On May 31, SWI PRL issued update on law on abusive bankruptcies.
SWI PRL Council of States approved bill to make fraudulent bankruptcies more difficult.
The package of measures aiming to protect creditors now goes to the National Council.
The legislation aims to get a very expensive phenomenon in Switzerland under better control, damage of several hundred million Swiss francs occurs this way each year.
Proposes via criminal law that bankruptcy should no longer be able to offer companies an excuse not to pay wages and debts, and to compete unfairly with other companies.
Proposals
In the event of a bankruptcy or debt enforcement offense certain abuses will be stopped via prohibition of activities such as stopping someone working in a company.
Such prohibitions will be communicated to the commercial register office, which will consequently ensure deletion of the persons concerned from the commercial register.
Preventive measures in the law of obligations as well as debt enforcement and bankruptcy law are to be added in order to strengthen transparency, assist the public.
Federal Court case law on the prohibition of the shell trade should also be reflected in law, shares in companies that are bankrupt should no longer be allowed to be sold.
The retroactive exit from the audit obligation, so-called opting-out, to be abolished.
Waiver of a limited audit should apply for a maximum of 2 subsequent financial years and must be registered with the commercial register before start of the financial year.
Next Steps
SWI PRL Council of States points out that the measures complement Federal Council's proposals for revision of company law and modernization of the commercial register.
If National Council also approves the bill, Federal Council must further develop law.
Aug. 2021 National Council Approval
On Aug. 20, 2021, SWI PRL reported the National Council has adopted the bill by 12 votes to 11 with 1 abstention; a minority requests the bill should not be submitted.
With 16 to 7 votes, the Council is against a time limit of the opting-out obligation.
Dec. 2021 Unresolved Items Discussed
On Dec. 1, 2021, SWI PRL Council of States discussed outstanding points, insisted that on state creditor bankruptcies, government agencies should not retain privilege.
Looked to National Council on shell trade, where bankrupt firm shares may only be sold if over-indebted with no business activity/assets; PRL originally wanted full ban.
Also looked to National Council regarding abolition of retroactive exit from the audit obligation; SWI PRL had originally wanted a two-year probation period before a waiver.
Prohibition of activity in criminal register sent to commercial registry to delete names. Bond, debt enforcement, etc, will also enable public search in the commercial register.
Mar. 2022 Further Debate
On Mar. 2, 2022, SWI PRL debated outstanding issues regarding the bill, voted with 94 votes to 77 in favour of government agencies not retaining privilege, as noted above.
Restated issues already agreed on; matter now goes back to the Council of States.
Mar. 7, 2022 Update
On Mar. 7, 2022, SWI PRL reported that the Council of States had now approved the amended version of the revised bankruptcy act; the bill is now ready for the final vote.
Mar. 18, 2022 Bill Approved
On Mar. 18, 2022, SWI PRL approved by 141 votes to 48, with 2 abstentions and 41 votes to 0, with 0 abstentions, revisions to the Debt enforcement and bankruptcy act.
These are designed to make the practice of using abusive bankruptcies more difficult.
However, this decision is subject to the optional referendum process for confirmation.
Jan. 2023 Resulting Amendments
On Jan. 25, 2023, SWI GVT sent resulting amendments to ordinances for consultation until May 5, 2023, following the Federal act on combating the abuse of bankruptcy.
Debtors will no longer be able to abuse bankruptcy proceedings to avoid commitments.
Law adopted in Mar. 2022 amends several laws: Code of obligations, Criminal code, Federal debt enforcement and bankruptcy act, Federal act on direct federal taxation.
And amendment of Commercial register ordinance and the criminal records ordinance.
The amendments to laws and ordinances are expected to come into force in Jan. 2024.
Debtors will no longer be able to misuse bankruptcy to avoid financial commitments in the future per amendments to laws, ordinances necessary adopted by Federal Council.
Deadline of Jan. 1, 2025 gives authorities sufficient time to adapt internal processes.
SWI PRL adopted in Mar. 2022 Federal law on combating abusive use of bankruptcy, new safeguards to prevent debtors from resorting to bankruptcy to escape obligations.
I.e. payment wages/debts repayment to detriment of their creditors or for unfair competition; public law claims will thus be subject to the bankruptcy's general rules.
Federal law amends various laws: Code of obligations, Law on debt enforcement and bankruptcy, Penal code, Federal law on direct federal tax, referendum deadline expired.
Legislative changes imply adaptation of ordinance on commercial register, on criminal record, too; Federal Council's proposals received positive opinions during consultation.
Federal Council initially proposed measures entered in force on 2024 but some cantons requested deadline be postponed to give them time to adapt policies (IT systems, etc).
Thus, Federal Council set entry into force on Jan. 1, 2025; new law to be published.
Nov. 2024 Debt Collection in Bankruptcy
On Nov. 14, 2024, SWI Tax, SWI GVT reported law change on debt collection practices.
Until Dec. 31, 2024, collection of taxes and duties is possible only via debt collection by garnishment as per Art. 43 no. 1 SchKG, but this provision will be repealed.
From Jan. 1, 2025, the initiated debt enforcement proceedings will continue for each debtor entered in the commercial register, which refers to provision Art. 39 SchKG.
Dec. 2024 Public Law Claims
On Dec. 9, 2024, SWI GVT clarified that SchKG changes from Jan. 1, 2025, on debt collection in bankruptcy re enforcement against debtors, applies to public law claims.
The Federal Office for Customs and Border Security (BAZG) will continue bankruptcy proceedings for its claims against debtors registered in the commercial register.
