How High Will My Dividend Be In Insolvency Proceedings?

Author:Ms Sabina Schellenberg and Patrick Dietrich

The opening of insolvency or debt-restructuring proceedings can lead to considerable uncertainties for the parties involved. Employees want to know whether they receive their wages, social security funds are interested in getting paid all outstanding contributions; all creditors of the company would like to receive clarity about the dividend they are entitled to and other interested persons may want to know who the creditors of the company are. In any case, the parties involved have one thing in common: they are all interested in information about the company and the status of the insolvency or debt-restructuring proceedings. The question is how to get the relevant information.

Insolvency proceedings in Switzerland are initiated by a court decision. After the commencement of insolvency proceedings the trustee must determine the assets of the company and the claims of the creditors. As soon as the trustee has gained an overview of the assets and liabilities, he can estimate to what extent the creditors' claims can be satisfied. This is the central question for creditors, namely how high the dividend will be.

Trustees regularly inform creditors by notifications and circulars. In large insolvency or debt-restructuring proceedings, the notifications and circulars are generally publicly available and online, although this is not a legal obligation for trustees. These information letters provide first indications of the status of the proceedings, of the existing assets, the claims filed and thus of the expected dividend. Trustees make estimates of the expected dividend at an early stage, usually indicating a minimum and maximum expected dividend. However, the estimates of the trustees must be taken with caution, especially at an early stage of the proceedings. At this point in time, it is often unclear how high the dividend will ultimately be, since the dividend depends on various aspects. On the one hand, it depends on the trustee's decision regarding the admission of the claims filed. The decision of admission or non-admission may be challenged by the creditors in court. Such proceedings often last for years and the amount of liabilities thus remains uncertain until a final decision of the Swiss Federal Supreme Court. On the assets side liability and claw-back claims can have a considerable influence on the amount of the insolvency assets. Here to, until the outcome of such proceedings, there is uncertainty regarding the actual state of the...

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