11 March 2015
By an ordinance (Mandatsbescheid) issued on March 1, 2015, the Austrian Financial Market Authority (“FMA”) has initiated the resolution of HETA ASSET RESOLUTION AG (“HETA”). HETA is the “bad bank” that was established to assume and manage large parts of the Austrian Bank Hypo-Alpe-Adria, which was required to be resolved in accordance with EU regulations. HETA is 100 percent owned by the Republic of Austria, and it currently manages assets worth approximately EUR 18 billion. The FMA is acting in its capacity as resolution authority pursuant to the Austrian Banking Restructuring and Resolution Act (“BaSAG”).
The resolution measures have been structured in accordance with the “Bank Recovery and Resolution Directive – BRRD,” the new European resolution regime for banks. The FMA imposed a debt moratorium until May 31, 2016 in order to establish a resolution schedule that corresponds to the targets of the BRRD. The decision will change the maturities of all (subordinated and non-subordinated) debt instruments and other liabilities issued by HETA until May 31, 2016, with the exception of certain specifically secured liabilities.
The resolution measure also covers bonds and other claims that were restructured by the “Federal Act on Resolution Measures for HYPO-ALPE-ADRIA-BANK INTERNATIONAL AG” (“HaaSanG”). The ordinance postpones the scheduled maturity of HETA’s eligible liabilities (capital and interest) until May 31, 2016. Remedies are required to be filed with the FMA within three months after publication of the ordinance (specifically, by June 1, 2015); this does not entail a suspensive effect. Additional measures are expected, particularly the application of the bail-in by creditors. The FMA also has indicated its openness to solutions by means of negotiation with creditors.
Various questions have arisen for non-Austrian investors:
- What receivables are covered by the debt moratorium?
- What receivables are affected by the “haircut,” the legally imposed extinguishment of certain subordinate liabilities of HETA on the basis of HaaSanG or HaaSanV?
- To what extent do HaaSanG and the FMA decision apply extraterritorially, that is, are the measures applicable to receivables under non-Austrian law?
- To what extent does BaSAG apply to HETA since BaSAG constitutes the framework for the resolution regime for banks but HETA is not a bank?
- To what extent does the default guarantee of the Austrian state of Carinthia (Kärnten) apply to these receivables?
- What remedies are available either under Austrian law or, possibly, under non-Austrian law—German, French and English laws are applicable to a number of bonds, and in some cases, a non-Austrian jurisdiction was agreed to?
- Would non-Austrian courts recognize the ordinance, and the moratorium stipulated thereunder?
- Could investors enforce their rights in Austria or against Austrian assets abroad?
Mayer Brown advises on these topics in close cooperation with experts in Austria.