For what is arguably the financial capital of the world, Switzerland is renowned for its jurisdiction's financial benefits, but this doesn't mean businesses encounter less risk.
Here, Daniel Hayek, Partner at Prager Dreifuss, gives Lawyer Monthly an update on the Swiss insolvency & restructuring landscape, revealing the most recent matters the firm has been involved with, progress in legislation surrounding foreign bankruptcy decrees, and what in his opinion is still to be introduced to Swiss legislation in this regard.
Has the insolvency and restructuring sector evolved significantly since we last spoke three years back?
There have been various developments in the insolvency & restructuring sector over the past years.
On the one hand, several amendments to the Federal Statute on Debt Enforcement and Bankruptcy entered into force on the 1st January 2014. They were enacted to encourage restructuring rather than liquidation of a company in distress by facilitating the application and approval of a moratorium on debt restructuring. Other incentives for restructuring include changes to employment law in relation to the takeover of businesses and more debtor-friendly rules on dealing with long-term contracts allowing a company in distress to free itself from long-term commitments that obstruct its financial recovery.
On the other hand, new case law of the Federal Supreme Court has clarified the situation with regard to the recognition of foreign bankruptcy decrees. Under Swiss law, liquidators of foreign estates must apply for recognition of the foreign bankruptcy decree and the opening of ancillary bankruptcy proceedings in Switzerland before claims can be filed or any action taken in Switzerland. Once the application has been approved, the local bankruptcy office can file claims on behalf of the ancillary bankruptcy estate.
One of the requirements for recognition is that the foreign jurisdiction grants reciprocity. Previously, it had been unclear whether the Netherlands granted reciprocity. A judgment rendered by the Federal Supreme Court within the Petroplus liquidation has now
laid down what qualifies as reciprocity, thus clarifying the legal situation and enabling recognition of bankruptcy decrees from the Netherlands.
What are the most recent legal matters you have been involved with and what have been the professional challenges therein?
Recently we have been involved in the insolvencies of Petroplus, Lehman Brothers and Swissair.