On 1 January 2019, certain changes to Swiss debt enforcement and bankruptcy law will enter into force. The revised law aims to offer better protection for debtors against unjustified debt enforcement steps and to facilitate the recognition of foreign bankruptcy proceedings.
Restriction on disclosure in debt enforcement register
The Swiss Debt Enforcement and Bankruptcy Act (DEBA) allows the initiation of debt enforcement proceedings prior to a court's involvement: A creditor may request the debt enforcement office located at the domicile of the debtor to issue a payment order to the debtor, which the office will do without verifying the existence and enforceability of the purported claim. The debtor may then declare its objection within ten days. In the event of an objection, the creditor will have to obtain a favourable court decree before continuing with the enforcement proceedings. If, on the other hand, the debtor does not object to the payment order, the creditor may directly continue with enforcement proceedings, which, generally speaking, will ultimately lead to the seizure of assets in cases involving individuals, or bankruptcy where legal entities are involved. Given that the debt enforcement office does not assess the purported claims before issuing a payment order, cases may arise where an order is served even though no claim exists or exists only for a lesser amount.
Each debt enforcement office keeps a register which lists payment orders served on debtors located in its district, objections raised by debtors and further enforcement steps taken. Anyone who establishes a legitimate interest in obtaining information about a specific person has the right to access the information in the register relating to such person for the past five years. The intended execution of a contract creates a sufficient interest to receive information on the prospective counterparty. In practice, before entering into binding agreements, it is customary for landlords etc. to request a register excerpt from a prospective counterparty. The debt enforcement register is therefore an important source for creditworthiness assessments and an unjustified payment order - which appears in the register - can have a substantial adverse impact on the ability of an individual or entity to do business.
In order to mitigate the negative effects of unjustified payment orders, art. 8a of the DEBA will be amended with effect from 1 January 2019: Under the new law, a...