SWITZERLAND Law and Practice Contributed by: Urs Hoffmann-Nowotny, Marcel Jakob and Benno Strub, Schellenberg Wittmer Ltd
Insolvent Liquidation (Bankruptcy) Once bankruptcy has been opened, the debtor is pro - hibited from continuing its business activities unless the bankruptcy administration decides otherwise. The bankruptcy estate encompasses all of the debtor’s assets, in Switzerland or abroad, although access to foreign assets may be limited. An inventory of all of the debtor’s assets is prepared, and the winding-up process determined. If the liquid funds available in the estate are insufficient to cov - er the estimated costs of the proceedings and if no creditor advances the funds, the proceedings will be suspended for lack of assets. Otherwise, bankruptcy proceedings are conducted in summary proceedings or, in large-scale cases, in ordinary proceedings. Based on a creditors’ call, a schedule of claims is then drawn up according to the order of priority pro - vided in the DEBA (see 2.1 Types of Creditors and 2.2 Priority Claims in Restructuring and Insolvency Proceedings ). The remaining assets are then liquidated. A decision must be made on whether to initiate legal action for claw-back (see 8.1 Circumstances for Setting Aside a Transaction or Transfer ) and directors’ and offic - ers’ liability (see 7.2 Personal Liability of Directors ). These claims are often not enforced by the bankruptcy administration itself, but instead assigned to interest - ed creditors. 5.3 The End of the Liquidation Procedure(s) Solvent Liquidation A solvent liquidation procedure is formally completed once the liquidators have realised all assets, settled all liabilities and distributed any remaining surplus to shareholders. The final step is deleting the company from the commercial register, which requires the com - pany to have filed for and settled all its Swiss taxes. Insolvent Liquidation (Bankruptcy) Once all proceeds have been realised and the sched - ule of claims has become definitive, the bankruptcy administration/liquidator prepares the distribution plan and the final account of the proceedings. Once the costs of the proceedings have been paid, the
the process; otherwise, the liquidator must initiate bankruptcy, a form of involuntary liquidation. • Involuntary liquidation, on the other hand, can be initiated by various actors (the debtor’s board or shareholders, its auditor, the creditors or the commercial register), but is always declared or confirmed by a court. Typically, it leads to bank - ruptcy due to insufficient assets to cover all debts or to a composition moratorium for the purpose of restructuring. 5.2 Course of the Liquidation Procedure Solvent Liquidation When a company initiates a voluntary (solvent) liqui - dation procedure, the management authority is trans - ferred to the liquidators appointed by the shareholders (which may or may not be the directors). The liquida - tors handle the winding-up phase focused solely on settling debts and distributing remaining assets (eg, all decisions related to operations, asset realisation and creditor settlement). Throughout the process, the liquidators must act primarily in the interests of credi - tors. If assets are insufficient to cover liabilities, they must initiate bankruptcy. Generally, contracts that existed before the liquidation remain valid unless they are terminated in accordance with their terms or statutory provisions. Liquidators may choose not to renew agreements or terminate contracts that conflict with the purpose of the liqui - dation to ensure the winding-up process proceeds efficiently. A voluntary liquidation process typically follows these stages: • shareholders resolve to liquidate the company and appoint liquidators; • registration of the resolution and the liquidators with the commercial register; • creditors’ call; • preparation of an initial balance sheet, completion of ongoing transactions and realisation of assets; • settlement of debts, followed by distribution of any surplus to shareholders; and • deletion from the commercial register (generally no earlier than one year after the creditors’ call).
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