Foreign Insolvency Orders
Traditionally, Switzerland has taken a very territorial approach to bankruptcy law being neither party to the EU Insolvency Regulation nor adhering to the UNCITRAL Model Law on Cross-Border Insolvency. As a consequence, foreign insolvency orders had no effect in Switzerland in the past unless and until the foreign insolvency orders were recognised in Switzerland. Moreover, even after recognition of the foreign insolvency orders the powers of the foreign receiver were very limited, and in principle a secondary (mini-bankruptcy) proceeding had to be conducted in order to realise any assets in Switzerland for the benefit of a foreign bankruptcy proceeding.
While foreign insolvency orders still need to be recognised in Switzerland, as of 1 January 2019 numerous forms of relief for cross-border bankruptcies and insolvencies entered into force:
- At the request of the foreign receiver the Swiss secondary proceeding needs not be carried out, if there are no secured or prioritised Swiss creditors or claims relating to a Swiss registered branch involved (new provision). In such circumstances, this easement should allow for a quick and cost saving transfer of Swiss assets to the main proceeding.
- Once the Swiss court has established that a secondary Swiss proceeding does not need to be conducted, the foreign receiver may take such acts as it is authorised under the main foreign proceeding. This includes arrangements to transfer Swiss assets to the main proceeding, conduct litigation, request information, initiate debt collection proceedings, and the lodging of clawback actions before Swiss courts and under Swiss law.
- Foreign decisions on clawback actions can be recognised and enforced in Switzerland if they have been rendered at the seat of the main foreign proceedings and provided the respondent does not have its domicile in Switzerland.
- Coordination in case of multiple proceedings between the involved authorities (including the foreign receiver) and their direct communication including protocols, basically in line with Articles 25-27 UNCITRAL Model Law, are now explicitly supported.