Status of an ancillary Swiss bankruptcy estate to challenge a specification
A recent decision of the Swiss Federal Court clarified whether a Swiss ancillary bankruptcy estate has standing to challenge a list of claims of a bankrupt Swiss third party debtor if the foreign bankruptcy estate has filed the respective claims directly. and regardless of the recognition of the foreign bankruptcy decree. In essence, the Swiss Federal Court refused the status of the ancillary bankruptcy estate because it may in such cases not be considered a creditor of the respective claims. The decision underlines the importance of having a foreign bankruptcy judgment recognized before the rights are asserted in Switzerland.
Foreign bankruptcy judgments must be recognized
Foreign liquidators must request the recognition of a foreign bankruptcy judgment in accordance with the principle of territoriality before being able to act in Switzerland (see our letter of June 22, 2020). Recognition serves as a form of legal assistance in favor of foreign bankruptcy proceedings. If the foreign bankruptcy judgment is recognized, the assets of the debtor located in Switzerland are subject to Swiss bankruptcy law and generally to so-called ancillary bankruptcy proceedings (Hilfskonkursverfahren) are open.
Foreign liquidators cannot act in Switzerland
The foreign liquidator has the right to request recognition but, in general, does not have the power to perform acts in Switzerland in matters of debt recovery. It does not have the right to file claims or challenge a statement of claims of a bankrupt Swiss third party debtor. In principle, only the ancillary mass of the (Swiss) bankruptcy can assert claims and exercise rights. In certain limited circumstances, the court may refrain from opening ancillary bankruptcy proceedings and authorize the foreign liquidator to act directly on Swiss soil. However, such authorization was not granted in the present case.
In this case, the foreign liquidator filed claims in the bankruptcy of a third party debtor both before and after the recognition of the foreign decree. The liquidator of the third party debtor assessed the claims but rejected them. The ancillary bankruptcy estate subsequently challenged the inadmissibility of the claims lodged by the foreign liquidator.
The ancillary bankruptcy estate does not have standing to contest a claims schedule
In principle, only (presumed) creditors who have filed a claim with a bankruptcy estate are entitled to challenge the claims schedule (for example if their claim is rejected). In its decision, the Swiss Federal Court insisted on the formal “creditor’s requirement” and ruled that the mass of the ancillary bankruptcy did not have the capacity to contest the schedule of claims of the Swiss third-party debtor as a mass of the foreign bankruptcy and not the mass of the incidental bankruptcy. had filed the respective requests.
According to the Swiss Federal Court, it does not matter whether the claims were filed by the foreign liquidator before or after the foreign bankruptcy judgment was recognized in Switzerland. As the recognition does not have retroactive effect, it does not affect the (in) validity of the claims filed by the foreign bankruptcy body before the recognition. The acts of a foreign liquidator remain inadmissible. Claims filed by the foreign bankruptcy estate after recognition of the foreign bankruptcy judgment are inadmissible because domestic claims must be invoked exclusively by the auxiliary bankruptcy estate.
To do things well
Although one can consider the decision of the Swiss Federal Court as (too) formalistic, it sets the standards to be respected. In view of the above, it appears essential that foreign liquidators comply with the formal requirements of Swiss law in order to get their hands on assets located in Switzerland.