Certificate of insufficiency of assets

The Certificate of Insufficiency of Assets is a legal document issued in the context of debt collection proceedings in Switzerland, attesting to the absence of seizable assets belonging to a debtor. It is one of the key steps in the debt recovery process, indicating the inability to satisfy a claim through the seizure of existing debtor’s assets.

The issuance of this certificate is governed by the Federal Act on Debt Collection and Bankruptcy (FDCB) which serves as the legal framework for all matters of pursuit and bankruptcy in Switzerland. According to the FDCB, after carrying out seizure measures, if no seizable assets are found at the debtor’s premises, the debt collection office issues a Certificate of Insufficiency of Assets. This certificate has a validity period of two years and can be renewed. Furthermore, it can be used as evidence in a potential bankruptcy petition against the debtor.

The Certificate of Insufficiency of Assets also falls within the scope of the Swiss Code of Obligations, which regulates contractual relationships and civil obligations. The relationship between creditor and debtor, including the creditor’s right to claim payment, is founded in this Code. When a debtor fails to meet their obligations, the creditor has the right to initiate a debt collection procedure, which can lead to the issuance of the Certificate of Insufficiency of Assets if no seizable assets are found.

Procedure and issuance of the certificate of insufficiency of assets

The preliminary steps to the issuance of the Certificate of Insufficiency of Assets begin with the pursuit request by the creditor. This request is usually followed by the issuance of a payment order to the debtor. If the debtor opposes this order, the creditor must obtain a provisional or definitive release before proceeding. These initial steps establish the legal basis for the pursuit and ensure that the debtor has been informed of the claim and had 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 performed with care and accuracy 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, a crucial prerequisite to the issuance of the Certificate of Insufficiency of Assets.

The actual issuance of the certificate is a formal procedure requiring the use of a specific form and its content must comply with legal requirements. The certificate is usually issued to the creditor and registered in the debt collection register. The immediate effects on the debtor can be considerable, including a potential impact on their solvency and credibility.

Consequences of the certificate of insufficiency of assets

For the debtor, the impact of the Certificate of Insufficiency of Assets can be profound. It is an official declaration of the inability to satisfy a claim, which can have serious repercussions on their solvency and credibility. Financial institutions and other potential creditors may view the Certificate of Insufficiency of Assets as a sign of financial instability, which can limit access to new credit or increase the costs of future borrowings. Additionally, certain restrictions may be imposed on trade or professional activities, thus limiting the debtor’s ability to conduct their business. In some cases, the issuance of the certificate can even lead to the conversion into a bankruptcy procedure, a more severe step with even more extensive consequences.

For the creditor, the Certificate of Insufficiency of Assets can also have significant implications. Firstly, it is an indication that normal pursuit is unlikely to recover the claim, which may necessitate a reevaluation of the recovery strategy. The creditor may choose to abandon pursuit or continue by engaging in additional measures, such as filing for the debtor’s bankruptcy. The Certificate of Insufficiency of Assets can also be used in the context of future pursuits against the debtor, acting as evidence of the latter’s inability to meet their previous financial obligations.

Special cases and exceptions

We will now examine the special cases and exceptions that can arise in the context of the Certificate of Insufficiency of Assets in Switzerland. These scenarios demonstrate the complexity and nuance inherent in this area of law and require special attention to ensure fair and appropriate application of the law.

In cases where the debtor is a legal entity rather than an individual, the process of the Certificate of Insufficiency of Assets can present specific challenges. Legal entities, such as companies, may have complex structures and assets distributed in different countries or jurisdictions. Identifying and seizing these assets can be a lengthy and laborious process. Moreover, the liability for the debt may be dispersed among several entities or individuals within the corporate structure, making the determination of responsibility more complex. Therefore, the process must be approached with caution and expertise, taking into account the legal specifics related to legal entities.

The application of the Certificate of Insufficiency of Assets can also vary in the context of tax debts or administrative fines. These types of claims often have a special status in Swiss law and may be subject to specific rules and procedures. For instance, the state may have priority rights in the collection of tax debts, which can affect how the Certificate of Insufficiency of Assets is applied. The nature of tax 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 occurs when assets are discovered after the issuance of the Certificate of Insufficiency of Assets. This situation can arise if the debtor intentionally conceals assets or if the initial inventory was incomplete or inaccurate. In such cases, complex legal questions may arise regarding the creditor’s right to pursue these assets and how the process should be resumed or adjusted. This may necessitate a reevaluation of the certificate and an exploration of 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 part is dedicated to comparing the Certificate of Insufficiency of Assets with other legal mechanisms used in Swiss debt collection law. Understanding these distinctions and how the Certificate of Insufficiency of Assets fits in relation to other tools is essential to appreciate its unique nature and function within the Swiss legal system.

The Certificate of Insufficiency of Assets and the declaration of bankruptcy are two distinct mechanisms used in Swiss pursuit proceedings, but they serve different purposes and follow different procedures.

The Certificate of Insufficiency of Assets is issued when the debtor does not possess seizable assets 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 on their financial credibility.

Bankruptcy, on the other hand, is a more severe measure that results in the liquidation of the debtor’s assets and often the cessation of their commercial activities. It is typically used in situations where the debtor is insolvent and unable to meet their financial obligations. The bankruptcy procedure is more complex and involves a more formal administration of the debtor’s affairs.

While 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 Certificate of Insufficiency of Assets is just one of many tools available to creditors for debt recovery 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 the Certificate of Insufficiency of Assets, a creditor may attempt to negotiate an amicable agreement with the debtor, using mediation or other forms of conflict resolution to find a mutually acceptable solution.

Additionally, there are other legal mechanisms such as asset seizure or debt assignment, which can enable the creditor to recover part or all of the claim without having to resort to the Certificate of Insufficiency of Assets.

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

An initial consultation

from 60 min to CHF 220.00

Asses your situation with a specialized lawyer.

You only want an appointment to ask some questions?
Not sure what to do?
Is your situation unclear?

Opt for an initial consultation with a lawyer.

You will then decide if you wish to proceed and our lawyers will give you the cost of the procedure according to your case.Appointments available in person or by videoconference.

Take an appointment with a lawyer

Need a lawyer in Geneva?

Take an appointment now

by calling our secretariat or by filling out the form below. Appointments available in person or by videoconference.

+41 22 348 32 35

PBM Avocats – Law firm based in Geneva and Lausanne. Lawyers registered at the bars of Geneva and Vaud.

Our Team

PBM Avocats in Geneva

Boulevard Georges-Favon 26

1204 Genève

T. : +41 22 348 32 35

PBM Avocats in Geneva

Boulevard Georges-Favon 26

1204 Genève

T. : +41 22 348 32 35