On 16 March 2018, Swiss Parliament approved a revision of the Swiss rules on international bankruptcy law in the Private International Law Act. At its inception in 1989, the rules were considered an adequate and even modern tool to deal with the recognition of foreign bankruptcy and insolvency decrees, composition agreements etc. and their legal consequences in Switzerland. Over the years, however, also in view of international developments, the rules have proven to be too cumbersome in some respects. The current revision simplifies recognition and relevant local proceedings.
Easier recognition of foreign bankruptcy decrees
The revision abolishes two former recognition requirements, making it easier to obtain recognition of foreign bankruptcy decrees in Switzerland: 1) It is no longer necessary that the concerned foreign state grants reciprocity to Swiss bankruptcy decrees. 2) The foreign bankruptcy decree no longer needs to be issued at the domicile or seat of the debtor; it can now also be issued at the latter's center of main interest provided that the debtor's domicile or seat was not located in Switzerland at the time of the opening of the foreign proceedings.
No automatic opening of ancillary bankruptcy proceedings in Switzerland
Under the current law, the recognition of a foreign bankruptcy decree always triggers the opening of ancillary (or "mini-") bankruptcy proceedings in Switzerland over the local assets of the debtor. Such proceedings intend to ensure the preferential payment of secured creditors and of privileged Swiss creditors out of the assets located in Switzerland. However, in most foreign bankruptcies, there are no such secured or privileged creditors. Rather, recognition is only sought because assets of the debtor are located in Switzerland (mostly Swiss bank accounts).
Under the revised law, the opening...