What’s it about?
Currently, state creditors such as tax authorities or social insurance agencies cannot enforce a company’s bankruptcy but can only pursue claims through seizure. Companies struggling to pay social contributions or taxes on time have so far not faced the immediate risk of being forced into bankruptcy.
As of 1 January 2025, state creditors will have the same rights as private creditors to enforce their claims directly through bankruptcy proceedings. It is expected that authorities will take a consistent approach in such cases.
What does this mean for companies?
The new law increases the risk that companies facing financial difficulties may be pushed into bankruptcy more quickly. At the same time, there is a heightened risk for directors and responsible parties to be held accountable, both civilly and criminally.
Until now, public claims were often subordinated, with companies prioritising payments to banks, employees, and similar obligations. To minimise the aforementioned risks, state claims will need to receive significantly greater attention with the implementation of the new law.
Conclusion
The new law sends a clear signal against abusive practices and will enhance the financial accountability of companies and their leadership. Businesses that adapt early to these changes can mitigate risks and maintain their ability to act.
If you have any further questions or need support, please feel free to contact us. We are here to assist you with our expertise.
Author
Diana Krasnic
Legal
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