SWITZERLAND Law and Practice Contributed by: Urs Hoffmann-Nowotny, Marcel Jakob and Benno Strub, Schellenberg Wittmer Ltd
Rehabilitation and Reorganisation . There is no spe - cific financing instrument for a moratorium. Consid - ering that liabilities incurred with the administrator’s consent are liabilities of the estate (see 2.1 Types of Creditors ) and new security may be granted with the composition court’s approval (see 4.4 The Position of the Debtor in Restructuring, Rehabilitation and Reorganisation ), it is possible to raise specific financ - ing, subject to the aforementioned conditions. A composition proceeding may end either (a) in the release of the restructured company from composition proceedings, (b) with the conclusion of a composition agreement (restructuring plan) or (c) with the opening of bankruptcy proceedings if no restructuring can be achieved. Unless the debtor is fully restructured during the mor - atorium without a composition agreement, a compo - sition agreement is prepared during the moratorium, which must then be accepted by a qualified majority of creditors and confirmed by the court. Swiss law provides for two main types of composition agree - ment: • An ordinary composition agreement, where the debtor and the creditors agree on the terms and conditions of the repayment of the debts, allows the debtor to continue to exist. Usually, the agree - ment provides for a hair-cut/dividend settlement and/or deferred repayment. • A composition agreement with assignment of assets leads to the liquidation of the debtor (see 5. Statutory Insolvency and Liquidation Proce- dures ). It is a kind of “softer” bankruptcy with more flexible rules. A composition agreement is only possible if there are sufficient assets to fully pay all privileged creditors. The proceeds from the liqui - dation constitute the estate, which is distributed among the creditors as in bankruptcy. In practice, the assets constituting the business of the debtor are often already sold during the composition mor - atorium, and the proceeds from the sale together with the remaining assets constitute the estate which is then assigned to the creditors. The restructuring may also be implemented as a pre - pack deal. Such a prepack, for example, may involve
must be accompanied by key financial documents, including accounts, a liquidity plan and a provisional restructuring plan. Initially, the court grants a provisional moratorium, often within days or even hours, and without a hear- ing, although court practices may vary. The provisional moratorium results in an automatic stay. If there are no prospects for restructuring, the court denies the petition and opens bankruptcy. The debt - or company and creditors may appeal relevant court decisions. 4.2 Statutory Restructuring, Rehabilitation and Reorganisation Procedure Any composition proceedings begin with a provisional moratorium (lasting up to eight months in total), allow - ing for an analysis of the debtor’s financial situation and its restructuring options. The granting of the pro - visional moratorium is published (except upon request in justified cases, so-called silent moratorium). Usu - ally, the court appoints an administrator (this is com - pulsory in the case of a silent moratorium). If the prospects of recovery are confirmed during the provisional moratorium, the court grants a definitive moratorium of four to six months (prolongable to a maximum of 24 months). The definitive moratorium is always published and an administrator must be appointed. During the moratorium, no debt enforcement proceed - ings may be instituted or continued (with some excep - tions). Periods of limitation and peremptory deadlines do not run, and interest ceases to accrue against the debtor for all unsecured claims. All in all, the effects of the granting of a moratorium on the assets and liabilities of the debtor are similar to the opening of bankruptcy proceedings, although less far-reaching. In general, the debtor’s business is continued during the moratorium under the supervision of the adminis - trator (see 4.4 The Position of the Debtor in Restruc- turing, Rehabilitation and Reorganisation ). With respect to the position of the shareholders and the creditors during the proceedings, see 4.6 The Posi- tion of Shareholders and Creditors in Restructuring,
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