Insolvency law of Switzerland

It is principally codified in the Federal Statute on Debt Enforcement and Bankruptcy (German: Bundesgesetz über Schuldbetreibung und Konkurs, SchKG; French: Loi fédérale sur la poursuite pour dettes et la faillite, LP; Italian: Legge federale sulla esecuzione e sul fallimento, LEF) of 11 April 1889 (as amended)[1] as well as in ancillary federal and cantonal laws.

[8] If the debtor contests the creditor's claim, he may lodge a verbal or written objection (Rechtsvorschlag / Opposition) with the DCO within ten days of the receipt of the summons for payment.

The form of the execution proceedings generally depends on the nature of the debt and on the legal status of the debtor (although numerous exceptions and some special modes of execution exist): The seizure of assets is initiated by an application for continuation (Fortsetzungsbegehren / demande de continuation) filed by the creditor with the DCO.

[18] Unless the proceedings are limited to an item of pledged property to begin with (as in the case of foreclosure), the DCO will inventory all assets of the debtor (such as cash, valuables, real estate and future salary payments) and seize them (Pfändung / saisie) to the extent that is required to satisfy the involved creditor(s).

[28] To the extent the creditors remain unpaid, they receive certificates to that effect by the BO, but they may not initiate new insolvency proceedings against the debtor unless they can prove that he has acquired new assets.

[30] Certain assets that are considered essential to the financial and physical survival of the debtor and his family are also exempt from all enforcement proceedings.

[31] Creditors may request the courts to take certain measures to secure the debtor's assets in order to make them available for eventual liquidation.

These are court-mediated or out-of-court settlements between the debtor and his creditors aimed at preempting full bankruptcy proceedings.

[39] If out-of-court settlement efforts fail or are not undertaken, the debtor or a creditor may initiate the statutory proceedings by petitioning the competent cantonal court for a provisional, then a definitive debt restructuring moratorium (Nachlassstundung / sursis concordataire).

Once concluded, it takes effect with respect to all creditors and sets an end to all ongoing debt enforcement proceedings.

The scheme particularly affected the construction industry and cost taxpayers millions through unpaid taxes, social security contributions, and COVID loans.