Switzerland amends bankruptcy law to protect debt-strapped firms hit by lockdowns

• Financial

In the wake of a global-scale move to adopt a notion of social distancing measures alongside a forced lockdown of businesses in order to contain a new strain of an older flu pathogen, the Swiss Federal Government of president Simonetta Sommaruga, serving her second term after being re-elected in 2020, had been contemplating a swathe of momentary changes in its bankruptcy laws in order to protect the firms grievously hurt by the forced lockdown measures, facing off capital problems and a mounting debt-piles.

On top of that, Swiss Justice Ministry said in a statement on Thursday (April 9th) that the proposals it was going to consider would enable the pandemic-hit companies to wait for a substantial period of time before filing for a bankruptcy application, only if the companies’ ability to resolve their debt-issues after the crises, seemed to be evident.

Aside from that, a day after the Swiss Government, which had already rolled out a $64 billion in fiscal aid to salvage something from the small- and medium-scale businesses, had cautioned that the Swiss economy, world’s 20th largest by nominal GDP, would likely to contract by a double-digit percentage point figure this year due to the pandemic, the government said in a statement on Thursday (April 9th), “The coronavirus pandemic threatens many companies with over-indebtedness and therefore bankruptcy.

A wave of bankruptcies would have serious consequences for the economy, in particular for jobs. ” Besides, referring to the Swiss Government’s effort to antagonize a higher bankruptcy rate, Justice Minister Karin Keller-Sutter said on Thursday (April 9th), “Today, there are many companies that are confronted by liquidity problems and losses in value that are caused by the coronavirus.

The simple aim of the government is to cushion the impact as much as possible, support and limit the damage for people in this country. We must wherever possible protect jobs. When a company cannot be rescued, it still must be allowed to go bankrupt in order to protect the creditors. ”