Attorney Markus Fellner anticipates an increase in restructuring cases. He also criticizes the legal landscape, which makes it difficult for companies to continue operations.
TREND: Among the many restructuring cases in which fwp has been involved is that of the industrial group Rosenbauer. New investors have stabilized the company. Are such cases becoming more frequent due to the current economic downturn?

MARKUS FELLNER: Rosenbauer is certainly typical of Austrian restructuring cases: The founding generation took the company public, but through succession, an ever-growing number of family branches became involved, each with diverging interests. Caught between the desire to lead and the retreat into a shareholder role, a certain indecisiveness arose.

TREND: So more of an internal problem?
MARKUS FELLNER: Exactly. That’s why the situation was less critical than at some other family-owned businesses, for which external factors are now making it even harder to survive in Austria. Rosenbauer was able to move forward with new top management and three investors, including Invest AG. The stock price shows that it’s working very well.

TREND: Invest AG is part of RLB Upper Austria. From your perspective, will banks in the future more often convert loans into equity stakes when the situation comes to a head?

MARKUS FELLNER: In Austria, that’s rather atypical for commercial banks. Our banks are very reluctant to assume shareholder rights. Unlike in Germany, for example. There, the Anglo-American pressure to restructure is also much higher.

TREND: What exactly do you mean by that? 

MARKUS FELLNER: In Germany, it’s standard practice in crises for funds to buy loans at a discount, then try to get the company back on its feet financially and resell it. A second point: In my view, the equity management sector has taken a back seat at local banks. In the past, a credit institution had a huge investment portfolio. Today, our banks only have very small teams. But the capacity could and should definitely be built up. Because if we don’t build a bridge there, the risk of companies falling into foreign hands becomes even greater.

TREND: Everyone was hoping for an economic recovery in 2026. Due to the war in Iran, the opposite is the case. You’re going to have a lot more restructurings on your hands, aren’t you?

MARKUS FELLNER: That is to be expected. The war in Iran came at the worst possible time for the world. In addition to energy prices being very high again, however, we cannot deny that we also have a hiring issue in Austria. We cannot try to offset high labor costs through government subsidies, but only through innovation, quality, and dedication.

TREND: Family business owners rarely lack dedication. Are they nevertheless more vulnerable than others in crises?

MARKUS FELLNER: Yes, because there is usually a very emotional attachment to the company. On the one hand, that’s a positive thing, but in a crisis it’s also a challenge, because it requires sober, rational decisions that can be tough and sometimes have to be tough on the owner. But people generally don’t like to be hard on themselves. This often only works with the help of banks or corporate lawyers. The older an entrepreneur gets, the more he clings to his life’s work—which is quite natural, but often hinders restructuring. A decision could also mean that the life’s work still bears his name but belongs to someone else. That’s where you should let the professionals take over.

TREND: The Taus Group, for example, has announced on its own initiative that it would like to take the group under its wing. The question is: Are there even enough people who want to invest in Austria?

MARKUS FELLNER: I can’t comment on specific cases. But yes, there are interested parties. In Austria, perhaps less the classic private equity investor model, but rather companies affiliated with financial institutions or family offices.
 In addition, there are strategic investors who want to grow stronger in shrinking markets through consolidation. This applies to brick-and-mortar retail, which I believe will end up in the hands of fewer players—see the example of Palmers—or to the automotive supplier sector, wherever cutthroat competition prevails.

TREND: The domestic grocery retailer MPreis is already looking for partners. Surely not an easy undertaking?

MARKUS FELLNER: I’m not involved in that, but I believe the lean period has been going on there for quite some time, and I know that restructuring also thrives on a certain momentum. That means you should move quickly through the transformation phase to find a new footing.

TREND: You mentioned family offices. They don’t seem to be all that active in this country, though...

MARKUS FELLNER: In Austria, people don’t like to talk about the money that family offices invest. But there are quite a few that are quite actively involved in industry—at least as long as the founder or founders are still alive. After that, they usually become more cautious.

                          “Politicians are surprisingly uninterested in crises at major Austrian companies. We need conditions for more attractive restructuring procedures.” - Markus Fellner

TREND: You were involved in KTM’s insolvency as a representative of the creditor banks, which took a significant hit. What went wrong there?

MARKUS FELLNER: In my opinion, a cardinal error occurred at KTM, namely that the company did not restructure out of court but instead went through a court-supervised insolvency, likely because management errors occurred that led to this fallacy. Given how KTM and the holding company are currently reporting their financials, this would have been a textbook case for an out-of-court restructuring, which would have caused far less damage to suppliers, employees, and, above all, the banks. And the company could likely have been pulled out of the crisis just as effectively.

TREND: As a lawyer, what advice would you give a company in distress to prevent a situation like KTM’s from arising in the first place?

MARKUS FELLNER: I would immediately bring in a restructuring consultant to handle the financials and liquidity management. I would quickly seek an external manager who can cooperate well with the current leadership but has no legacy issues—someone who can shape the future free from the past. When the crisis becomes acute, customer and supplier relationships should be kept stable, kept out of crisis discussions as much as possible, and solutions should be sought with the banks. After all, everyone shares the same problem and should therefore work together. In practice, this has proven very effective in recent years. In cases where I’ve been involved, out-of-court restructuring has been successful almost everywhere, often even when it seemed unlikely.

TREND: Because ultimately, isn’t that the more sensible path for the banks as well?

MARKUS FELLNER: For creditors, it is almost always better to restructure without going to court. Except in cases of fraud or criminal activity—there’s simply no other way then.

TREND: You criticize that out-of-court proceedings in Austria are difficult due to the legal landscape. As we stumble from one crisis to the next, has anything changed?

MARKUS FELLNER: No. Politicians are surprisingly uninterested in crises at major companies. Instead of considering how to keep economic output in Austria, they cling to the regime of judicial insolvencies, where the restructuring scenario is simply pitted against the breakup scenario.
 
Politicians should recognize that companies can also be provided with money—especially debt capital—to keep them afloat, and that they shouldn’t be allowed to go bankrupt lightly.
TREND: What would it take?

MARKUS FELLNER: Even in judicial restructuring, the long-term continuation of the business must be the priority. A restructuring plan in Austria that mandates a 20% repayment rate within two years is often unachievable. Companies could be given more time, with the repayment rate increased accordingly. Then creditors would be much more receptive to it. What is entirely missing is the ability to convert debt into equity during restructuring proceedings, which the bank would then either hold or sell. This is not provided for in Austria. We are lagging far behind in this regard.

TREND: And why isn’t anything happening, when it would clearly be an advantage?

MARKUS FELLNER: The authority lies with the Ministry of Justice, where this area is not given the attention it deserves. The capacity for economic crisis management is not being built up. I think the Ministry of Finance or the Ministry of Economy could be brought in. Time and again, I resolve to make this push—this time I’ll do it. Because we need attractive restructuring procedures under which the company can grow and the bank has a strong interest in keeping the business afloat. Right now, court proceedings essentially default to a conflict between the company and its creditors. That’s due to the system we have in Austria.