Rehabilitation: Insolvency Proceedings

The judicial estate proceedings are a tool of the Swiss debt enforcement and bankruptcy law (SchKG) and regulate the development of a composition agreement during debt restructuring.

Nature of the Composition Proceedings

Like bankruptcy, the composition proceedings serve to clear debtor's liabilities and take place under the supervision of a composition judge, who appoints a trustee to cooperate. The aim of the composition moratorium is the preliminary securing of the legal and economic existence of a company, by having all creditors accommodate the debtor. During the composition moratorium, neither bankruptcy, debt enforcement through seizure, nor the realization of pledged assets is possible.

Procedure of the Composition Proceedings

Usually, the composition proceedings are initiated upon an application by the debtor. It can also be initiated by a creditor. Subsequently, the debtor makes an offer for debt settlement in the form of a composition agreement. The composition agreement is deemed accepted if the composition judge and the majority of creditors, who simultaneously represent at least two-thirds of the total amount of the claims or a quarter of the creditors, who represent at least three-quarters of the total claims, have consented. If the agreement is reached, it binds all creditors, including those who have not consented to the agreement. The actual debt settlement then takes place in the context of the implementation of the composition agreement.

Extra-judicial Composition Agreement

The so-called extra-judicial composition agreement consists of the totality of debt relief agreements with individual creditors without the involvement of authorities. These are private law negotiations that enjoy contractual freedom according to the Code of Obligations. In the case of an extra-judicial composition agreement, there is no guarantee for equal treatment of all creditors. Moreover, the debtor reserves the right to initiate judicial composition proceedings.

• Further information
   
• Calculate an offer for fiduciary