Certificate of insufficiency of assets

The “acte de défaut de biens” is a legal document issued as part of the debt collection process in Switzerland, attesting to the absence of seizable assets on the part of the debtor. It is one of the key stages in the debt collection process, signalling the inability to satisfy a claim through seizure of the debtor’s existing assets.

The issuance of this deed is governed by the Federal Debt Collection and Bankruptcy Act (LP), which serves as the legal framework for all debt collection and bankruptcy cases in Switzerland. According to the LP, if no seizable property is found on the debtor’s premises after the seizure measures have been carried out, the debt collection office issues a certificate of default. This deed is valid for two years and may be renewed. It can also be used as evidence in a bankruptcy petition against the debtor.

Default deeds are also governed by the Swiss Code of Obligations, which regulates contractual relations and civil obligations. The relationship between creditor and debtor, including the creditor’s right to claim payment, is based on this Code. When a debtor fails to meet his or her obligations, the creditor has the right to initiate legal proceedings, which may lead to the issue of a certificate of default if no seizable assets are found.

Procedure and issuance of the certificate of default

The preliminary steps to issuing a certificate of default begin with the creditor’s request to proceed. This is generally followed by the issue of a summons to pay to the debtor. If the debtor objects to this summons, the creditor must obtain a provisional or final discharge before proceeding. These initial steps establish the legal basis for legal action, and ensure that the debtor has been informed of the claim and given the opportunity to respond.

The debt-collection office plays a central role in the process, starting with the inventory of the debtor’s assets. The inventory must be carried out with care and precision to ensure that all seizable assets are identified. If no seizable assets are found, the debt-collection office must then declare the absence of seizable assets, an essential prerequisite for issuing the certificate of default.

Issuing the deed itself is a formal procedure requiring the use of a specific form, and its content must comply with legal requirements. The deed is generally delivered to the creditor and entered in the debt collection register. The immediate effects on the debtor can be considerable, including a potential impact on his solvency and credibility.

Consequences of a deed of default

For the debtor, the impact of a deed of default can be profound. It is an official declaration of inability to satisfy a debt, which can have serious repercussions on the debtor’s solvency and credibility. Financial institutions and other potential creditors may see the deed of default as a sign of financial instability, which may limit access to new credit or increase the cost of future borrowing. In addition, certain restrictions may be imposed on trading or professional activities, limiting the debtor’s ability to conduct business. In some cases, issuance of the deed may even result in conversion to bankruptcy proceedings, a more serious step with even more far-reaching consequences.

For the creditor, the deed of default can also have significant implications. Firstly, it is an indication that normal legal action is unlikely to recover the debt, which may necessitate a reassessment of the collection strategy. The creditor may choose to abandon the lawsuit, or continue by taking additional measures, such as filing for bankruptcy against the debtor. The deed of default may also be used in future proceedings against the debtor, acting as evidence of the latter’s inability to meet his or her previous financial obligations.

Special cases and exceptions

Below, we will examine the special cases and exceptions that can arise in the context of the deed of default in Switzerland. These scenarios demonstrate the complexity and nuance inherent in this area of law, and require particular attention to ensure a fair and appropriate application of the law.

In cases where the debtor is a legal entity rather than a natural person, the deed of default process can present specific challenges. Legal entities, such as companies, may have complex structures and assets spread across different countries or jurisdictions. Identifying and seizing these assets can be a long and laborious process. In addition, responsibility for the debt may be spread across several entities or individuals within the corporate structure, making the determination of liability more complex. The process must therefore be approached with care and expertise, taking into account the legal specificities associated with corporate entities.

The application of the deed of default may also vary in the context of tax debts or administrative fines. These types of debt often have a special status under Swiss law, and may be subject to specific rules and procedures. For example, the state may have priority rights in the collection of tax debts, which may affect the way in which the deed of default is applied. The nature of fiscal and administrative obligations requires a particular understanding of public law and the interactions between debt collection law and other areas of law.

Another special case arises when assets are discovered after the deed of default has been issued. This can happen if the debtor intentionally conceals assets, or if the initial inventory was incomplete or inaccurate. In such cases, complex legal issues may arise concerning the creditor’s right to pursue these assets and how the process should be resumed or adjusted. This may require a reassessment of the deed and an exploration of the legal remedies available to ensure that the creditor’s rights are protected while respecting the debtor’s legal protections.

Comparison with other legal mechanisms

This final section compares the deed of default with other legal mechanisms used in Swiss debt collection law. Understanding these distinctions and how the deed of default relates to other tools is essential to appreciating its unique nature and function within the Swiss legal system.

Deeds of default and declarations of bankruptcy are two distinct mechanisms used in Swiss debt enforcement, but they serve different purposes and follow different procedures.

A deed of default is issued when the debtor has no seizable assets with which to satisfy a claim. It does not necessarily lead to the cessation of the debtor’s commercial or professional activities, but can have significant consequences for his or her financial credibility.

Bankruptcy, on the other hand, is a more serious measure, involving the liquidation of the debtor’s assets and often the cessation of business activities. It is generally used in situations where the debtor is insolvent and unable to meet his financial obligations. Bankruptcy proceedings are more complex and involve a more formal administration of the debtor’s affairs.

Although both mechanisms can be used in the context of non-payment of debts, they differ in their scope, consequences and application, reflecting different degrees of severity and different aspects of Swiss debt collection law.

The deed of default is just one of the many tools available to creditors for debt collection in Switzerland. Each of these tools has its own characteristics and may be more or less appropriate depending on the circumstances.

For example, before resorting to a deed of default, a creditor may try to negotiate an amicable settlement with the debtor, using mediation or other forms of conflict resolution to find a mutually acceptable solution.

In addition, there are other legal mechanisms, such as seizure or assignment of receivables, which can enable the creditor to recover part or all of the debt without having to resort to a deed of default.

Comparing the deed of default with these other methods highlights its specific nature and relative advantages and disadvantages. It is not always the most appropriate tool for all situations, and its use must be carefully considered in the light of the particular circumstances of each case.