SWITZERLAND Law and Practice Contributed by: Daniel Haeberli and Simone Gloor, Homburger
financings are rarely requested for acquisition financing, being more commonly used for work- ing capital financing.
• a pledge; • a security assignment ( Sicherungszession ); and • a security transfer ( Sicherungsübereignung ). The typical Swiss security package consists of the following (in terms of security and underly- ing assets): • the pledge of shares or quotas; • the security assignment ( Sicherungszession ) of intercompany loan receivables, insurance receivables and trade receivables; • the pledge of bank accounts; • the pledge of intellectual property rights; and • the security transfer ( Sicherungsübereignung ) of mortgage certificates ( Schuldbriefe ). Under Swiss law, the perfection requirements for collateral depend on the form of the security and the type of asset. Swiss law does not recognise or accept the concept of a floating charge or lien. Taking security over movable assets requires the security provider to relinquish exclusive control of the movable assets, and for the secured party to obtain physical possession of them. How- ever, certain movable assets, such as aircraft and ships, are subject to special laws providing for the perfection of a security in such movable assets by registration of the security interest in the relevant registry, rather than taking control or possession of those assets (those registry secu- rity interests are explained in more detail in 5.3 Registration Process ). Shares For security purposes, shares of a corporation ( Aktiengesellschaft ) or quotas of a limited liabil- ity company ( Gesellschaft mit beschränkter Haf - tung ) are typically pledged instead of assigned or transferred for security purposes, in order to prevent the security agent from becoming the
4. Intercreditor Agreements 4.1 Typical Elements
In cases where there are multi-layered debt financing instruments, such as senior loans, second-lien, mezzanine and high-yield bonds, it is typical to have an agreement among the creditors. This agreement serves the purpose of: • determining the relative rights of the various creditor groups; • establishing the priorities in relation to pay- ments (waterfall) and sharing in the collateral; and • choosing the mechanisms relating to the enforcement of the collateral. 4.2 Bank/Bond Deals Large acquisitions may be financed through secured loans and secured bonds. In such cases, it is common for loans and bonds to be secured on a pari passu basis. The intercreditor agreement typically follows the LMA standard. 4.3 Role of Hedge Counterparties Hedge counterparties are usually not involved in the acquisition financing of Swiss deals, and do not typically receive the benefit of the collateral securing the acquisition financing. 5. Security 5.1 Types of Security Commonly Used In relation to debt financings, the most common forms of security are as follows, depending on the kind of underlying assets available:
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