Review set-off in Austrian insolvency proceedings: counterclaim, opening date, claim acquisition, statutory limits and residual claim.
BRANDAUER Rechtsanwälte
Insolvency law, Salzburg and throughout Austria
We review the procedural status, contracts, payment records and security, then explain which legal question needs to be addressed next.
After insolvency proceedings open, two payment claims may face each other. A creditor has an unpaid invoice against the insolvent business but also owes that business money. Whether the positions can be set off is not determined by the accounting balance alone.
Section 19 IO protects a set-off position that already existed when the insolvency proceedings opened. Section 20 IO prevents a set-off position from being created after opening or through a problematic acquisition of a claim in particular cases. The parties, basis of each claim, accrual, maturity and acquisition date must therefore be documented separately.
This article addresses set-off by an ordinary creditor in Austrian insolvency proceedings. Repayment and set-off of a shareholder loan are also subject to the specific EKEG rules and are addressed in a separate article.
A counterclaim alone is insufficient. Only a comparison of both claims and their timelines shows whether a set-off position may exist.
| Review field | Legal basis | Documents | Core question |
|---|---|---|---|
| Mutuality | Section 1438 ABGB requires mutual, comparable claims capable of set-off. | Contracts, invoices, accounts and exact party names. | Are the same legal entities creditor and debtor of each other? |
| Section 19 IO Opening date | A set-off position already existing at opening is generally preserved. | Opening order, performance dates, maturities and balances. | Were both claims capable of set-off at the relevant time? |
| Acquisition | Section 20 IO restricts set-off where a counterclaim is acquired later or in proximity to insolvency. | Assignment, purchase agreement, prior acquisition duty and knowledge. | When and in which circumstances was the counterclaim acquired? |
| Valuation | For conditional, deferred or non-monetary claims, section 19(2) IO refers to sections 14 and 15 IO. | Conditions, terms, subject of performance and calculation. | Which amount can be used for set-off purposes? |
| Residual claim | Under section 1438 ABGB, discharge extends only as far as the claims balance each other. | Reconciled calculation, payments, credit notes and security. | Does a claim remain that must be treated separately? |
The table provides a review framework. Statutory exceptions and the specific procedural status require individual assessment.
The check organises timing, acquisition and parties. It does not determine conclusively whether a specific set-off is legally effective.
Discuss the specific matter with the firm.
Section 20(1) IO excludes set-off in particular where an insolvency creditor became a debtor of the estate only after opening or acquired the claim against the debtor only after opening. Organise the later event before calculating a balance.
Without the accrual date, maturity and acquisition date, the boundary between sections 19 and 20 IO cannot be reviewed reliably. Build a separate chronological list for each claim.
For an acquired counterclaim, section 20 IO considers the timing, any earlier duty to acquire and knowledge of the debtor’s insolvency. Keep the complete acquisition file and the information available at that time.
Set-off generally requires mutual claims. Group affiliation, an economic connection or the same contact person does not replace the identity of the legal entities involved.
The core facts are organised. The requirements of section 1438 ABGB, the opening-date rule in section 19 IO and possible exclusions or exceptions under section 20 IO can now be reviewed against the complete contracts and procedural status.
Section 1438 ABGB provides the general basis for set-off. The claims must be mutual, comparable and capable of balancing each other. This civil-law starting point remains important in insolvency proceedings.
Check the exact legal name, contracting party and invoice recipient on both sides. A claim against a subsidiary cannot be set off against a debt owed to its parent merely because both belong to the same group. Different contractual relationships must not disappear into one combined balance either.
The firm’s German article on set-off and rights of retention in B2B contracts explains the general questions outside insolvency proceedings. Insolvency adds the opening-date review.
Section 19(1) IO states that claims already capable of set-off when insolvency proceedings opened need not be asserted in the proceedings. The opening date is therefore the central dividing line.
Prepare a timeline for both claims covering the contract, performance, invoice, maturity, partial payments and amendments. The date of an invoice alone does not necessarily show when the underlying claim accrued or became capable of set-off.
For ongoing contracts, the file must also distinguish performance before and after opening. The article on ongoing contracts in insolvency explains the performance status and the insolvency administrator’s election.
Section 20(1) IO makes set-off inadmissible in several situations. This particularly includes a creditor who became a debtor of the estate only after opening or acquired the claim against the insolvent debtor only after opening.
The provision also addresses acquisition before opening where the later debtor of the estate knew or should have known of the debtor’s insolvency when acquiring the counterclaim. Section 20(2) IO contains exceptions, including acquisition more than six months before opening or an earlier duty to acquire without such knowledge. These facts require evidence and cannot be inferred from an accounting date.
For an assignment or claim purchase, keep the complete agreement, date, consideration, any earlier acquisition duty and information about the debtor’s financial condition. Only this material permits a review of the acquisition rule.
A claim is not automatically excluded from set-off merely because it was conditional or deferred at opening. Section 19(2) IO refers to section 14 IO and section 15 IO for the calculation. For a conditional claim, the court may also make set-off subject to security.
Document the condition, term, subject of performance and calculation basis. An internal book value does not replace the insolvency-law valuation. For a non-monetary claim, the file must show how the amount relevant for set-off is determined.
The special cases in section 20(3) and (4) IO concern certain claims arising from contracts treated because of insolvency and specific financial transactions. This article does not derive a general exception for ordinary supply or service contracts from those provisions.
Under section 1438 ABGB, the obligations are discharged only as far as the claims balance each other. If the creditor’s claim exceeds the debt owed to the estate, a difference remains. It must not be treated as already resolved without further review.
Classify the remaining amount as an insolvency claim, possible estate claim or another position. The creditor topic page connects the basis of the claim, filing, schedule status and security. The creditor document check helps prepare the file.
Also document the set-off declaration, its wording and receipt. An accounting entry, a legal set-off and treatment in insolvency proceedings are not automatically the same thing.
Section 19(1) IO states that a claim already capable of set-off at opening need not be asserted in the insolvency proceedings. This applies only to the extent of the actual set-off position. Any residual amount requires separate review.
Section 20(1) IO generally excludes set-off where the claim against the debtor was acquired only after opening. Any statutory exception must be reviewed specifically.
No. Section 19(2) IO does not exclude set-off merely because a claim is conditional. The claim is calculated under sections 14 and 15 IO. The court may require security for a conditional claim.
Not on its own. Shareholder loans may also be subject to the repayment restriction and other EKEG rules. They require a separate assessment.
Review the claim basis, filing, schedule status and security in context.
Organise procedural data, claims, payments and security for legal review.
Classify performance status, the administrator’s election and further contract steps separately.
Tell us your role, the business concerned and the procedural status. We respond within one business day.
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