The recovery of unpaid claims and the management of financial distress are governed in Switzerland by the Federal Act on Debt Enforcement and Bankruptcy (DEBA / Loi fédérale sur la poursuite pour dettes et la faillite, LP), which provides a unified federal framework for both enforcement against individual debtors (by way of seizure) and insolvency proceedings against legal entities (bankruptcy). PBM Avocats advises creditors seeking to recover debts, debtors wishing to contest enforcement proceedings, and businesses facing financial difficulties, from our offices in Geneva and Lausanne.
Debt Enforcement Procedure: From Request to Seizure
Any creditor holding a monetary claim may initiate enforcement by filing an enforcement request with the Debt Enforcement Office (Office des poursuites) competent for the debtor's domicile. The Office issues a payment order (commandement de payer), which is served on the debtor. The debtor then has 20 days to pay, reach a settlement, or file an objection. If no objection is filed and the debt is not paid, the creditor may request continuation of enforcement, which leads to the seizure of the debtor's assets or, for registered legal entities, to bankruptcy.
Once seizure is ordered, the Debt Enforcement Officer identifies and attaches the debtor's assets, taking into account the statutory minimum vital income that must be left free of seizure. The seized assets are then realised (sold at auction or disposed of), and the proceeds are distributed to the creditor. If the realisation does not cover the full debt, the creditor receives a certificate of shortfall (acte de défaut de biens), which allows enforcement to be resumed if the debtor's financial situation later improves.
Challenging Enforcement: Objection and Discharge
A debtor who disputes the validity or amount of the claim may file an objection (opposition) to the payment order within 10 days of its service. The objection completely suspends the enforcement. To overcome an objection, the creditor must apply to the court for a discharge (mainlevée). A provisional discharge (mainlevée provisoire) is available where the creditor holds a signed acknowledgement of debt or similar written evidence; a final discharge (mainlevée définitive) requires an enforceable judgment.
PBM Avocats advises creditors on the evidence required to obtain a discharge, drafts and argues discharge applications before the competent court, and assists debtors in preparing and arguing objections and actions to set aside acknowledged debts (action en libération de dette). We also advise on the recognition and enforcement of foreign judgments in Switzerland under the Lugano Convention and bilateral treaties.
Corporate Insolvency: Bankruptcy and Over-Indebtedness
Corporate insolvency in Switzerland is primarily triggered either by the debtor's insolvency (suspension of payments) or by over-indebtedness (art. 725b CO). When the board of directors of an SA or Sàrl has reason to believe the company is over-indebted, it must have an interim balance sheet prepared, submitted to a licensed auditor, and — if both going concern and liquidation balance sheets show over-indebtedness — notify the court, which will declare bankruptcy unless creditors subordinate their claims to the extent of the over-indebtedness.
Bankruptcy proceedings are administered by the Bankruptcy Office, which inventories and liquidates the assets and distributes the proceeds to creditors in the statutory order: secured creditors first, then first-class creditors (employees' wage claims), second-class creditors (social insurance contributions) and third-class (unsecured) creditors. PBM Avocats represents creditors in filing and defending claims in bankruptcy proceedings, challenges distributions and ranking decisions, and advises board members on their legal obligations when insolvency is approaching.
Restructuring: Moratorium and Composition
Swiss law provides two main tools for debt restructuring without full bankruptcy: the provisional moratorium (sursis provisoire, art. 293 DEBA) and the composition moratorium (sursis concordataire, art. 293a et seq. DEBA). The provisional moratorium may be granted for up to four months and allows the debtor to assess whether a restructuring is viable. The composition moratorium is granted for up to 24 months (extendable in certain circumstances) and leads either to a composition agreement with creditors or, if restructuring fails, to summary liquidation.
A composition agreement (concordat) binds all unsecured creditors once approved by the requisite majority and confirmed by the court, even if individual creditors voted against. PBM Avocats advises debtors in preparing moratorium applications, negotiating with creditors, and structuring composition agreements. We also represent creditors in moratorium and composition proceedings to protect their interests and maximise their recovery.
Frequently Asked Questions about Debt Enforcement & Bankruptcy
What is the Swiss debt enforcement procedure and how does it work?
Debt enforcement in Switzerland is governed by the Federal Act on Debt Enforcement and Bankruptcy (DEBA / LP). A creditor wishing to recover a monetary claim initiates the process by filing an enforcement request (réquisition de poursuite) with the competent Debt Enforcement Office (Office des poursuites). The Office then serves a payment order (commandement de payer) on the debtor. If the debtor does not pay within 20 days and does not file an objection (opposition), the creditor may request continuation of enforcement, leading either to seizure of assets (saisie) or, if the debtor is a legal entity, to bankruptcy (faillite). The procedure is territorial: the competent Office is generally that of the debtor's domicile.
How can a debtor challenge a debt enforcement proceeding?
A debtor who disputes the claim may file an objection (opposition) to the payment order within 10 days of its service. The objection suspends the enforcement. To overcome the objection, the creditor must obtain either a court judgment or an order for provisional discharge (mainlevée provisoire) — where the claim is based on a written acknowledgement of debt — or a final discharge (mainlevée définitive) — where the claim is based on an enforceable judgment. The debtor may resist the discharge by filing an action to set aside the debt (action en libération de dette). PBM Avocats advises debtors on the most appropriate grounds for objection and on the defence strategy.
What assets are protected from seizure under Swiss law?
Swiss law provides for a minimum vital income protected from seizure. Under art. 93 DEBA, the Debt Enforcement Officer must leave the debtor with the means necessary for a frugal living for themselves and their dependants, calculated on the basis of the applicable cantonal guidelines (lignes directrices pour le calcul du minimum vital). Exempt from seizure are also certain categories of personal property (clothing, basic household goods), tools needed for the debtor's trade, and claims for maintenance (art. 92 DEBA). Cantonal guidelines vary; in Geneva and Vaud, the minimum vital is calculated according to specific tables.
What is the difference between personal bankruptcy and corporate bankruptcy in Switzerland?
Under Swiss law, bankruptcy (faillite) applies only to legal entities (companies) and to natural persons registered in the Commercial Register. Individuals who are not registered in the Commercial Register may not be declared bankrupt; they are subject only to seizure-based enforcement (voie de la saisie). For legal entities, bankruptcy may be declared by the court when the entity is insolvent or over-indebted. The bankruptcy estate is administered by the Bankruptcy Office, which liquidates the assets and distributes the proceeds to creditors in accordance with the statutory order of priority (art. 219 DEBA).
What is a composition agreement (concordat) and when is it available?
A composition agreement (concordat) is a court-supervised restructuring procedure available to debtors facing temporary financial difficulties. It allows the debtor to obtain a moratorium (sursis concordataire) during which a court-appointed commissioner assists in restructuring the business and negotiating with creditors. At the end of the moratorium, a composition agreement — which may provide for partial payment of debts, deferral of payment, or a combination — is submitted to creditors for approval. If approved by the required majority of creditors and confirmed by the court, the agreement binds all creditors. PBM Avocats assists debtors and creditors in composition proceedings.