Swiss Federal Supreme Court: A de facto liquidation during a debt restructuring moratorium does not require shareholder approval

The judgment 5A_53/2026 of 4 May 2026 of the Swiss Federal Supreme Court deals with a recurring question at the interface between corporate law and restructuring law: Is a resolution of the shareholders' meeting necessary if measures taken in the context of a composition proceeding constitute a de facto liquidation of the company? The Swiss Federal Supreme Court confirms that the decision-making process in a composition proceeding is subject to the provisions of the Swiss Debt Enforcement and Bankruptcy Act, which take precedence over the division of competences pursuant to corporate law. Accordingly, the approval of the shareholders is not a prerequisite for the sale of a part of the business during the composition proceeding, even if this constitutes a de facto liquidation.

Brief overview of Swiss composition proceedings

The composition proceeding, as a judicial restructuring proceeding, is initiated with an application for approval of the provisional debt restructuring moratorium to the competent court. The application is to be approved, unless there is obviously no prospect of restructuring or the conclusion of a debt restructuring agreement. The provisional debt restructuring moratorium is initially granted for up to four months, and can subsequently be extended to a maximum of eight months. In the vast majority of cases, a provisional administrator is appointed. The provisional debt restructuring moratorium can be carried out "silently", i.e. without public announcement.

After the expiry of the provisional debt restructuring moratorium, the definitive debt restructuring moratorium can be granted for four to six months and extended to up to 12 months upon application – provided that there is a prospect of restructuring or confirmation of a debt restructuring agreement. In particularly complex cases, it can even be extended to a maximum of 24 months. Unlike the provisional debt restructuring moratorium, the definitive debt restructuring moratorium is public in any case.

In the course of the composition proceedings, a so-called debt restructuring agreement can be concluded with the consent of certain majorities of the creditors, whereby a distinction is made between ordinary debt restructuring agreements, which usually provide for a haircut, and debt restructuring agreements with the assignment of assets, which entail the liquidation of the debtor company.

During the debt restructuring moratorium, the company will continue to operate under the supervision of the administrator. Unless otherwise ordered, the powers of the company's corporate bodies are, in principle, not restricted. This excludes, among other things, the sale of fixed assets. Such sale requires the authorisation of the composition court or – if such a committee has been appointed – the creditors' committee.

It is not uncommon for a restructuring through an asset deal, meaning the sale of the company's business or a part thereof, to take place in the context of a sale agreed before the debt restructuring moratorium (pre-pack) or as transaction negotiated during the debt restructuring moratorium. Since such a sale usually also includes the transfer of fixed assets, it usually requires the approval of the composition court or creditors' committee.

Relationship to the division of competences under corporate law

Outside of composition proceedings, the company is represented by the executive body (board of directors) or by other authorized signatories. In exceptional cases, however, the power of representation of the executive body is limited. In particular, a resolution of the shareholders' meeting may be required for a sale of the business or a substantial part thereof, if such sale represents a de facto change of purpose or liquidation.

There has been a controversial discussion in legal doctrine as to whether this division of competences under corporate law is also to be observed in the context of composition proceedings:

• Some legal scholars argued that during the composition proceeding, the powers of the corporate bodies pursuant to corporate law continue to apply in principle. According to this view, the sale of the entire business or significant parts thereof necessarily requires a resolution of the shareholders' meeting even during the composition proceeding. Some representatives of this view are at least in favour of a sale without the consent of the shareholders' meeting within the framework of a restructuring agreement with an assignment of assets aimed at a restructuring through an asset deal.
• Other scholars argue that the division of competences under corporate law is no longer applicable only in exceptional cases, especially if the continuation of the company is no longer feasible anyway due to over-indebtedness and immediate action is required in order to protect public interests as well as those of employees and other creditors.
• Still others held that a resolution of the shareholders' meeting was not required for the sale of (part of) a business during the composition proceeding. They argued that otherwise the purpose of the composition proceedings as a restructuring instrument would be jeopardised. Furthermore, as the creditors were also not assigned any participation rights in the event of a sale of a business or a part thereof during the composition proceeding, the shareholders should even less be granted such rights, especially since they could otherwise prevent the realization of assets which is in the interest of the creditors. Given that, in addition, the executive body can decide without the participation of the shareholders' meeting whether and which restructuring path is sought, this must also apply to sales acts during the debt restructuring moratorium.

This controversy led to either approval resolutions being sought by the shareholders' meeting – with the risk that the shareholders could prevent a possibly positive restructuring option – or to individual business sales not taking place due to the remaining legal uncertainty for the parties involved regarding the validity of the asset transfer.

This legal uncertainty has now been remedied by the decision of the Swiss Federal Supreme Court, which is scheduled for publication.

The decision of the Swiss Federal Supreme Court

In the case on which the decision discussed here is based, the Swiss Federal Supreme Court had to assess the standing of a shareholder (the decision specifically concerned a GmbH) to file an appeal against the decision of the composition court that approved the sale of a business. The Swiss Federal Supreme Court supported the decision of the lower court, which denied that the shareholder had standing to appeal. In this context, the Federal Supreme Court also commented on the question of the approval requirement by the shareholders of a sale of a business, which is tantamount to a de facto liquidation. In particular, the Swiss Federal Supreme Court clearly spoke out in favour of a restructuring-friendly interpretation of the law in its reasoning and expressly stated the following (translated from German and emphasis added):

The decision to file an application for the initiation of judicial composition proceedings is one of the non-transferable and inalienable tasks of the board of directors of the corporation (art. 716a para 1 no. 7 CO) or the managing director of the LLC (art. 810 para 2 no. 7 CO), without the need for a resolution of the shareholders. Likewise, the board of directors or managing director of the LLC can decide on the further course of the debt restructuring moratorium without the participation of the shareholders and - as envisaged here according to the administrator's report - propose a debt restructuring agreement with the assignment of assets to the creditors for a vote (pursuant to art. 305 SchKG) (FISCHER, Teilkollektive Restrukturierungsverfahren [...], 2023, p. 290 para. 327 with references). The same must therefore apply when it comes to legal acts requiring approval under art. 298 para 2 SchKG or a sale of assets or companies during the debt restructuring moratorium, i.e. in this case too, no participation of the shareholders is required (HUNKELER, loc. cit., N. 17g, 17i et seq. on Art. 298 SchKG; STAEHELIN, loc. cit., p. 167; cf. BAHAR, Distressed M&A: qui décide de céder l'entreprise? Réflexions sur la répartition des compétences au sein d'une société en difficulté, in: Mélanges en l'honneur de Nicolas Jeandin, 2025, p. 12 f.; WOHL, Konkurs nach vorgängiger Nachlassstundung, BlSchK 2024 p. 296).

In line with this, during the debt restructuring moratorium, the powers of disposal of the company's corporate bodies are restricted in favour of the creditors' interests (cf. art. 298 paras 1 and 2 SchKG). Just as in the case in which the composition court can authorise the administrator to sell the business without the participation of the corporate bodies, the consent of the shareholders' meeting is not required, so the consent of the shareholders' meeting is not required if the composition court authorises the corporate bodies to sell the business with the consent of the administrator: Thus, every authorisation by the composition court for the sale of fixed assets implicitly contains an authorisation to carry out a de facto (partial) liquidation without the consent of the shareholders (STAEHELIN, loc. cit., p. 167).

Practical implications

The decision of the Swiss Federal Supreme Court consolidates a restructuring-friendly interpretation of the legal framework in Switzerland. It strengthens legal certainty for sellers and buyers of a business sale within the framework of a debt restructuring moratorium. It is to be hoped that this will further strengthen the importance of a restructuring through an asset deal in a debt restructuring moratorium. In any case, companies in financially distressed situations are well advised to duly assess this option.

In practice, it remains to be seen how significant remaining uncertainties will be viewed. For example, the decision of the Swiss Federal Supreme Court also states – in line with legal doctrine – that the composition court does not carry out a comprehensive examination of the sale of the business, and therefore (director's) liability claims, in particular against the members of the company's executive body, remain applicable if the sale leads to damage to the debtor's assets. Probably primarily due to a lack of relevance to the present decision, it is unfortunately not expressly clarified whether such liability claims could be imminent solely based on the violation of the division of competences under corporate law or – which would be assumed with a consistent interpretation of the law – only if the sale constitutes a breach of duty on the part of the persons acting for other reasons, for example if they were subject to a conflict of interest or if the sale was carried out without due care.