SWITZERLAND Law and Practice Contributed by: Urs Hoffmann-Nowotny, Marcel Jakob and Benno Strub, Schellenberg Wittmer Ltd
In composition proceedings, depending on the stage of the proceedings, a creditors’ committee may or must be appointed by the creditors. See 4.3 The End of the Restructuring, Rehabilitation and Reorganisa- tion Procedure and 4.6 The Position of Shareholders and Creditors in Restructuring, Rehabilitation and Reorganisation . 7. Administrator and Liquidator in Composition Proceedings The court-appointed administrator ( Sachwalter ) monitors the debtor’s actions during the composition moratorium and has numerous other specific tasks. A liquidator is elected by the creditors if a composition agreement with assignment of assets is reached (see 4. Statutory Restructuring, Rehabilitation and Reor- ganisation Proceedings ). Although the law does not require any specific qualifications to act as administra - tor, usually specialised lawyers are chosen. Swiss insolvency law makes a basic distinction between claims that already existed at the moment when the insolvency proceedings were opened (pre- filing claims or bankruptcy/composition claims), and claims that arise during the insolvency proceedings with the approval of the bankruptcy administration or the administrator in composition proceedings (post- filing claims or liabilities of the estate or mass liabili - ties). Liabilities of the Estate 2. Creditors 2.1 Types of Creditors The estate is liable for claims that arise during the bankruptcy or composition proceedings. The liabilities of the estate must be asserted through ordinary legal proceedings and are not subject to the schedule of claims procedure. In bankruptcy proceedings, prob - lems with distinguishing between post- and pre-filing claims rarely arise, as the business operations are usually discontinued. However, in composition pro - ceedings, the continuation of the insolvent debtor’s business or part thereof is the standard case, so liabili - ties of the estate will normally arise. Notably, liabilities incurred with the administrator’s consent during com - position proceedings are liabilities of the estate.
The costs of the proceedings, including the costs of the bankruptcy administration and the administrator or liquidator in composition proceedings, also consti - tute liabilities of the estate. Bankruptcy/Composition Liabilities Claims that arose prior to the insolvency proceed - ings are generally treated equally, meaning that each creditor must bear its share of the loss proportion - ally (ie, same percentage of approved claim as divi - dend). However, the law does provide for three differ - ent classes of creditors. Only when the creditors in a higher class have been fully satisfied are those in a lower class entitled to the (remaining) proceeds, which are then to be shared equally among them again. The three classes and the most relevant claim types are as follows: • First class: Claims of employees derived from the employment relationship which arose during the six months prior to the opening of bankruptcy proceedings but not exceeding the amount cor - responding to one year’s earnings of CHF148,200. Claims by pension funds against the employer. • Second class: Claims by the social insurance bod - ies for the contributions. • Third class: All other claims. The claims of the first two classes are referred to as privileged claims, and those in the third class as ordi - nary claims. Subordinated Claims Swiss insolvency law does not specifically govern subordinated claims. Claims for which creditors agreed or unilaterally declared that they shall be sub - ordinated form a separate class below the third class. The concept of equitable subordination is recognised by the SSC based on the abuse of rights doctrine. Notably, shareholder loans are generally not subordi - nate or recharacterised as equity. Secured Claims Secured claims do not initially fall within these cat - egories. They are satisfied directly out of the proceeds from realisation of the collateral. The uncovered part of secured claims will be allocated to the classes set out above.
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