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Financial restructuring
The substantive turnaround the moratorium’s breathing space is there to make possible.
Financial restructuringComposition
moratorium
A distressed but viable company is otherwise at the mercy of whichever creditor acts first, and one enforcement can trigger a cascade that destroys a business that could have been saved. The composition moratorium freezes that: a court-supervised shelter that suspends enforcement while the company reorganises or agrees a composition with its creditors. We assess whether it fits, prepare the application and the restructuring plan, advise on a discreet provisional stage, and guide the company through to recovery or an orderly composition.
At a glance
Breathing space to reorganise.
Court-supervised; enforcement suspended.
- Protects
- Suspends creditor enforcement
- Stages
- Provisional, then definitive
- Overseen by
- A court-appointed administrator
- Aims at
- Recovery or composition
- Start
- Can be non-public
The essentials
What a composition moratorium is
The composition moratorium (Nachlassstundung) is a court-supervised process under the debt-enforcement law that shields a company from enforcement while it reorganises or negotiates a composition agreement. The court grants it and appoints an administrator to supervise; most enforcement is suspended. It is the principal court tool, short of bankruptcy, for rescuing a company that needs protection and time, and it can be sought instead of bankruptcy when the board faces over-indebtedness under the Code of Obligations but a restructuring has real prospects.
Who this is for
- viable companies under mounting enforcement pressure;
- companies unable to agree a restructuring out of court;
- boards facing over-indebtedness with a real turnaround plan;
- businesses needing a discreet, protected reorganisation.
Where it fits
The moratorium protects a financial restructuring, follows the over-indebtedness duties, and is the rescue alternative to bankruptcy.
The mechanism
How the moratorium works
The moratorium gives fast protection first, then commits to the longer process once viability is assessed, aiming at recovery or a composition.
| Element | What it does |
|---|---|
| Provisional stage | Fast protection while prospects are assessed |
| Definitive stage | Longer period to execute the restructuring |
| Administrator | Supervises, approves, reports to court |
| Outcome | Recovery, or a confirmed composition |
During the moratorium the board generally keeps running the business, under the administrator’s supervision and the court’s limits. The whole thing succeeds or fails on the credibility of the underlying restructuring and the case put to the administrator, court and creditors. We focus our work there.
How it runs
How we guide it
Assess the fit, prepare the application and plan, work with the administrator, and shape the composition to confirmation.
- Step 1
Assess the fit
Judging honestly whether the company is viable and whether a moratorium is the right route.
- Step 2
Prepare the application
Building the restructuring plan and figures that make the application credible, discreetly where possible.
- Step 3
Work with the administrator
Engaging constructively with the court-appointed administrator and presenting the case well.
- Step 4
Shape the composition
Negotiating a composition acceptable to creditors and viable for the company, toward court confirmation.
- Throughout
Guard the board
Keeping the directors’ duties in view, so the process protects the board as well as the business.
Budget
What it costs
The cost reflects the complexity of the restructuring, the number of creditors, the length of the moratorium and the administrator’s involvement. It is weighed against the alternative, a value-destroying collapse, which for a genuinely viable company makes the protected process the better economics for the company and its creditors alike.
We scope and quote against the situation. Pricing is on request.
Discuss the moratorium
What it takes
What a successful moratorium requires
A moratorium that actually rescues the company rests on:
- a business that is genuinely viable underneath;
- a credible restructuring plan behind the application;
- engagement sought early, before the last gasp;
- constructive work with the administrator;
- a composition creditors will accept and the court confirm.
A moratorium is not a guarantee of rescue
The protection a moratorium gives is real but conditional: it buys time and shelter for a viable company to restructure, not a rescue for a business that is not viable. Sought for a company whose underlying economics are broken, or sought too late as a last gasp, it mostly postpones the outcome while consuming time, cost and goodwill, and can still end in bankruptcy or a composition with assignment of assets. This is why the honest viability assessment comes first, before the application, not after the moratorium has failed. Where the business is viable and the timing right, the moratorium gives it a real chance the open market would not. Where it is not, we say so.
Why Goldblum
The shelter, in practice
Assessing the fit honestly, preparing the application and plan, working with the administrator and shaping the composition to confirmation is the work this firm does.
Credible
A case that stands up
A restructuring plan and figures that make the application credible to the administrator, the court and the creditors.
Discreet
Confidential where it helps
Advice on using a non-public provisional stage, so the business’s relationships are protected as far as the process allows.
Honest
The right tool, or not
A candid viability assessment first: the moratorium pursued where there is real prospect, not to defer the inevitable.
Related
Around the moratorium
Director duty
Over-indebtedness (Art. 725 CO)
The duties under which a moratorium can be sought instead of notifying for bankruptcy.
Over-indebtedness (Art. 725 CO)Insolvent
Bankruptcy proceedings
The terminal route a failed moratorium can lead to, handled to protect directors.
Bankruptcy proceedings
FAQ
Composition moratorium: FAQ
01What is a composition moratorium?
A composition moratorium (Nachlassstundung) is a court-supervised process under the debt-enforcement law that protects a company from creditor enforcement for a defined period while it reorganises or negotiates a composition agreement with its creditors. The court grants the moratorium and appoints an administrator to oversee the company, and during it most enforcement actions are suspended, giving a viable business the breathing space to put a restructuring in place that it could not achieve while creditors were free to act. It is the principal court tool for rescuing a company that needs protection and time, short of bankruptcy. The aim is recovery or an orderly composition, not liquidation.
02How does the moratorium protect the company?
By suspending enforcement. Once granted, the moratorium generally halts debt-enforcement proceedings against the company, so individual creditors cannot seize assets or push it into bankruptcy while the process runs. This is its essential value: a distressed but viable company is otherwise at the mercy of whichever creditor acts first, and one enforcement can trigger a cascade that destroys a business that could have been saved. The moratorium freezes that, holding the creditors back as a group so the company can reorganise or negotiate. The protection is not absolute, certain claims are treated specially, but for the core problem of creditor pressure, it is the shelter the company needs.
03What are the provisional and definitive stages?
The process usually begins with a provisional moratorium, granted relatively quickly on the company's application to give immediate protection while the court and the appointed administrator assess whether a restructuring or composition has real prospects. It can run for several months and, in complex cases, be extended. If the prospects are confirmed, the court grants a definitive moratorium for a longer period (commonly several months, extendable in complex cases to a year or more) during which the restructuring is executed or the composition agreement is negotiated and put to creditors. The two stages let the court give fast protection first and commit to the longer process only once viability is assessed. We guide the company through both.
04What is the administrator's role?
The court appoints an administrator (a Sachwalter) to supervise the company during the moratorium. The administrator monitors the company's conduct, protects creditors' interests, often must approve certain transactions, reports to the court, and plays a central part in negotiating and verifying the composition agreement. The company's board generally continues to run the business, but under the administrator's supervision and within limits the court sets. Working constructively with the administrator is essential to a successful moratorium, because the administrator's view carries weight with the court and the creditors. We help the company engage with the administrator effectively and present its restructuring credibly within the process.
05What is a composition agreement?
A composition agreement (Nachlassvertrag) is the deal between the company and its creditors that the moratorium is often aimed at. It comes in two broad forms: an ordinary composition, under which creditors accept a defined settlement (typically a percentage of their claims, or rescheduled payment) in satisfaction of their debts so the company can continue; and a composition with assignment of assets, under which the company's assets are realised for the creditors in a structured way, as an alternative to bankruptcy. The agreement must be approved by the required majorities of creditors and confirmed by the court. We help shape a composition that is both acceptable to creditors and viable for the company, and steer it to confirmation.
06When should a company seek a moratorium?
When it is viable but cannot achieve a consensual restructuring without protection from enforcement, either because creditors are too numerous or divided to agree out of court, or because enforcement pressure is already mounting and threatens a value-destroying collapse. It can also be the right step when the board faces over-indebtedness: a moratorium can be sought instead of simply notifying for bankruptcy, where a restructuring has genuine prospects. Timing matters: sought early, with a credible plan, it has the best chance; sought too late, as a last gasp, it has less to work with. We assess whether a moratorium is the right tool and prepare the application to give it the best prospects.
07Is the moratorium public?
Not always at first. The law allows a provisional moratorium to be granted without public notice in appropriate cases, which can be valuable for a company worried that publicity will itself accelerate the crisis, frightening customers, suppliers or counterparties. This confidential window gives the company a chance to stabilise before the matter becomes public, as it generally must if the process continues to the definitive stage. The ability to start discreetly is one reason to engage early, while a non-public provisional moratorium is still an option. We advise on whether and how confidentiality can be used, and structure the approach to protect the business’s relationships as far as the process allows.
08How does it compare with bankruptcy?
Bankruptcy realises a company's assets and distributes them to creditors, ending the business; a composition moratorium is aimed at saving the company or achieving an orderly composition that recovers more for creditors than bankruptcy would. The moratorium is the rescue-oriented route, bankruptcy the terminal one. They are connected: a moratorium that fails can lead to bankruptcy, and a composition with assignment of assets is itself a structured alternative to it. The choice turns on whether the business is viable and whether a restructuring or composition can realistically be achieved. We are candid about which the situation calls for, and pursue the moratorium where there is genuine prospect rather than as a way to defer the inevitable.
09Does Goldblum represent the company in court?
Our role is to guide and prepare: we assess whether a moratorium is the right tool, build the restructuring plan and the figures that make the application credible, prepare the application and the supporting case, coordinate with the appointed administrator, and help shape and negotiate the composition agreement toward confirmation. Where formal court representation is required, we work with the appropriate specialists, while leading the commercial and restructuring substance that determines whether the process succeeds. The moratorium succeeds or fails on the quality of the underlying restructuring and the credibility of the case put to the court and creditors, and that is where our work is focused.
10What if the moratorium doesn't succeed?
If the restructuring proves unachievable or the composition is rejected, the moratorium can end in bankruptcy or, where appropriate, a composition with assignment of assets that realises the company's assets in an orderly way. This is why the viability assessment at the outset matters so much: a moratorium is not a guarantee of rescue, and seeking one for a business that is not genuinely viable mostly postpones an outcome while consuming time and cost. Where it is the right tool, it gives a viable company a real chance the open market would not; where it is not, an orderly exit is the honest course. We assess this honestly before recommending the moratorium, not after it has failed.
11Can Goldblum guide the company through it?
Yes. We assess whether a composition moratorium is the right route, prepare the application and the restructuring plan that give it the best prospects, advise on using a non-public provisional stage where confidentiality helps, coordinate constructively with the court-appointed administrator, and help shape and negotiate the composition agreement to confirmation, keeping the board's duties in view throughout. Where the situation instead calls for restructuring out of court, or an orderly exit, we say so. The aim is to use the moratorium's protection to carry a genuinely viable company through to recovery or an orderly composition, rather than to defer an inevitable outcome.
Does a viable company need protection to reorganise?
Tell us the position. A partner assesses whether a moratorium fits, prepares the application and plan, and guides the company through the process.