14 May 2020

What is a debt-restructuring moratorium?

Since 20 April 2020, both the judicial and debt collection pauses have ended. The legal standstill decreed by the Swiss Federal Council in accordance with Art. 62 of the Debt Enforcement and Bankruptcy Act (DEBA) has thus expired. For a business that, despite the emergency aid provided by the Swiss government and the cantons, is still unable to meet its obligations (immediately) but wishes to continue its business activities, the question arises as to how it can obtain creditor protection.

One way of obtaining creditor protection and thus time for a reorganization is the debt-restructuring moratorium. The debt-restructuring moratorium grants any legal form of business creditor protection for up to 24 months. This option should be considered in particular if the prerequisites for deferral of bankruptcy filing are not met or its effect is insufficient (please see COVID-19 Deferral of Bankruptcy Filing in Switzerland).

Did the Swiss government introduce the debt-restructuring moratorium by means of emergency law?

No, the debt-restructuring moratorium is a creditor protection instrument provided for in the Debt Collection and Bankruptcy Act, which has proved its worth in practice. The hurdles for granting the debt-restructuring moratorium are low. However, in order to simplify the reorganization of businesses in the wake of the corona crisis, the Swiss government has provided for further simplifications in debt-restructuring proceedings in the COVID-19 Insolvency Law Ordinance.

By means of emergency legislation, the Swiss government introduced the COVID-19 emergency moratorium in addition to the debt-restructuring moratorium. The COVID-19 emergency moratorium gives small and medium-sized businesses the possibility of a temporary moratorium. Such a deferral is intended to provide unbureaucratic assistance to businesses with liquidity bottlenecks (please see "Help is on the way" - The Swiss COVID-19 Insolvency Law Ordinance).

Under what conditions can I apply for a debt-restructuring moratorium for my business?

A business can apply for a debt-restructuring moratorium at the competent bankruptcy court. The following enclosures must be submitted with the application:

  • a current balance sheet;
  • an income statement; and
  • a liquidity plan or equivalent documents showing the debtor's current and future assets, earnings or income situation.

In order to make it easier for businesses to obtain creditor protection as quickly as possible, the Swiss government has stipulated by means of emergency legislation that (in contrast to the legal situation prior to the issuance of the COVID-19 emergency moratorium) no provisional reorganization plan need be attached to the application. Moreover, the bankruptcy court does not examine the debtor's ability to reorganize before the opening of the debt-restructuring proceedings. Even in the event of apparent hopelessness, the debt-restructuring proceedings must therefore initially be approved, and there is no ex officio bankruptcy. The emergency law has introduced an important exception here: After the granting of the debt-restructuring moratorium businesses which were not over-indebted on 31 December 2019 are given until 31 May 2020 to prepare for restructuring.

What are the effects of the debt-restructuring moratorium?

During the entire debt-restructuring moratorium the debt cannot be enforced against the debtor. Certain exceptions apply only in the case of pledged claims (Art. 297 para. 1 DEBA). With the exception of urgent cases, all civil and administrative proceedings are suspended (Art. 297 para. 5 DEBA).

The court appoints an administrator to examine the prospects of reorganizing in more detail (Art. 293b para. 1 DEBA) and to monitor the debtor (the business) (Art. 295 para. 2(b) DEBA). If the ability to reorganize has not been demonstrated by 31 May 2020, the administrator must submit a corresponding request to the court so that the court can open bankruptcy proceedings on the basis of Art. 296b DEBA.

The bankruptcy court may also order that certain acts can only be validly performed with the involvement of the administrator (Art. 298 para. 1 DEBA). The sale of parts of the fixed assets is also only possible to a limited extent (Art. 298 para. 2 DEBA).

With the exception of employment contracts and with the agreement of the administrator, the debtor may prematurely terminate continuous obligations if the purpose of the reorganization would otherwise be frustrated. The other party's claim for compensation only constitutes a claim for debt-restructuring (Art. 297a DEBA).

How long does the debt-restructuring moratorium last?

The emergency law has extended the duration of the provisional debt-restructuring moratorium from four to up to six months.

In justified cases, the court will refrain from public disclosure of the debt-restructuring moratorium to avoid negative publicity (Art. 293c para. 2 DEBA).

If, during the provisional moratorium, it becomes apparent that there is a prospect of reorganization or confirmation of a composition agreement, the bankruptcy court will grant the definitive moratorium ex officio, which will last for a further four to six months (Art. 294 para. 1 DEBA). At the administrator's request, the debt-restructuring moratorium can be extended to a total of twelve months, and in particularly complex cases even up to 24 months (Art. 295b para. 1 DEBA).

Is it possible to exit the debt-restructuring moratorium?

If the reorganization is successful, i.e. if the debtor is able to satisfy the creditors in full, the debt-restructuring moratorium is revoked (Art. 296a para. 1 DEBA).

If the creditors agree to a composition agreement and if this is approved by the court, the debt-restructuring moratorium ends. There are two types of composition agreements:

  • In a composition agreement with dividend settlement, the debtor and the creditors agree on a certain composition dividend and the creditors waive their residual claims (Art. 314 et seq. DEBA).
  • The composition agreement with assignment of assets (Art. 317 et seq. DEBA) has similar effects to bankruptcy. The debtor grants the creditors or a third party the right of disposal over the debtor's assets.

If there is no prospect of reorganization or confirmation of a composition agreement (Art. 293a DEBA), or if it is necessary to preserve the debtor's assets (Art. 296b DEBA), bankruptcy is opened immediately.

Debt restructuring moratorium or COVID-19 emergency moratorium?

The COVID-19 emergency moratorium is not available to all businesses, only small and medium-sized ones. The effects are also less far-reaching than with the debt-restructuring moratorium. For example, the COVID-19 emergency moratorium does not cover wage claims. We recommend that businesses that need creditor protection first check whether they are even eligible to apply for the COVID-19 emergency moratorium. In addition, they should check whether the limited effect of the COVID-19 emergency moratorium is sufficient in their current situation.


The thresholds for granting the debt-restructuring moratorium are low, it has proven itself in practice and offers the business the chance to find a lasting solution with its creditors, even if they cannot be fully satisfied. We therefore recommend that boards of directors of businesses in crisis familiarize themselves with debt-restructuring as an instrument for protecting creditors. As soon as there are signs that creditor protection may be necessary, we recommend preparing an application for a debt-restructuring moratorium so that it can be pulled out in an emergency.

If you have any further questions or require more detailed advice, your usual VISCHER contact person and the VISCHER Restructuring & Insolvency Team will be happy to assist you.

Authors: Jana Essebier and Thomas Krizaj

Topics: Insolvency LawRestructuringPandemicCoronavirusBoard of DirectorsLiquidity


Here you will find the frequent news alerts in the fields tax, litigation and arbitration, public sector and regulatory, corporate and commercial law and intellectual property law.

Select topics

Subscribe to Blog Updates

Subscribe to Blog Updates