Of all the tools in Swiss restructuring law, the Nachlassstundung, the court-ordered debt moratorium, is the most misunderstood. To some boards it sounds like the end, a public admission of failure one step short of bankruptcy. To others it sounds like a magic pause button that makes creditors disappear.
It is neither. Understood correctly it is one thing: purchased time, under supervision, at a price. Whether that trade is worth making depends on what you intend to do with the time.
What the moratorium is
A Nachlassstundung is granted by a court to a debtor in financial difficulty (Art. 293 DEBA). It typically begins with a provisional stage in which the situation is assessed (Art. 293a DEBA), often with a provisional commissioner appointed (Art. 293b DEBA), and can move into a definitive stage after a hearing (Art. 294 DEBA). The court usually appoints an administrator, the Sachwalter (Art. 295 DEBA), who supervises the company while the moratorium runs.
Two points matter for how it feels in practice. The company keeps operating: management stays in place and the business continues, though Art. 298 DEBA limits its power of disposal and makes certain transactions subject to approval. And this is a supervised process with reporting duties and real constraints. Protection and control arrive together, and you cannot have one without the other.
What it protects you from
The core effect is breathing room on the liability side. During the moratorium, debt enforcement against the company is largely stayed (Art. 297 DEBA), and the constant tactical pressure of individual creditors racing to collect is switched off. Claims that arose before the moratorium are, broadly speaking, frozen where they stand, to be dealt with collectively rather than by whoever moves fastest.
That changes the negotiating geometry. Instead of defending against many uncoordinated attacks while trying to run a business, management can negotiate with its creditors as a group, toward a common outcome. Typically that is a composition agreement, which needs creditor acceptance (Art. 305 DEBA) and then confirmation by the court (Art. 306 DEBA), or a transfer of the viable business to a buyer. The law also provides tools for dealing with burdensome long-term contracts that would otherwise make any rescue arithmetic impossible.
What it does not do
A moratorium adds no money. Salaries, suppliers and taxes falling due during the moratorium must be paid as the business runs, and obligations incurred during this period enjoy a special status precisely because counterparties would otherwise stop dealing with you. If the company cannot fund its operations through the moratorium period, the moratorium does not fix that. It merely provides an orderly setting in which to fail.
It does not fix the business either. A company that burns cash on day one of a moratorium burns cash on the last day too, unless something real changes in between. It does not erase debts by itself: relief comes only from the composition the creditors ultimately accept, or from a sale. Nor is it a shelter for what was done before, since acts predating the moratorium remain open to avoidance (Art. 331 DEBA).
And it is not invisible. While the provisional stage can in certain circumstances remain unpublished, counterparties, banks and key suppliers will generally learn of it, and the company must manage that conversation rather than hope to avoid it.
What management should do with the time
The moratorium rewards companies that arrive with a plan and punishes those that arrive with a hope. The time should be spent on a short list of things: finalising the restructuring concept and testing it against real numbers; negotiating the composition or the sale with the major creditor groups; securing the financing that carries the company through and beyond the process; and communicating deliberately with employees, customers and suppliers, who will otherwise write their own version of events.
The worst use of a moratorium is as a waiting room. Time bought at significant cost in money, reputation and management attention, and then spent hoping the market turns. Courts and administrators see the difference quickly, and so do creditors.
Sometimes the answer is clearly yes: a fundamentally viable business, a balance sheet problem that a composition or a sale can solve, and creditors who can be brought to a collective solution but not to a quiet one.
Sometimes an out-of-court agreement is faster, cheaper and more discreet. Sometimes the honest answer is that there is nothing left to protect. Which situation is yours depends on facts, on cash runway, creditor structure and the state of the core business, and on timing, because the moratorium works best for companies that still have something to negotiate with. If you are weighing this question, we are happy to think it through with you before the options narrow further.
This is general information, not legal advice. How it applies to your situation depends on the facts, if in doubt, ask.
