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Company liquidation in Switzerland

Published on 19.03.2022, Updated 22.11.2023 | Knowledgebase

Company liquidation in Switzerland in any form — revised and precise information.

  • Reasons;
  • Timeframes;
  • Cost.
  • through voluntary liquidation
  • the process of voluntary liquidation
  • through bankruptcy
  • the process of bankruptcy
  • through sale and purchase of shares
  • how to sell a firm

Do you have a firm in Switzerland, but it is not working, did not work and never will work? Or maybe you don't need it anymore?

It is no secret that maintaining a firm in Switzerland is costly, regardless of whether it is working and whether it has a bank account etc. Usually, there are expenses for local management, the registration address, and taxes. Therefore, we are talking about at least 10 000 franks.

That being said, you cannot simply fire your management and "abandon" the firm, as is the usual practice with offshores – in most cases, you will have a signed agreement with certain conditions that include a long notice or compensation for your employees. Moreover, sometimes the management will have a blocked deposit of your funds.

There will have to be at least six months between the day you decide to liquidate the firm and the day it is deleted from the trade registry (in our experience, sometimes it can even take up to four years).

During all this time, you will have to keep maintaining your firm: pay the liquidator (a liquidator replaces your management, and usually it is the same person), pay for the registration address, accounting etc.

If the liquidation means that the company cannot pay the bills (bankruptcy), there are even more documents to be filled out, which takes at least a year. Furthermore, until the company is actually deleted from the trade registry, you will also have to deal with the Konkursamt (there is a different one in each canton). They will take control of the firm accounts, take the remainder of the money, sell the company's property, and use the received funds to repay the creditors.

Liquidation of a firm in Switzerland – three main ways to do it

1. Voluntary liquidation

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.
Company liquidation in Switzerland

The process of voluntary company liquidation in Switzerland

The first and most crucial step – 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).

After notarizing the documents, they need to be sent to the trade registry and the tax office. After that, the tax office will serve as you for 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).

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.

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.

2. Bankruptcy

The second way is bankruptcy. It is less prevalent but still quite widely used.
If the firm has debt that cannot be repaid using its 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.
Company liquidation through bankruptcy

The process of the company bankruptcy in Switzerland

Certain conditions have to be met for bankruptcy to be possible.
1. Creditors' claims have to be sent through the Betreibungsamt, and there have to be records of recovering payment attempts.
2. The firm must have no assets to satisfy the claims of the creditors (that you know of).
Here is what this process looks like.
Your creditor does not get paid for goods or services during the agreed period and sends a recovering payment claim to the Betreibungsamt.

Betreibungsamt sends an executor to your firm who takes inventory and sells your assets by Debt Collection Procedures to repay the creditors. Sometimes the police are involved in this process as well (if the office is inaccessible or they need to search the house of the firm management etc.)

If within 30 days the creditors are not repaid, they are notified about the inability of repayment and the bankruptcy process is initiated by a different authority — the Konkursamt.

The Konkursamt has more authority: it can take your funds from a bank account, search for the creditors, and interrogate the firm's management (and as you know, the management of your Swiss firm must comprise of locals according to the Obligationenrecht).

Then one day, an employee of the Konkursamt summons your director or management of the firm for interrogation. Nonappearance means police involvement.

During the interrogation, they ask questions about the financial state of the legal entity, assets in Switzerland and abroad, cash flow and accounting data and so on.

An interrogation protocol is signed, and a warning is issued about criminal responsibility for lying or hiding facts.
We strongly recommend involving a lawyer when starting the bankruptcy process. It will end up costing you more if you don't hire one.

Within 2-4 months after the interrogation, the frozen assets are confiscated, a bankruptcy estate is created and then distributed among the creditors (in the order of precedence).

At the end of the procedure (which usually lasts at least two years), the company is deleted from the trade registry by the decision of a cantonal court.

Sale and purchase of shares of a Swiss company

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.

How to sell a company in Switzerland

The procedure is quite simple but somewhat costly to the shareholders.

It largely depends on whether the accounting was done correctly, the bills paid in time, and any debts or liabilities.

If so, then you can get a reasonable price for, basically, the documents. The price depends on whether the buyer needs to do Due Diligence and the type of your company, the year of registration, and the canton it is registered in.

Suppose the company's reports haven't been adequately filed or absent. If you don't know whether you have any creditors and debts but want to get rid of the company as soon as possible, transferring the ownership rights and management responsibilities will be costly.

However, as a result, you will be rid of all responsibilities within a week and will never have to think about your failed (or maybe successful) company.
How to sell a company in Switzerland

Advantages and disadvantages of each type of liquidation

1. Voluntary liquidation:
Pro — a simple procedure and an ideal solution for inactive firms.

Contra — costly through the whole liquidation process, takes a long time and risks unexpected expenses.
2. Bankruptcy:
Pro — 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.

Contra — takes a long time, unexpected problems arise, and a lawyer is needed. Also, it is impossible to estimate costs.
3. Selling the firm:
Pro — possibility of getting some money for the firm that doesn't work and that you don't need anymore, getting rid of responsibilities quickly.

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

Cost of liquidation of a firm in Switzerland

Cost of liquidation of a firm in Switzerland
The most important question is this – is it worth liquidating the firm?
There is no simple answer.

It all depends on the type of the company, its age, cash flow and other matters.
Suppose we are talking about an easy voluntary liquidation, when the firm has no assets or debts, and all of the funds were spent on maintaining its activity during a specific period. In that case, there is an approximate budget of 3000 — 8000 franks.
It includes expenses for preparing documents, paying the notary fees, the trade registry fees (different for every canton) and document turnover for this process.

If its bankruptcy that you choose to pursue, our representation's minimum cost would be 10-12'000 franks.
It is a long process with many documents, meetings at the cantonal authorities, etc.
The common practice among Swiss law firms is an hourly pay of 350-650 franks an hour and a deposit of 5-10'0000 franks.
If the documents have been analyzed and the case outcome is entirely predictable, it could be a fixed price fee for the entire process.

If you want to go for sale and purchase of shares, you can get anywhere from 0 up to 5-8000 franks. But, of course, it depends on the company's state, its processes, and registration year.
If the company has problems, then most likely, the owners will have to pay someone to take up the responsibilities.
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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