SWITZERLAND Law and Practice Contributed by: Urs Hoffmann-Nowotny, Marcel Jakob and Benno Strub, Schellenberg Wittmer Ltd
the sale of the business in an asset deal or share deal (after the relevant business has been carved-out into a new entity) or, in the case of a financially distressed holding company, the sale of subsidiaries. Such trans - actions are subject to specific authorisation by the composition court or, if applicable, the creditors’ com - mittee (see 4.4 The Position of the Debtor in Restruc- turing, Rehabilitation and Reorganisation ). 4.3 The End of the Restructuring, Rehabilitation and Reorganisation Procedure The administrator calls a creditors’ meeting to inform them about the proposed composition agreement. In a written ballot, the creditors decide whether the proposed agreement should be accepted or rejected. A composition agreement must be approved with a qualified majority of the following two alternative vot - ing quorums: • the majority of creditors with voting rights who together hold claims worth at least two-thirds of the total amount of claims (ie, more than 50% of votes and at least 66.66% of claims); or • one-quarter of creditors with voting rights who together hold claims worth at least three-quarters of the total amount of claims (ie, at least 25% of votes and at least 75% of claims). In the case of a composition agreement with assign - ment of assets, the creditors elect the liquidator (who may be, and often is, the previous administrator) and a creditors’ committee. The administrator must submit to the court a final report informing about received creditor approvals and recommending approval or rejection of the com - position agreement. The court will assess whether the necessary quorum has been met, whether the offered amount is in proper proportion to the debtor’s means, whether the payment of the liabilities of the estate is sufficiently secured and whether the privileged claims are covered. In the case of an ordinary composition agreement, the court must also ascertain that the shareholders have contributed to the restructuring (see 4.2 Statutory Restructuring, Rehabilitation and Reorganisation Procedure ). The court has discretion only in assessing whether the aforementioned statu - tory requirements are met (no overall fairness test)
and can only either approve or reject the composition agreement. In practice, most courts heavily rely on the opinion of the administrator. If the composition agree - ment is rejected, bankruptcy is opened. An approved composition agreement is binding on the debtor and all the creditors, including those who did not consent to it (cram-down mechanism, but no cross-class cram-down). In the case of an ordinary composition agreement, the execution of the com - position agreement is, in principle, the responsibility of the debtor. It is possible, however, for the former administrator or a third party to be appointed by the composition court to implement and monitor the per - In general, during composition proceedings, the debtor may normally continue its business activities under the supervision of the administrator. In other terms, the company as such and its corporate bodies (general assembly, board of directors, management) remain in place and keep their competences (to the extent they are not restricted or suspended by law or the court’s specific dispositions). The court may, however, withdraw the powers of the debtor to manage its business and delegate this pow - er to the administrator, or it may reserve certain acts and decisions to the administrator. formance of the composition agreement. 4.4 The Position of the Debtor in Restructuring, Rehabilitation and Reorganisation Without authorisation from the composition court, the debtor is prohibited by law from disposing or encum - bering fixed assets ( Anlagevermögen ), providing security (eg, to secure new funding) or making gifts (including transactions without adequate considera - tion) during the moratorium. If such a transaction is considered necessary or in the creditors’ best inter - est, the debtor must apply for specific authorisation from the composition court or, if applicable, the credi - tors’ committee (Article 298 DEBA). If approved, these transactions are not subject to any claw-back actions (see 8.1 Circumstances for Setting Aside a Transac- tion or Transfer ).
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