The Restructuring Review

Author:Mr Daniel Hayek and Chantal Joris
Profession:Prager Dreifuss
 
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I OVERVIEW OF RESTRUCTURING AND INSOLVENCY ACTIVITY

Switzerland's GDP rose by 0.6 per cent in the fourth quarter of 2017. Positive impulses on the production side came from various sectors, namely the manufacturing industry, the construction industry and most service industries, including financial services. GDP growth was hampered by foreign trade in goods and services, with exports in goods and services dropping by 1.4 per cent and 2.7 per cent, respectively, and imports of services falling by 5.1 per cent. In total, Switzerland's real GDP growth amounted to 1.0 per cent in 2017.2 The Swiss federal government's Expert Group spring 2018 expects the GDP to grow by 2.4 per cent in 2018, mainly because of the healthy global economy, which is boosting international demand for Swiss products, and to an overall growth on the expenditure side of the GDP. The favourable economic environment also has a positive impact on the labour market, with unemployment gradually declining since mid-2016. In 2017, the unemployment rate was at 3.2 per cent, decreasing from 3.3 per cent in 2016. The Expert Group is predicting a further drop in unemployment to 2.9 per cent in 2018 and 2.8 per cent in 2019.3

As a result of a slightly stronger Swiss franc than anticipated, the Swiss National Bank (SNB) has revised its inflation forecast downwards and anticipates an inflation rate of 0.6 per cent for 2018. For 2019 and 2020, the SNB predicts inflation of 0.9 per cent and 1.9 per cent, respectively.4

In Switzerland, no official statistics are published with regard to 'composition proceedings', that is, formal restructuring proceedings. With regard to bankruptcy proceedings, in 2017, 13,257 bankruptcy proceedings were opened, which equals an increase of 2.6 per cent compared to 2016. Although this is the highest number of bankruptcy proceedings since 2008, losses resulting from bankruptcy proceedings has been decreasing since 2015, and has in particular sharply decreased by 33.5 per cent compared to 2016, equalling in losses of 1.7 billion Swiss francs.5

II GENERAL INTRODUCTION TO THE RESTRUCTURING AND INSOLVENCY LEGAL FRAMEWORK

Switzerland does not have a comprehensive law on insolvency and restructuring procedures. While insolvency matters are mainly governed by the Swiss Debt Enforcement and Bankruptcy Law (DEBL), formal restructuring procedures are provided for in both the DEBL and the Swiss Code of Obligations (CO), with the latter also containing provisions on...

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