October 25 2023

Switzerland, tougher measures against abusive failures from 1 January 2025

Source: Admin.ch

Debtors must not be able to escape their financial obligations by abusing bankruptcy proceedings. At its meeting on 25 October 2023, the Federal Council put the necessary amendments to laws and ordinances into force with effect from 1 January 2025. This deadline gives the authorities sufficient time to adapt their internal procedures.

In March 2022, Parliament passed the Federal Act on Combating Bankruptcy Abuse. In future, it will be more difficult to settle debts at the expense of creditors. For example, bankruptcy enforcement will be initiated for public law claims according to the general rules. Debtors should no longer be able to abuse the bankruptcy procedure to evade their financial obligations, such as the payment of wages or debts, thereby harming others. It will also no longer be possible to use bankruptcy proceedings to compete unfairly with other companies.

The Federal Act on Combating Bankruptcy Abuse involves the amendment of several pieces of legislation, namely the Swiss Code of Obligations, the Federal Act on Debt Collection and Bankruptcy, the Criminal Code and the Federal Act on Direct Federal Taxation. The referendum deadline for the new provisions has expired unused.

These legislative changes require the adaptation of certain provisions of the Commercial Register Ordinance (Commercial Register Ordinance - ORC) and the VOSTRA computerised criminal records ordinance. Most of the opinions expressed in the consultation were positive, which is why the Executive had to make only minor adjustments. In particular, it was welcomed that the indicia for suspecting a null transfer of shares will be listed in the ORC. The clarifications concerning the listing of the waiver of a limited audit were also approved.

Originally, the Federal Council had proposed to introduce the new provisions on stricter measures in the fight against abusive bankruptcies already at the beginning of 2024. However, during the consultation process, the cantonal authorities wished for a delayed entry into force in order to give the authorities sufficient time to adapt their internal procedures and IT systems. For this reason, the Federal Council has put the new statutory and ordinance provisions into force with effect from 1 January 2025.

Source: Admin.ch