Swiss Bankruptcy Too Fast? Restructuring Expert Urges Caution

Alessandro Farsaci, a restructuring expert with the global consultancy Alvarez & Marsal, has identified a concerning trend in the Swiss corporate landscape. According to his analysis, financially troubled companies in Switzerland are frequently directed towards bankruptcy too quickly, potentially foregoing opportunities for recovery and preservation of value. This approach, he suggests in his discussion with finews.ch, may stem from a lack of awareness or understanding of alternative mechanisms available under Swiss law. The immediate recourse to bankruptcy can lead to the dissolution of viable business units, job losses, and the destruction of enterprise value that might otherwise be salvaged through a structured restructuring process.

The implications of this trend are significant for the broader Swiss economy, which prides itself on stability and a robust legal framework. Farsaci’s critique points to a potential gap between legal provisions and their practical application in corporate crises. By opting for swift bankruptcy, stakeholders—including creditors, employees, and shareholders—may inadvertently choose a path that maximizes losses rather than one that seeks to rehabilitate the business. This observation places a spotlight on the decision-making processes within companies and their advisors during periods of financial stress.

As a central pillar of his argument, Farsaci advocates for the more frequent and considered use of Nachlassstundung, or debt restructuring moratorium. This legal procedure allows a company temporary protection from creditors’ claims, providing crucial breathing room to develop and negotiate a restructuring plan. Unlike bankruptcy, which aims for liquidation, the moratorium is designed as a tool for corporate turnaround, aiming to keep the business operational while it addresses its liabilities.

However, Farsaci offers a crucial caveat: the Nachlassstundung is not a simple, off-the-shelf solution. He explicitly warns that it cannot be applied rapidly or simplistically “according to the textbook.” The process demands meticulous preparation, skilled negotiation with diverse creditor groups, and a credible, executable business plan for recovery. It requires expert navigation of complex legal and financial terrain, which is where firms like Alvarez & Marsal specialize. The moratorium’s success hinges on transparency, early action, and a consensus-building approach that balances the interests of all parties involved, making it a challenging but often more value-preserving alternative to a forced sale of assets.

Beyond advocating for a different approach during a crisis, Alessandro Farsaci provides forward-looking advice aimed at the root of the problem. He shares guidance for Verwaltungsräte—boards of directors—on measures to implement so that their companies never require the services of a restructuring specialist like Alvarez & Marsal. This advice underscores the importance of proactive governance and financial oversight.

The core of this preventive strategy likely involves robust early-warning systems, regular and realistic stress-testing of business models, and maintaining open lines of communication with key financial stakeholders. Boards are encouraged to foster a culture where emerging financial difficulties are identified and addressed candidly at the earliest possible stage, rather than being concealed until a crisis becomes unmanageable. By heeding this advice, directors can steer their companies away from the precipice of distress, thereby protecting value for shareholders, preserving employment, and maintaining Switzerland’s reputation for corporate resilience. Farsaci’s insights ultimately frame corporate restructuring not just as a crisis management tool, but as an outcome to be avoided through diligent and informed governance.