comply with these statutory duties, they are per- sonally liable for any additional losses that the company suffers from when the board should have ceased its commercial activities and notified the bankruptcy court up to the time when the bank- ruptcy court was actually notified. Below, the different restructuring measures
available to the board of directors of a Swiss com- pany in distress will be discussed. The focus will, in particular, be on restructuring measures with regards to the capital of the company.
Restructuring measures The term restructuring has not been defined by Swiss corporate law. However, the Swiss Federal Supreme Court has defined it as the financial recovery of a company (ATF 121 III 420), that is, measures which aim to secure the financial survival of the company and prevent it from being (invol- untarily) liquidated. There are a variety of restructuring measures,
including financial, management and organisa- tional options. Before implementing any radical restructuring measures, the board and the manage- ment of a financially troubled company should carefully review all possible alternatives to restruc- ture the company or to recapitalise its balance
are inalienable and non- transferable
“
These duties ”
sheet, with regard to both debt and equity. It is fur- ther advised to start to evaluate possible fall back scenarios as soon as possible and to get an adequate number of specialists – either in-house or consult- ants – involved, since time is always a very critical factor in a restructuring process, particularly in the case of a group of companies with numerous (com- plex) intra-group transactions and trading relation- ships.
Liabilities Possible measures on the liability side of the bal- ance sheet include the restructuring of existing debt by extending its maturity, changing the finan- cial and other covenants allowing for more flexibil- ity for the management to plan and implement a turnaround plan, amending the collateral package, a subordination of existing debt or the taking up of new subordinated loans, and debt/equity swaps (conversion of existing debt into equity). A debt/equity swap – as well as the raising of new share capital from new shareholders – is likely to require the prior restructuring of the equity struc- ture of the company, either by decreasing the exist- ing share capital or by introducing preferred shares or hybrid instruments for the converting debt holders, or a mixture of both. The reduction in
About the author Dr Alexander Vogel was admitted to the bar in Switzerland in 1992 and the New York Bar in 1994. He holds a degree from the University of St Gallen Law School and a master’s from Northwestern University School of Law. He practises in the areas of corporate law and M&A, leveraged
transactions, corporate finance/banking, bankruptcy law, capital markets and real estate. He has recently been involved in various national and cross-border acquisitions and acquisition financing structures for Swiss and international clients. He has advised clients and creditors in work-out negotiations and cross-border insolvency procedure, and advised on
defence strategies for companies and groups in financial distress. Vogel is a member of the board of directors of several Swiss companies. He currently heads the firm's corporate and finance department. He speaks German, English and French
Contact information
Alexander Vogel Meyerlustenberger Lachenal
Forchstrasse 452 Postfach 1432 8032 Zürich, Switzerland T +41 44 396 91 91 F +41 44 396 91 92 W:
www.mll-legal.com
About the author Dr Wolfgang Muller is a partner in Meyerlustenberger Lachenal’s capital markets/corporate group. He specialises in capital markets, in particular equity capital markets and M&A. Muller graduated from the University of Zurich and obtained his MBA
from the Australian School of Business, the University of New South Wales, Sydney, and the University of Michigan Business School and Ann Arbor, USA. He is a member of the Swiss Bar and the International Bar Association.
Contact information
Wolfgang Muller Meyerlustenberger Lachenal
Forchstrasse 452 Postfach 1432 8032 Zürich, Switzerland T +41 44 396 91 91 F +41 44 396 91 92 W:
www.mll-legal.com
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