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Dari Podhur

19 March 2022, updated 06.11.2024

14 min

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Counsel

Table of contents

Main problems of the liquidation process

Operating a firm in Switzerland is costly, with expenses such as local management fees, registration address costs, and taxes, often totaling at least 10,000 francs. You cannot simply abandon the firm or dismiss management without notice due to signed agreements requiring lengthy notice periods or compensation. Additionally, management may have a blocked deposit of your funds, adding complexity and ensuring ongoing expenses

High costs of maintaining a Swiss firm

Throughout the liquidation process, especially in bankruptcy cases, you must interact with the Konkursamt (Bankruptcy Office), which varies by canton. The Konkursamt takes control of the firm's accounts, liquidates remaining funds, and sells company assets to repay creditors, adding another layer of complexity until the firm is officially removed from the trade registry

Dealing with bankruptcy
 and the konkursamt

Liquidating a firm in Switzerland involves a lengthy process, with
at least six months between the decision to liquidate and the firm's deletion from the trade registry, sometimes extending up to four years. During this time, you must continue maintaining the firm
by paying the liquidator, covering the registration address,
and handling accounting expenses. Bankruptcy cases require additional paperwork, extending the process by at least a year

Lengthy liquidation process

The first and primary way of liquidation is voluntary liquidation. Usually, suppose the business is not working, and you see no point continuing it. Then, the shareholders or founders (depending on the company type, AG or GmbH, decided to liquidate the company

This path should be followed if the firm has assets and accounts receivable, which can be used to repay the creditors, and the rest (if there is any left) can be distributed among the firm's founders

Three types of liquidation

The first and most crucial step is to carefully analyze the cash flow
and property of the firm to understand whether you will be able
to repay the creditors. After that, a specific internal document
is prepared and notarized. We strongly recommend involving lawyers in this step, as the hired management has a conflict of interest
and doesn't always adequately understand the client's situation (especially a foreign client)

Analyze cash flow and property

After notarizing the documents, they need to be sent
to the trade registry and the tax office. The tax office will then serve you with a so-called Schlussbilanz (a closing balance). After checking the documents in the final stage, they will write a resolution to the trade registry of the canton (for or against the company's liquidation)

Notarization and submission

Even though this process can be described in one paragraph, it can take a long time, starting from 6 months and up to a few years. During the entire process, the tax office, the registry, the liquidator, the bank, and the creditors send documents back and forth

Lengthy process

As a result, a cantonal court judge rules for the liquidation of the company from the local registry, upon which all
the documents are sent to an archive

Court resolution

The second way is bankruptcy. It is less prevalent but still quite
widely used. If the firm has debt that cannot be repaid using
it’s assets, you can limit your responsibility and announce bankruptcy

The result is not guaranteed, though, as a special authority of the canton called Konkursamt has to decide whether you acted with good faith

To initiate bankruptcy in Switzerland, specific conditions must
be met. First, creditors' claims must be submitted through the Betreibungsamt, with documented attempts at payment recovery. Second, the firm must lack sufficient assets to satisfy the creditors' claims. The process begins when a creditor,
unpaid for goods or services, sends a payment recovery claim to the Betreibungsamt

Initial conditions for bankruptcy

The Betreibungsamt sends an executor to inventory and sell the firm's assets through Debt Collection Procedures to repay creditors. Police involvement may be necessary if the office
is inaccessible or if the firm's management's residence needs to be searched. If creditors are not repaid within 30 days, they are notified of the repayment failure, and the Konkursamt
initiates the bankruptcy process

Betreibungsamt's role

The Konkursamt has more authority, including the ability to access bank accounts, search for creditors, and interrogate the firm's management. In Switzerland, the management of a firm must include local residents per the Obligationenrecht. The Konkursamt summons the director or management for interrogation, with police involvement if they fail to appear. During the interrogation, they inquire about the financial state, assets, cash flow, and accounting data, issuing a protocol and warning of criminal liability for dishonesty

Konkursamt's authority

Hiring a lawyer at the start of the bankruptcy process is strongly recommended to avoid higher costs later. Within 2-4 months after interrogation, frozen assets are confiscated, a bankruptcy estate
is created, and assets are distributed among creditors according to precedence. The entire procedure typically lasts at least two years, concluding with the company's deletion from the trade registry by a cantonal court decision

Final steps and legal advice

In some cases, the company was created but never engaged in any business activities. Zero-balance accounts were created, bills paid, and statistical data was sent to state registries in time. In this case, the fastest way to get rid of the company is to sell it

Selling a company in Switzerland is straightforward but can be costly for shareholders. The ease and cost largely depend on proper accounting, timely bill payments, and any existing debts or liabilities. If these are in order, you can fetch a good price for your company. The price varies based on the need for due diligence, the company's type, registration year, and canton of registration

Selling a company in Switzerland

If the company's reports are inadequately filed or missing, and you are unaware of any creditors or debts but wish to quickly transfer ownership, the process can be expensive. However, completing this transfer will free you from all responsibilities within a week, allowing you to move on from your company without further concerns

Handling inadequate reports

A simple procedure and an ideal
solution for inactive firms

Costly through the whole liquidation process, takes a long time and risks unexpected expenses

A possibility to get someone else to satisfy the creditors' claims. There is a chance to get a share of the company's assets. The assets are distributed by a third party with no conflict of interests no involvement of management and shareholders

Takes a long time, unexpected problems arise, and a lawyer is needed. Also, it is impossible to estimate costs

Possibility of getting some money for the firm that doesn't work and that you don't need anymore, getting rid of responsibilities quickly

In some cases, a costly audit is needed and other checks and compensations, which leads to expenses rather than income for the shareholders

Сost of liquidation
of a firm in Switzerland

The cost of liquidating a company in Switzerland depends on factors like the company's type, age, and cash flow. For a simple voluntary liquidation, where the firm has no assets or debts and funds have been used for operations, the budget ranges from 3,000 to 8,000 francs. This includes preparing documents, notary fees, trade registry fees (which vary by canton), and document turnover costs

Factors affecting liquidation costs

If pursuing bankruptcy, the minimum cost for representation is 10,000 to 12,000 francs. This process is lengthy, involving numerous documents and meetings with cantonal authorities. Swiss law firms typically charge an hourly rate of 350-650 francs, with a required deposit of 5,000 to 10,000 francs. For predictable outcomes, a fixed price fee may be agreed upon

Bankruptcy costs

The sale and purchase of shares can yield anywhere from 0 to 8,000 francs, depending on the company's condition, processes,
and registration year. If the company has issues, owners might need to pay to transfer responsibilities. The company's state significantly influences the final sale price

Sale and purchase of shares

Swiss law firms usually charge by the hour, with fees ranging from 350 to 650 francs. If the case's outcome is predictable, a fixed fee for the entire process may be arranged. This approach provides a clear cost expectation for clients, facilitating better financial planning during the liquidation or sale process

Legal fees and predictability

Legal disclaimer

This article is not a legal consultation or a guide with all the possible scenarios and outcomes. Every client and situation is different and needs an individual approach. We strongly recommend involving qualified lawyers in any case. Goldblum and Partners, the firm's employees, the partners and lawyers are not responsible for any expenses, damages and other losses that occur as a result of you using this article to try and resolve the situation yourself despite being warned

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