COVID-19 Insolvency Ordinance - Easing of filing obligation and moratorium for SMEs - Tax and Legal blog

COVID-19 Insolvency Ordinance - Easing of filing obligation and moratorium for SMEs

On 16 April 2020, the Federal Council adopted additional temporary measures in relation to the Swiss insolvency and restructuring regime by enacting the COVID-19 Insolvency Ordinance, which took effect on 20 April 2020 for six months and set the following main objectives:

  • One of the main goals of the COVID-19 Insolvency Ordinance is to relieve pressure on relevant bodies of Swiss entities to request the opening of insolvency proceedings. Relief is targeted at over-indebtedness situations caused by negative impacts of the COVID-19 pandemic on liquidity, earnings and going-concern prospects.
  • Further, the Swiss Federal Council put in place a special COVID-19 moratorium. This moratorium – which replaces the general suspension of debt enforcement proceedings ordered by the Swiss Federal Council earlier in the COVID-19 outbreak, which expired on 19 April 2020 – will facilitate SMEs' simple and pragmatic access to a protective moratorium with less formal requirements.
  • Finally, COVID-19 Insolvency Ordinance provides amendments to the general composition proceedings.

A. Current filing obligation in case of over-indebtedness

Pursuant to Article 725(2) of the Swiss Code of Obligations, the executive bodies of Swiss companies are under a strict duty to notify the bankruptcy judge if the company is over-indebted. This is the case if its balance sheet – on a stand-alone basis – shows that the liabilities of the company are covered neither if the assets are appraised on a going-concern basis nor if they are appraised at liquidation values.

However, over-indebtedness is not only to be tested against most recent annual financials but executive bodies are held to draw up (and submit to the auditors for examination) interim financials at going-concern and liquidation values if there is a concern (begründete Besorgnis) that the company may be over-indebted.

The filing obligation exists where both balance sheets show an over indebtedness and may take the form of a request (i) for the opening of bankruptcy proceedings, (ii) for the grant of a composition moratorium or (iii) for a deferral of bankruptcy.

Non-compliance with the filing obligation exposes the members of the executive bodies to the risk of personal liability (for damages caused by the delayed filing).

B. Easing of filing obligation

1. Fear of COVID-19 related insolvency wave

The impact of the COVID-19 pandemic on the prospects of a company is currently very difficult to assess. In times of widespread uncertainty, it is very challenging for companies to project cash flows and earnings as well as to assess the sustainability of the going-concern assumption. Therefore, the COVID-19 Insolvency Ordinance aims to remove pressure from executive bodies of Swiss entities and to avoid premature insolvency fillings. 

2. No over-indebtedness as of 31 December 2019 and prospect of remedying over-indebtedness by 31 December 2020

The Federal Council has decided to temporarily exempt the executive bodies from their duty to notify the bankruptcy judge, provided that:

  1. the company was not over-indebted on 31 December 2019; and
  2. there is "a prospect" (Aussicht) that the over-indebtedness will be eliminated until 31 December 2020.

Companies that were over-indebted as of 31 December 2019 but were relieved from the duty to notify the court because creditors subordinated their claims to a sufficient extent cannot benefit from the relief of suspension of the duty to notify the court granted under the new rules, if the over-indebtedness is not covered anymore by subordinated claims.

3. Duty to draw up interim balance sheet and exemption for auditors

The company's executive bodies remain obliged to continuously monitor the financial situation of the company and, if there are signs of over-indebtedness, to prepare an interim balance sheet. However, the duty to have the interim balance sheet audited is suspended under the COVID-19 Insolvency Ordinance. In addition, the subsidiary filing obligation of auditors will be equally suspended if the executive bodies have no duty to do so under the COVID-19 Insolvency Ordinance.

C. COVID-19 moratorium for SMEs

The COVID-19 moratorium is designed as an alternative to the ordinary moratorium under Swiss insolvency laws and can be applied for during the effective term of the COVID-19 Insolvency Ordinance.

In practice, it provides small and medium-sized enterprises (“SMEs”) with a simple procedure to obtain a temporary deferral of their payment obligations in order to reorganize and prepare for the time after the COVID-19 crisis.

1. Conditions

Public listed companies and companies that exceed two of the following thresholds in two successive financial years are excluded from the scope of the COVID-19 moratorium:

  1. a balance sheet total of CHF 20 million;
  2. sales revenues of CHF 40 million or more; or
  3. 250 full-time employees on annual average.

Any other company may request the court to grant such COVID-19 moratorium provided that:

  1. it was not already over indebted on 31 December 2019; or
  2. if there was an over-indebtedness, certain creditors subordinate their claims to those of all other creditors to the extent of the over-indebtedness.

2. Simple and straightforward procedure

The company's executive bodies must submit a written request to the court at the place of its registered office. The Covid-19 moratorium shall be granted by the court in a simple and straightforward procedure, which is shown by the following circumstances, among others:

  • The financial information to be provided to the court is less specific than under an ordinary moratorium but must make plausible the applicant's financial position as of 31 December 2019;
  • A court appointed judicial administrator is the exception (this takes into account the nature of the Covid-19 moratorium as a routine measure for a large number of debtors, and it aims at keeping the administrative work and the costs low);
  • The company is under no obligation to file a re-structuring plan;
  • The COVID-19 moratorium will always be public and the relevant authorities – such as the bankruptcy authority, the land register and the commercial register – are notified by the court granting the COVID-19 moratorium.

3. Effects

During a period of three months starting from the decision of the court (which may be extended for a further three months), the COVID-19 moratorium will have the following effects:

  • It affects all claims against the company that have arisen prior to the granting of the moratorium (with some exceptions such as claims that would ranked in the first priority in case of a bankruptcy, e.g. claims of employees);
  • During the COVID-19 moratorium, the company's creditors are precluded from commencing (or continuing) enforcement proceedings (debt collection proceedings pursuant to the Swiss Debt Enforcement and Bankruptcy Act) against the company for such claims, this does not apply to first-class claims and to the enforcement of a mortgage. The realization of the relevant charge over the real estate, however, is suspended;
  • No attachment orders (or similar preliminary measures) can be obtained for the deferred claims; limitation and forfeiture periods concerning deferred claims are suspended;
  • The company is prohibited from satisfying claims that are subject to the COVID-19 moratorium; however, claims arising after the granting of the COVID-19 moratorium are not affected by the moratorium; this shall allow the company to continue its business operations during the COVID-19 moratorium. However, during the COVID-19 moratorium, the debtor may not perform any legal acts that impair the legitimate interests of the creditors or favour individual creditors to the detriment of others;
  • The company will be operating under ordinary rules once the term of the COVID-19 moratorium has expired.

D. Additional measures for ordinary restructuring moratorium

If a company cannot benefit from (i) the suspension of the duty to notify the court, or (ii) the request for a COVID-19 moratorium, the company can still apply for the ordinary debt-restructuring moratorium. Therefore, the Federal Council has also implemented additional measures for such moratorium. These measures include (i) the suspension of the current request to submit a provisional restructuring plan (provisorischer Sanierungsplan); and (ii) the extension of the maximum period from four to six months for which a provisional moratorium can be granted (which is intended to promote direct restructuring during the provisional moratorium).

Please reach out to our key contacts below if you have questions or would like to know more about this topic.


Explore our collection of Swiss COVID- Tax & Legal insights designed to help companies in Switzerland to better navigate the COVID-19 crisis.

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Jürg Birri blog- 1

Jürg Birri - Partner, Head of Legal

Jürg is leading the legal practice at Deloitte in Switzerland. He joined the firm as a Partner in 2019. Jürg is an Attorney-at-Law and a Federal Tax Expert and advises clients in the financial services industry on a wide range of tax and regulatory issues. He is in charge of a larger team of lawyers and experts who specialize notably in business, corporate, M&A, employment, as well as private client and financial market law.


Nicolas Wehrli

Nicolas Wehrli - Partner, Legal

Nicolas is a Partner and the Head of the M&A practice of Deloitte Legal in Switzerland. With 15 years of experience in the field, he has extensive experience advising clients in domestic and cross-border M&A transactions (focusing on private M&A and private equity transactions) as well as international capital markets transactions, multi-jurisdictional restructurings, and general corporate and commercial matters.


2.Pardey  Ev.desktop (1)

Ev Pardey - Director, Restructuring Services

Ev is a senior restructuring professional with more than 13 years of experience in working with underperforming businesses in turnaround and wind down situations. Her areas of expertise comprise liquidity management, cost transparency, identification and implementation of improvement measures and financial planning.



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