At its meeting on October 14, 2020, the Federal Council decided not to extend the temporary measures to prevent corona-related bankruptcies. The measures of the Covid-19 Ordinance on Insolvency Law of April 16, 2020 were limited to six months and continue to apply until October 19, 2020. With the Covid-19 Ordinance on Insolvency Law of April 16, 2020, the Federal Council had temporarily suspended the obligation of companies to report over-indebtedness and created the temporary, unbureaucratic Covid 19 deferral, for SMEs in particular. As stated in the corresponding media release, the Federal Council intends to return to the ordinary law, but will continue to monitor the situation closely and, if necessary, take further insolvency law measures at a later date, should this be necessary. The Parliament expressly delegated the authority to do so to the Federal Council in the Covid 19 Act, which entered into force on September 26, 2020.
This means on the one hand the abolition of the possibility to apply for a Covid-19 deferral. For legal entities and their responsible persons that are subject to a legal obligation to notify in the event of capital loss and over-indebtedness, this also means a return to the regular legal obligations to notify in the event of capital loss and over-indebtedness. In the case of stock companies, this (again) means the obligation to draw up an interim balance sheet and to submit it to a licensed auditor for examination in accordance with art. 725 para. 2 of the Swiss Code of Obligations, if there are justified concerns of over-indebtedness. If the interim balance sheet shows that the claims of the company’s creditors are not covered either at the value of a going concern or at sale value, the Board of Directors must notify the judge unless company’s creditors rank behind all other company creditors to the extent of the under-coverage.
However, the extension of the debt-restructuring moratorium approved by the Parliament as part of the company law revision – irrespective of the corona pandemic – will already be put into force by the Federal Council on October 20, 2020. The total duration of the provisional debt-restructuring moratorium will thus be extended from four to eight months. The remaining parts of the company law revision, on the other hand, will only enter into force later. The associated facilitation of the restructuring of companies can also be of significance in a crisis like the corona pandemic.
The Reichlin Hess team is at your disposal for further information.