From the bankruptcy ruling onwards, how does bankruptcy progress? Liquidation of the company starts at this point, ending with its deletion from the trade register.
Once the court has pronounced initiation of bankruptcy, the liquidation process comes under the remit of the relevant court and bankruptcy office. In just over half of all cases in Switzerland, the bankruptcy office estimates that assets which can be seized are not even enough to cover the liquidation costs (between CHF 5,000 and CHF 10,000). It then decides to suspend the bankruptcy and publish this decision in the official gazette (Art. 230 LP). If, within 10 days, no creditor requests a liquidation procedure and stands guarantor for its financing, the bankruptcy is closed and the company is deleted from the trade register (this is what happens in the very large majority of cases of suspension of bankruptcy).
All other bankruptcies in Switzerland go through a liquidation phase. There are two main types of liquidation procedure: summary liquidation and ordinary liquidation. These procedures must be completed one year after initiation of bankruptcy.
Summary liquidation, a fast and effective procedure, occurs when the case is straightforward or when the company no longer has significant assets. This is the form of bankruptcy most frequently used when bankruptcy is not suspended. It is the responsibility of the bankruptcy office to propose this to the court.
Ordinary liquidation, which is much rarer, occurs in significant bankruptcy cases. Unlike summary bankruptcy, it comprises two meetings of creditors, who are thus able to control and verify the liquidation procedure more closely.
Liquidation procedures are described in Articles 221 et seq of the Federal Law on Debt Enforcement and Bankruptcy (LP).
Summary liquidation procedure
- Inventory. As soon as the office receives the order to initiate bankruptcy, it carries out an inventory of the company’s assets, mentioning the estimated value of assets that can be seized. The office takes all measures necessary to protect the assets: placement under seals, placement of seized items in a secure place, etc. At this stage, the bankrupt is required to provide the office with all necessary information. The bankrupt’s debtors must meanwhile indicate the nature of their debt or hand over to the office the assets belonging to the bankrupt.
- Call to creditors. The offices publishes the initiation of bankruptcy in the official gazette and instructs creditors to make themselves known and submit their claim within one month of this publication.
- Administration of the assets in bankruptcy. The office examines the bankrupt’s accounts and management. It compares the claims produced at the time of the call to creditors with the bankrupt’s accounts and takes a decision on the claims. It draws up a final statement of assets and liabilities, an inventory of any disputes and a prior notice regarding the decisions that still need to be taken.
- List of creditors. Once the claims have been examined and verified, the office draws up a complete table of the bankrupt’s liabilities, known as the list of creditors. This contains only those claims recognized definitively. It also contains claims which have been excluded and the reason for their exclusion. At this stage, creditors have the option of disputing the list of creditors before the court.
- Liquidation. The office proceeds with the sale at auction or by private agreement of the bankrupt's assets.
- Distribution of monies. The office draws up a table showing distribution of funds collected during the liquidation and prepares the final account. The bankruptcy costs are covered first. Then, each creditor receives a share of the monies. Monies are distributed by priority classes. Creditors who are not repaid in full receive a certificate of non-execution for the amount not received.
- Closure. Closure of the bankruptcy forms the subject of a ruling. It is published in the official gazette. The company is deleted from the trade register.
For more information about priority classes, see the chapter on the consequences of bankruptcy: