Swiss law provides for insolvency and moratorium proceedings.
Insolvency proceedings
The aim of insolvency proceedings is, in principle, the liquidation of the debtor. Upon the opening of insolvency proceedings, the insolvency administration will draw up an inventory of the assets belonging to the insolvency estate. In the event the inventory reveals that the insolvency estate contains sufficient assets to cover the costs of insolvency proceedings, and in particular depending on the amount of assets and the circumstances, the insolvency administration will either opt for ordinary or summary insolvency proceedings. A call to creditors for filing claims is publicly announced.
The insolvency administration draws up the schedule of claims, which may be subject to actions by creditors. As soon as the schedule of claims is final, the distribution plan is drawn up, which reveals the proportion and resulting net proceeds for each admitted claim, followed by the distribution of the proceeds and the issuance of the certificates of shortfall.
The opening of insolvency proceedings has, among others, the following effects:
- the debtor’s right of disposal is transferred to the insolvency administration
- all obligations of the company/debtor become due, with the exception of those which are secured by mortgages on its real estate, and
- claims which are not for a sum of money are, in principle, converted into a monetary claim of corresponding value.
However, the opening of insolvency proceedings does not result in the automatic termination of contracts and the insolvency administration may opt for a fulfilment of contractual obligations.
Moratorium proceedings
Moratorium proceedings aim at the restructuring of the debtor, or at least the rescue of a profitable operating part of the debtor.
Moratorium proceedings start with a provisional moratorium and may be followed by a final moratorium.
Provisional moratorium
The provisional moratorium aims to clarify whether there is a prospect of restructuring or the conclusion of a composition agreement. Accordingly, in principle, following the granting of a provisional moratorium, a commissioner is appointed to assess the feasibility of the debtor’s restructuring or the conclusion of a composition agreement.
The granting of a provisional (and a final) moratorium has, among others, the following effects:
- enforcement proceedings can be neither initiated nor continued
- civil court proceedings in which concern claims against the debtor that arose prior to the moratorium are, as a rule, stayed
- limitation and forfeiture periods stand still, and
- no applications for freezing of assets regarding claims that arose prior to the moratorium may be granted.
Depending on the developments during the provisional moratorium and the outcome of the analysis of the debtor’s financial situation, before the expiry of the provisional moratorium, the commissioner asks the court to grant a final moratorium or the opening of insolvency proceedings. The commissioner will opt for the request to open insolvency proceedings if it comes to the conclusion that there is no prospect of debt restructuring or the conclusion of a composition agreement. In the event the restructuring of the debtor is successful before the expiry of the provisional or final moratorium, the court revokes the moratorium.
Final moratorium
The final moratorium aims at the restructuring of the debtor or the conclusion of a composition agreement. The law provides for two types of composition agreements:
- an ordinary composition agreement is an agreement under which the creditors in particular waive parts of their claims; the conclusion and approval of an ordinary composition agreement leads to the restructuring of the debtor
- by way of a composition agreement with the assignment of assets, creditors are granted the right to dispose of the debtor’s assets, or such assets are assigned in whole or in part to a third party. The conclusion and approval of a composition agreement with the assignment of assets leads to the full or partial liquidation of the debtor’s assets.
Social Media cookies collect information about you sharing information from our website via social media tools, or analytics to understand your browsing between social media tools or our Social Media campaigns and our own websites. We do this to optimise the mix of channels to provide you with our content. Details concerning the tools in use are in our privacy policy.