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Switzerland

Paul Hastings in collaboration withLenz & Staehelin
Liquidity Measures
Reliefs
Insolvency Measures
Debt Collection and Bankruptcy

Liquidity Measures

Guarantee program

Government Measure1

Eligible SMEs may apply for loans of up to 10% of their most recent annual turnover capped at CHF 20m:

  • Loans up to CHF 500k are made without formality, by banks and are fully secured by a state guarantee organisation;
  • Applications for loans over CHF 500k (plus annual interest) are subject to an ordinary review by banks but take into account the guarantee, which cannot exceed 85% of the loan (plus interest).

Exceptionally, the amount of the guarantee may exceed CHF 20m, if the applicant faces material adverse consequences as a result of COVID-19; in that case, any increase in the guarantee is subject to the approval of the Federal Department of Economic Affairs, Education, and Research (EAER) with the agreement of the Federal Department of Finance (FDF).

Loans are granted for a period of five years (an extension of two years in case of difficulties is also possible).

Loans will be amortised in full within five years. However, if amortisation within this deadline has material adverse consequences for the borrower, the participating bank may, with the agreement of the guarantor, extend the deadline once by two years.

Interest rates:

  • loans < CHF 500,000: 0.0% p.a.;
  • loans > CHF 500,000: 0.5% p.a.;
  • loans not secured by a joint and several guarantee: in accordance with the credit agreement.

By March 31 of each year (commencing 31 March 2021), the Federal Department of Finance (FDF) may (in consultation with the participating banks) adjust the interest rates upwards to take account of market developments.

1 Note that some cantons have announced similar measures. Businesses should confirm whether measures have actually been enacted in their canton.

 
Eligibility

Swiss based SMEs2 which:

  • were Incorporated before 1 March 2020;
  • are not (i) bankrupt, (ii) in a composition procedure, or (iii) being wound up at the time of the application;
  • are substantially affected economically as a result of the COVID-19 pandemic, in particular as regards their turnover;
  • have not been granted guarantees already under the emergency law regulation applicable to the sectors of sport and culture at the time of the application.

2 SMEs are businesses, which do not exceed two of the following criteria in two successive financial years: (i) a balance sheet total of CHF 20m; (ii) turnover ofCHF 20m; and (iii) 250 FTE on average per year.

 
Supervising Authority

The Federal Department of Economic Affairs, Education and Research (EAER).

Credit applications must be submitted by 31 July 2020 to the creditor banks using the form below provided for this purpose and the banks must forward them to the guarantee organisations by 14 August 2020.

The volume of loans guaranteed by the Swiss Confederation is currently capped at CHF 20b, but it may be increased in the next few days to CHF 40b if the Swiss Parliament accepts the Federal Council’s proposal of 3 April 2020.

Electronic documents to submit loan applications are available here

 
Availability

Effective as from 26 March 2020 for a period of six months.

Deferred Tax Payments

Government Measure

Enterprises will be allowed to postpone tax related payments without being subject to interest until 31 December 2020. This applies to VAT payments and custom duties (from 21 March 2020), as well as to federal income tax (from 1 March 2020).

Withholding tax and stamp duty remain unaffected. However, Swiss law provides for flexible payment modalities if a payment within the deadline would have material adverse consequences for the taxpayer. The tax authority may accept an extension of the deadline or a payment by instalments.

 
Eligibility

Automatic with no application required.

 
Supervising Authority

Swiss Federal Tax Administration.

The cantons have not announced whether similar measures will apply at the cantonal level, but some cantons have already enacted other tax related measures. Thus, businesses should check whether measures have been enacted in their canton.

 
Availability

Effective as from 21 March 2020 until 31 December 2020 in relation to VAT payments and custom duties and as from 1 March 2020 until 31 December 2020 in relation to federal income tax.

Reliefs

Deferral of the payment of social security contributions

Government Measure

Employers may request to temporarily defer the payment of the AVS-AHV/AI-IV/APG-EO/AC-ALV2 social security contributions (the "1st pillar contributions"). If this deferral is approved, no default interest is due.

Employers may also request the adjustment of the usual amount of the advance payments in respect of the 1st pillar contributions in the event of a significant decrease in the total payroll. The deferral of payments and reduction of advance payment requests is evaluated by the AVS-AHV compensation funds.

 
Eligibility

Businesses impacted by the current exceptional economic situation.

 
Supervising Authority

AVS-AHV compensation funds.

 
Availability

Effective as from 26 March 2020 for a period of six months.

Temporary suspension of default interest on arrears of social security contributions3

Government Measure

The social insurances (AHV/IV/ALV/EO) generally waive, until 30 June 2020, the collection of default interest on arrears of social security contributions. The measure applies retroactively from 21 March. Contributions remain due and must be paid in full.

As of 1 July 2020, the compensation funds will once again submit summons in the event of non-payment of social security contributions and may, if necessary, institute legal proceedings.

3This measure complements the one already taken with regard to the suspension of default interest on deferred payments granted to companies lacking liquidity.

 
Eligibility

Company or self-employed person required to pay social security contributions.

 
Supervising Authority

AVS-AHV compensation funds.

 
Availability

Effective as from 29 April 2020 (with retroactive effect to 21 March 2020) to 30 June 2020.

Insolvency Measures

Suspension of limitation periods for the entire debt collection system

Government Measure

Limitation periods are suspended for the entire debt collection system. This means, in essence, that debt collection acts may no longer be carried out. The following are, in particular, deemed debt collection acts:

  • Service of an order to pay to debtors;
  • Definitive and provisional dismissal of debtor’s objection; and
  • Bankruptcy notice, bankruptcy hearings, and the declaration of bankruptcy.

Limitation periods triggered by debt enforcement acts that come to an end within this suspension period or the debt collection holidays will not expire during that period, but are extended until the third day following the end of the suspension period and the debt collection holidays.

 
Eligibility

All debtors, without exception.

 
Supervising Authority

Debt enforcement and bankruptcy offices.

Debt Collection and Bankruptcy

Easing of insolvency filing obligations

Government Measure

The new COVID-19 Insolvency Ordinance temporarily allows executive bodies of Swiss companies not to notify the courts of an existing balance sheet over-indebtedness and to continue trading on the basis of an overall positive assessment of the future ability of the company to restructure its balance sheet by 31 December 2020.

To remove pressure from executive bodies and to avoid premature insolvency filings in view of daunting liability risks, the Swiss Federal Council has now ordered that companies with a healthy balance sheet (no over-indebtedness) as per 31 December 2019 will not have to comply with insolvency filing requirements established under Swiss law, if:

  • there are prospects (Aussicht) that the company will have a "clean" balance sheet (no over-indebtedness) by 31 December 2020; and
  • the company was not over-indebted as per 31 December 2019.

In addition, while corporate executives will still have to prepare interim financials in case of a concern of over-indebtedness, it will not be necessary to have such interim financials audited. The subsidiary filing obligation of auditors will be equally suspended. This allows for a dialogue between executive bodies and statutory auditors.

3 A company suffers "over-indebtedness" when the claims of the company’s creditors are not covered by the company’s assets.

 
Eligibility

Swiss based companies with a healthy balance sheet (no over-indebtedness) as per 31 December 2019.

 
Availability

Effective as from 20 April 2020 and, subject to any extension, expires six months thereafter.

COVID-19 moratorium aka "Moratorium-lite"

Government Measure

Under the new COVID-19 Insolvency Ordinance, access of small and medium sized entities (SMEs) to a protective moratorium has been facilitated by introducing a special COVID-19 moratorium or 'moratorium-lite' with less stringent formal requirements.

The main differences between the 'moratorium-lite' and the general moratorium are as follows:

  • the moratorium-lite is available to privately held SMEs only (i.e. not to listed or large companies);
  • the "moratorium-lite" can only be applied for by the SME seeking protection (but not by its creditors);
  • the applicant must have been balance sheet "healthy" (no over-indebtedness) as per 31 December 2019. This requirement is aimed at ensuring that the "moratorium-lite" will not be used for entities which were in distress prior to the COVID-19 pandemic. That said and in contrast to what is outlined above for the easing of filing obligations, companies showing an over-indebtedness as per 31 December 2019 which, at that time, was covered by debt subordinations may apply for a "moratorium-lite”;
  • the financial information to be provided to the court is less specific than under a composition moratorium but must make plausible the applicant's financial position to the extent possible;
  • the duration of the 'moratorium-lite' is initially up to three months (one time extension by up to three months possible);
  • the appointment of an administrator by the court will be the exception (rather than the rule as in the general moratorium);
  • the moratorium will always be public (no silent "moratorium-lite") and the SME will have to inform its creditors proactively once the "moratorium-lite" has been granted;
  • while the "moratorium lite" generally offers protection against creditor action, certain remedies of a general moratorium do not apply: (i) Interest continues to accrue during the 'moratorium lite', (ii) court and administrative proceedings are not suspended automatically, (iii) it will not be possible for an administrator to order the conversion of non-monetary claims into monetary claims and (iv) long term agreements cannot be terminated to facilitate the restructuring even if an administrator is appointed;
  • no specific "exit" rules apply to the "moratorium-lite", i.e. the SME will be operating under regular rules again once the term of the "moratorium-lite" has expired. There will not be any court involvement at that stage;
  • as in the composition moratorium, super-priority of claims coming into existence during the "moratorium lite" requires consent from the administrator. However, as administrators will be the exception for the "moratorium lite", creditors may not expect to benefit from a super-priority.

If a "moratorium-lite" is applied for, the COVID-19 Insolvency Ordinance clarifies that the executive bodies of the relevant entity will have complied with their filing obligations in case of over-indebtedness.

 
Eligibility

Private Swiss based SMEs (as set out above).

 
Availability

Effective as from 20 April 2020 and, subject to any extension, expires six months thereafter.

Amendments to general moratorium

Government Measure

The new COVID-19 Insolvency Ordinance provides for certain amendments to the general moratorium. In particular, applicants are currently not requested to provide a restructuring plan to the court together with the request for the grant of a provisional composition moratorium (i.e. the first stage of the general moratorium) as such document would be difficult to produce in the current uncertainty. Further, the maximum duration of the provisional moratorium has been extended to six months (previously: four months). Lastly, until 31 May 2020, courts will not have to open bankruptcy proceedings ex officio in case of uncertainties regarding the prospects of the successful restructuring provided, however, that the relevant debtor was not over-indebted as per 31 December 2019 or such over-indebtedness was covered by sufficient debt subordinations.

 
Eligibility

Debtors subject to bankruptcy proceedings.

 
Availability

Effective as from 20 April 2020 and, subject to any extension, expires six months thereafter.