COVID-19 – Update from Switzerland

COVID 19 Swiss take Measures to assist over indebted businesses

On April 16, the Federal Council took further steps to ease the pressure on businesses in the context of the Coronavirus crisis. Over-indebted companies are at the center of these measures. The loss of income causes great financial difficulties for both the companies directly concerned and indirectly. In order to provide the affected businesses with sufficient liquidity, the Federal Council had already decided on March 25 to grant guarantees for bridging loans.

With these measures, the problem of over-indebtedness had not yet been resolved because, according to article 725 CO, the board of directors of companies in financial difficulty remained required to inform the court. The Federal Council has now relaxed this information obligation and decreed that it was no longer mandatory if the company concerned was not over-indebted on 31 December 2019 and that, in all probability, the over-indebtedness should be corrected by then the end of 2020. Companies thus gain a little respite to take new measures. At the same time, the Federal Council adapted the composition law and introduced the COVID 19 stay. Any sole proprietorship, any business of persons or any legal person may, as a debtor, request a stay of up to three months from the Concordat judge. Exceptions are public enterprises and enterprises of systemic economic importance. This reprieve is supposed to give businesses time to deal with the current economic deadlock. At the request of the debtor, the COVID-19 stay can be extended once for a maximum of three additional months. As part of this COVID-19 stay request, the company will thus comply with legal requirements and will not have to file a notice of over-indebtedness with the court.

Union Suisse Creditreform supports this approach and is pleased that certain points brought up during the public consultations have been included. For example, in the COVID-19 stay, there is no derogation from the duty of public disclosure of information by the court. This is how COVID-19 stays approved or extended will be made public. In addition, the court must immediately notify the debtor and all creditors in writing or by email of the approval or extension of the stay. We have already taken various measures. All COVID-19 stays, valid from April 20, will be recorded and displayed in our information and thus immediately identifiable. Credit management is now central. Credit limits must be adapted to changes in the financial situation of client companies. Invoices must be issued immediately and a strict reminder system is essential. If a debtor requests a deferred payment, a payment plan must be signed by your debtor. You thus gain an acknowledgment of debt which can be used to obtain a temporary release in the context of a lawsuit against your debtor. Many of our members already use the Creditreform monitoring service. In this way, they keep themselves informed of each relevant change and can react quickly if necessary. Creditreform also supports you with up-to-date financial information and debt collection services that allow you to focus on your core business despite the exceptional circumstances we face.

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