Two Student Dormitories in Wiener Neustadt File for Insolvency

A further 62 units are added on Grünangergasse, with liabilities amounting to approximately 4.5 million euros. The insolvency proceedings on Ungargasse affect 13 creditors with total claims of around 5.8 million euros. According to Creditreform and AKV Europa, the liabilities add up to more than ten million euros. 13 and 10 creditors respectively are affected in the two proceedings.

Causes of the Crisis

As reasons for sliding into insolvency, the company cites significantly increased energy, operating, and financing costs. At the same time, it was unable to pass these cost increases on to tenants. In addition, over-indebtedness is assumed because a current property valuation also revealed a significantly lower property value than the existing financing liabilities had led to be expected.

Talks with the financing bank regarding a sustainable restructuring have failed. The costs of the proceedings have additionally burdened the financial situation, according to the AKV. The assets include, in particular, the property used for operations together with its inventory as well as claims against an affiliated company.

In both cases, the intention is to offer creditors a quota of 20 percent, payable within two years of acceptance of the plan. A quota of 20 percent is being offered to creditors. The company is, however, to be continued in any case. Continuation is planned.

Restructuring Plan and Consequences for Employees

The impact on the workforce is limited: Two employees are affected by the insolvency of Campus Residence Ungargasse GmbH, and three employees are affected on Grünangergasse. A total of five employees must come to terms with the new situation.

Credit protectors also report pending legal disputes with tenants. In addition, there is currently likely to be court proceedings concerning alleged rent reduction claims by residents. These disputes could additionally complicate the proceedings.

End of Student Rentals

In order to increase occupancy, the focus had recently been increasingly on short-term rentals. However, the price level there has declined. In addition, the price level for short-term rentals has deteriorated due to the high reduction in supply and intensified competition, respectively. The strategy of replacing students with short-term guests therefore did not work.

The consequences for the student tenant base are far-reaching: Renting to students is to be discontinued in the future, and the properties will be operated exclusively in the area of short-term rentals. This means that an important supply of affordable housing for students disappears directly on the campus of FH Wiener Neustadt.

Both properties are located near the City Campus of FH Wiener Neustadt, which has grown strongly in recent years. The loss of student housing affects the university at a time when many young people depend on affordable accommodation within walking distance of the teaching institution.