Debt enforcement and bankruptcy: what to know before you need it

The payment order: 10 days to react

The procedure starts when the creditor files a debt enforcement request (réquisition de poursuite) with the debt enforcement office, which serves you a payment order (commandement de payer). At this stage the creditor does not have to prove anything.

• You have 20 days to pay.
• You have 10 days to file an objection (opposition) if you dispute the debt, even in part. No reasons are needed: you object with the office, or directly to the official serving the order.
• Once you object, the enforcement stops: it is up to the creditor to have the objection lifted (mainlevée) by a court, with an acknowledgement of debt or a judgment.

Doing nothing is the worst option. Without an objection within 10 days, the debt is treated as accepted for the rest of the procedure, even if it could have been disputed.

Seizure or bankruptcy: it all depends on the commercial register

Once the debt is established, enforcement continues in one of two very different ways.

• Entered in the commercial register (Sàrl, SA, and a registered sole proprietorship): enforcement by way of bankruptcy (faillite). It is no longer a single asset that gets seized, it is the whole business that gets wound up.
• Unregistered sole proprietorship: enforcement by way of seizure (saisie) of your assets and income, as for a private individual.

The owner of a registered sole proprietorship is declared bankrupt at their place of residence, even if the business is registered in another canton. And since they are liable with their private assets, their bankruptcy takes their personal property with it too.

Since 1 January 2025, unpaid taxes, VAT, fines and social insurance contributions are also enforced by way of bankruptcy against a debtor entered in the register. A tax debt that used to lead to a seizure can now lead to bankruptcy.

From the bankruptcy warning to bankruptcy

Against a debtor subject to bankruptcy, the creditor then requests a bankruptcy warning (commination de faillite): a final notice. Twenty days after it is served, the creditor can ask the court to declare bankruptcy. They have at most 15 months from service of the payment order to do so.

Until the judgment, paying stops everything. After it, the bankruptcy office takes over: it inventories the assets, sells them and distributes the proceeds among the creditors, in an order set by law.

Sàrl and SA: over-indebtedness forces you to act

A company whose debts exceed its assets is over-indebted (surendettée). Since the revision of company law that came into force on 1 January 2023, the rule is the same for the Sàrl and the SA:

• draw up interim accounts and have them audited by the statutory auditor or, failing that, by a licensed auditor;
• notify the court, which may declare bankruptcy;
• unless creditors agree to rank behind all the others (a sufficient subordination (postposition) of claims), or there is a serious prospect of turning the situation around within 90 days.

Before bankruptcy, the law also offers a restructuring route: the composition moratorium (sursis concordataire), which shields the business from its creditors while it negotiates. It is requested from the court, and this is the moment to be supported by a lawyer or a fiduciary.

Limited liability has one exception: social insurance contributions

A Sàrl or an SA protects the private assets of its partners and shareholders. Except on one point: the AVS, AI, APG and unemployment contributions withheld from salaries. If they are not paid over and the company goes bankrupt, the compensation office can turn to the managers and directors personally (art. 52 AVSG/LAVS). The courts almost always treat it as gross negligence.

When cash gets tight, social insurance contributions come before every other bill. It is the only company debt that can follow you all the way home.

When you are the creditor

A client who does not pay means the same procedure, from the other side. The debt enforcement request is filed with the debt enforcement office at the debtor's place of residence or registered office, often online. Before going down that road, two reflexes:

• request an extract from the debt enforcement register for any major new client, before working for them;
• obtain a signed acknowledgement of debt (an accepted quote, a contract): this is what will let you get the objection lifted quickly if the debtor objects.

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