������Ƶ

A Forbearance Agreement lets creditors temporarily pause their right to collect debt or enforce legal actions when borrowers face financial difficulties. Under Austrian civil law, these agreements help struggling businesses or individuals avoid immediate default consequences while working out payment solutions.

The agreement typically sets specific conditions, like partial payments or new deadlines, that the debtor must meet during the forbearance period. It's particularly useful in Austrian banking relationships and real estate financing, where it offers an alternative to formal insolvency proceedings while maintaining legal protections for both parties under the Austrian Civil Code (ABGB).

Consider a Forbearance Agreement when your business faces temporary financial challenges but needs time to recover. This tool proves especially valuable in Austrian commercial relationships when companies experience short-term cash flow problems yet maintain viable long-term prospects.

The timing is crucial: initiate discussions for a Forbearance Agreement as soon as you anticipate payment difficulties, but before defaulting on loans or contracts. Austrian banks and creditors often prefer this approach during economic downturns or industry-specific challenges, as it helps preserve business relationships while complying with Austrian banking regulations and insolvency laws.

• Short-term Payment Forbearance: Used mainly in Austrian retail banking, allowing 3-6 month payment breaks with specific catch-up terms
• Comprehensive Restructuring Forbearance: Common in commercial lending, including detailed business recovery plans and milestone-based extensions
• Property-Secured Forbearance: Tailored for real estate financing, protecting both the property collateral and tenant interests under Austrian property law
• Trade Creditor Forbearance: Designed for business-to-business relationships, often including modified payment schedules and continued supply arrangements

• Banks and Financial Institutions: Primary creditors who offer Forbearance Agreements to help manage non-performing loans while maintaining regulatory compliance
• Commercial Borrowers: Businesses facing temporary financial difficulties who seek payment relief while implementing recovery plans
• Legal Counsel: Attorneys specializing in Austrian banking and insolvency law who draft and review agreement terms
• Corporate Directors: Decision-makers who negotiate and approve forbearance terms on behalf of their companies
• Insolvency Administrators: Professionals who may review agreements when considering broader debt restructuring options

• Financial Documentation: Gather current loan agreements, payment histories, and financial statements showing the borrower's situation
• Default Status: Document specific defaults or anticipated breaches under existing agreements
• Recovery Plan: Prepare realistic financial projections and timeline for returning to normal payments
• Collateral Review: Update current valuations of any secured assets under Austrian property law
• Signatory Authority: Confirm proper authorization levels for both creditor and debtor representatives
• Compliance Check: Ensure alignment with Austrian banking regulations and insolvency laws

• Identification Section: Full legal names and details of all parties, including registration numbers for companies
• Original Loan Terms: Reference to existing agreements and specific obligations being modified
• Forbearance Period: Clear start and end dates with any conditional extensions
• Modified Payment Terms: Detailed new payment schedule and amounts under Austrian banking regulations
• Default Provisions: Consequences of breaching the forbearance terms
• Acknowledgment Clause: Confirmation that the original debt remains valid and enforceable
• Governing Law: Explicit reference to Austrian law and jurisdiction

A Forbearance Agreement differs significantly from a Debt Settlement Agreement in both purpose and outcome. While both deal with debt management, they serve distinct functions under Austrian law.

• Duration and Intent: Forbearance Agreements provide temporary relief while maintaining the original debt structure, whereas Debt Settlement Agreements permanently modify or reduce the debt obligation
• Legal Effect: Forbearance temporarily suspends enforcement rights but preserves the full debt amount; Debt Settlement permanently alters the original obligation
• Payment Terms: Forbearance typically involves a pause or reduction in payments with a plan to resume normal payments, while Debt Settlement usually includes a reduced lump sum or modified permanent payment structure
• Future Credit Impact: Forbearance generally has less severe implications for future creditworthiness under Austrian banking regulations than a Debt Settlement