Debt Collection and Bankruptcy Act: changes for companies
From January 1, 2025, federal bankruptcy law will change. This change will have a major impact on companies. Entities entered in the commercial register will be pursued through bankruptcy rather than seizure in the event of debt. This change will also affect self-employed persons, foundations and associations.
What exactly are we talking about?
As of January 1, 2025, paragraphs 1 and 1bis of Article 43 of theFederal Debt Collection and Bankruptcy Actwill be repealed. The change will affect the way in which debt collection under public law will be handled throughout Switzerland, whether in respect of VAT, fines and contraventions, tax claims, social security contributions or compulsory insurance premiums. (Source: State of Geneva website) As the Fédération des entreprises romandes explains, “At present, entities or individuals subject to seizure proceedings can continue their business activities without further modification. With the new legislation, the shock could be brutal. For whatever the amount owed and whatever the type of debt (private or public), their creditors will be directed to bankruptcy proceedings. At the end of the road, the entity will simply be declared bankrupt.
Why the change?
Behind this amendment to federal law lies a clear objective: to put an end to certain abusive practices. In future, debtors will no longer be able to abuse bankruptcy to avoid meeting their financial commitments.It therefore represents a strengthening of measures to combat abusive bankruptcies.
What can you do to avoid bankruptcy?
Geneva’s cantonal authorities are calling on the entities concerned to prepare now for this reform to avoid irreversible economic consequences. For Vincent Subilia, General Manager of the Geneva Chamber of Commerce, Industry and Services (CCIG), it is crucial to prevent and regularize arrears before the reform comes into force. Where necessary, companies are encouraged to explore the options available, such as negotiating a settlement or deferment with creditors, or initiating reorganization proceedings by applying for a debt-restructuring moratorium (LP)”, he recommends. (Source: State of Geneva website)
Business support
Last July, the Office cantonal des faillites genevois (OCF) published a detailed FAQ for those concerned.