Solvency is the board's own responsibility
Under Swiss company law, keeping an eye on the company's ability to pay is a non-transferable duty of the board (Art. 716a CO). It cannot be left to the CFO or the auditors.
The statute sets out an escalation. If there is a risk that the company becomes unable to pay its debts, the board must take measures to secure solvency and, where necessary, broader restructuring steps (Art. 725 CO). If losses erode the capital, further duties follow (Art. 725a CO). And if the company is overindebted (Art. 725b CO), the board must in principle notify the court, unless creditors subordinate claims to a sufficient extent or there is a realistic, near-term prospect of removing the overindebtedness.
The law does not expect the board to perform miracles. It expects the board to know where the company stands, to decide, and to be able to show later that it did both.
Monitor, decide, document
In a tightening liquidity situation, three habits carry most of the weight.
A rolling liquidity plan, updated frequently and honestly, including the invoices you would rather not think about. Board meetings at short intervals, with real decisions and minutes that record what was known, what was considered and why a course was chosen. And even-handed treatment of creditors, because payments that favour insiders or single creditors shortly before a collapse can be challenged later and reflect directly on the board.
Where overindebtedness is a serious concern, the board must have the position examined on the basis of interim accounts. Hoping the annual statements will look better is not an option the law recognises.
Why waiting is the worst strategy
Every week of delay narrows the menu. Standstill arrangements with key creditors, fresh money from shareholders, subordination agreements, the sale of assets or business lines, or a formal moratorium (Art. 293 DEBA) all require one thing above all: time, and counterparties who still trust the numbers. A board that opens talks early negotiates with options. A board that waits negotiates with none.
Waiting is also the single largest source of personal exposure. If the court is notified too late and the hole deepens, the additional damage can be claimed from the directors personally. BGE 136 III 322 is the reference on how that delayed-filing damage is calculated and substantiated, and it is calculated by comparing balance sheets, not by intuition. The cases that end badly for board members are rarely about bad luck. They are about months of hoping, undocumented.
What to do now
Get a current, honest liquidity picture. Convene the board and minute the assessment. Talk to key creditors and shareholders before you are forced to. Treat all creditors even-handedly. And take advice while the options are still open, because that is the point at which it changes the outcome. If your company is approaching this situation, we are glad to discuss your specific case.
This is general information, not legal advice. How it applies to your situation depends on the facts, if in doubt, ask.
