons will not come into force until 01.01.2022.
3 | 2021