Freelance practice in insolvency: professional work and practice assets

The opening of insolvency proceedings does not answer this question with a general yes or no. For freelance work, first identify whether the focus is the person’s own professional performance, a professional authorisation or an economically organised undertaking. Section 2(1)(4) of the Austrian Trade, Commerce and Industry Regulation Act excludes liberal professions from that Act. It does not replace a review of the statute governing the specific profession.

Even if personal work can continue, estate-related income and assets cannot simply be treated as private money. New fee claims, work already performed, advance payments and costs need a traceable allocation. Where a service period crosses the opening date, record the performance status on that date.

In practice, read the opening and appointment orders, describe the actual work and assign every payment to a service, contract and account. Only then can the continuation model be clarified with the responsible person in the proceedings and, where necessary, the professional body.

Section 2 IO covers property subject to enforcement that belongs to the debtor when proceedings open or is acquired during the proceedings. A freelance practice therefore requires an asset-by-asset review. This may include office equipment, devices, vehicles, bank balances, outstanding fees, domains, trademarks and transferable software rights. Mere use in the practice proves neither ownership nor inclusion in the estate.

Third-party equipment, rented premises, leased items and funds held for another person must be shown separately. Retention of title, pledges and other third-party rights remain a separate layer of review under section 11 IO. For client money or other funds held for others, purpose, legal basis and separate accounting matter. A mixed account makes allocation harder and should be documented immediately.

Prepare a perimeter list with the item or claim, owner, location, serial number, contract, book value, condition and supporting document. For claims, add the debtor, service period, invoice date, objections and payments received. This helps decide whether an asset is to be realised, collected, separated from the estate or retained for permitted performance.

Section 3 IO provides that acts by the debtor after the opening of proceedings which concern the insolvency estate are ineffective against insolvency creditors. This is an estate-related rule. It does not mean that every personal act is prohibited, and it does not mean that the former practice owner may continue to deal with every asset without restriction.

Check whether the act concerns an estate account, an outstanding fee, equipment, a trademark, a domain or an ongoing contract. Also read the appointment order, any self-administration order and any approval requirements. For ongoing reciprocal contracts, the insolvency rules on the administrator’s election may be relevant. A contracting party should not rely on an informal message as proof of continuing authority.

Law offices and medical or advisory practices also involve professional secrecy, file management and data protection. Insolvency does not make these duties irrelevant. The file must be organised so that only necessary information is disclosed and client or patient data is not mixed with realisable business information.

For an undertaking, section 114a IO provides for continuation until the reporting hearing in principle, unless continuation would obviously increase the loss of insolvency creditors. Section 115 IO requires a court review before closure and examines whether a greater disadvantage can be avoided in another way. Whether these rules fit a particular freelance structure depends on whether an undertaking is actually being continued in the insolvency-law sense.

Continuation cannot be justified by reputation or a full diary alone. Prepare current income, reliable receipts, running costs, staff and premises costs, insurance, necessary software, work in progress and the expected effect on the estate. Mark uncertain fees as uncertain.

For work centred on the individual, identify which services the debtor must personally perform and which tasks may lawfully be delegated. A short-term order may benefit the estate while creating new costs, liability questions or professional-law problems. Base the decision on a defined period, a liquidity calculation and traceable contract data.

A single balance sheet is not enough for the first review. Collect the opening order, appointment order, current account balances, cash records, accounting and tax documents, outstanding fees, advance payments, ongoing contracts and the relevant professional authorisations. Section 99 IO makes the duties to provide information and cooperate relevant to the file.

Organise the documents around the opening date. Mark services before and after that date, invoices, disputed claims and payments made to a private account. With mixed accounts, a chronological list of movements with the document and economic purpose is useful.

For practice assets, invoices, leases, rental agreements, insurance records and photographs help establish the position. Digital assets should have their own list covering licence terms, domain access, administrators and backups. Keep access credentials secure and send them only through an authorised channel.

Mixing private and professional payments: When fees, advances and third-party funds run through one account, allocation becomes unnecessarily difficult. Secure a complete statement and explain each unusual movement.

Treating every practice item as owned: Leasing, rental, retention of title and security rights are easy to miss. Check the contract before handing over or realising an asset.

Taking on new obligations without checking authority: An order may generate income while creating costs and risks. Record scope, payment path and authority before acceptance.

Disclosing all client or patient data: The procedural review needs only necessary information. Professional secrecy and data protection remain part of the file organisation.

Using optimism instead of figures: Reputation, a full diary or one order does not replace a liquidity and estate analysis.