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COVID-19: Legal standstill in debt enforcement

  • Jörg Kilchmann, Partner |

Given the current spread of COVID-19 and the extraordinary situation in Switzerland, the Swiss Federal Council decided on a temporary legal standstill ("Rechtsstillstand") for debt and bankruptcy enforcement. The Swiss Federal Council's measure is a reaction to the financial difficulties of numerous companies and is intended to provide certain relief to the economy.

How long does the legal standstill last and what effect will it have?

The Swiss Federal Council declared a legal standstill as of 19 March 2020, 7 am. It will last until midnight on 4 April 2020. This declared legal standstill will seamlessly be followed by the statutory debt enforcement holidays ("Betreibungsferien"). The entire duration of the debt enforcement standstill thus begins on 19 March 2020 and ends on 19 April 2020.

For the duration of the standstill, the performance of any debt enforcement activities against individuals and legal entities is prohibited. After the end of the standstill on 19 April 2020, the performance of debt enforcement activities will again be permitted.

Why is the legal standstill important in light of the spread of COVID-19?

Given the current financial crisis and the economic development of recent weeks, an economic decline for the current year is relatively certain. Some companies are already retracting their annual forecasts for 2020 and announcing a deterioration in consumer behavior. Companies inevitably do not have the same financial liquidity as before the outbreak of COVID-19 and may no longer be able to pay open invoices.

For this reason, the Swiss Federal Council decided to provide emergency aid of up to CHF 42 billion to alleviate economic difficulties.