Kika/Lehner scandal: SPÖ wants stricter insolvency law

Billionaire and short friend Benko took advantage of a loophole in the bankruptcy law and made a lot of money from Kika / Leiner. At the same time, thousands of employees have lost their jobs. So that the Kika/Liener case cannot be repeated, MP SPÖ President Julia Herr will apply for a stricter insolvency law in the next National Council sessions.

SPÖ wants to close loopholes in the insolvency law so that the Kika/Leiner case cannot be repeated in the future. “If a billionaire and friend of the ÖVP like Rene Benco can enrich himself at the expense of the general public and pay employees more, then something is wrong. In the end, the Kika-Leiner deal cost thousands of employees their jobs and the taxpayer about 300 million euros,” says Julia Herr, Which will file an application for reform of the insolvency law in the National Assembly: “The OVP and the Greens can then show whether they still want to be lobbyists for billionaires or make politics for the general public.”

An end to corporate “chopping”.

Specifically, the new insolvency law aims to put an end to the “chopping up” of companies: until now, each company was considered separately, even if it was part of a corporation. This makes it possible to run up debt with one company while the other companies in the group are making big profits. In the future, profitable parts of the company – in the case of Kika / Leiner from real estate – should not be separated when companies are taken over. This prevents losing parts from going bankrupt and throwing employees out into the street. Austria will not be alone in this: such regulation has been recommended at the UN level, but has always been banned in Austria by the ÖVP.

SPÖ plan for a stricter insolvency law:

• Filling the loopholes in group insolvency law: Corporate chips — on the one hand for picking good bits and making money with them, and on the other hand for throwing bad bits and throwing employees out into the street — should be banned in the future.
• Owner Accounting: In order to keep companies alive, creditors’ claims must be converted into shares of a company (a so-called debt-equity swap). So that the owners and creditors contribute to the rescue because they develop a self-interest in the survival of the company.
• Taxpayers come first – Taxpayers money must come first: As in the Netherlands, tax debts must be paid off first in bankruptcy. This is not currently the case in Austria. That must be changed.
• Separate judicial unit dealing with bankruptcy cases: Instead of an under-resourced insolvency administrator, what is required is a specialized authority that deals with major insolvencies and can deal with potential delays in insolvency, etc. Compared to WKStA, the interests of the public must be represented.
• Liability extension in case of merger of companies: Benko will also have to be in charge of Kika/Leiner in the future. To this end, liability must be extended in such a way that the companies divided are also mutually liable for the damage caused by the division.