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Belser Altorfer & Partner Zurich

As long as a group of companies is solvent, the fact that it is composed of several corporate entities is often ignored by third parties which are dealing with the group. Under Swiss law a legal entity is in the event of its insolvency still considered as a distinct body, solely liable for its debts and which answers only with its own assets. This approach leads to a separate liquidation of the estate of each one of the various related companies. Faced with the danger of a fierce battle then starting between the companies of the formerly unified group, the parties involved frequently try to resort to the approach of consolidation.

Though the basic approach in Switzerland clearly remains that of atomism some authors suggest that consolidation could be an appropriate solution to supersede the often unfair inefficiencies of the atomistic approach. In the light of the US doctrine of substantive consolidation, some authors attempt to overcome the intrinsic limits of the traditional solution with a new concept which goes far beyond the piercing-the-corporate-veil doctrine acknowledged and applied in Switzerland. The new concept has been favoured by new precedents of the Swiss Supreme Court establishing a new liability-basis within groups of companies deriving from a liability which is the result of the impression created by the group that it would be answerable as a whole with all its assets.

The new rather provocative theory says that groups of companies implicitly constitute partnerships in certain cases. Due to the absence of any statutory provisions in Swiss Bankruptcy Law dealing with the peculiarities of groups of companies it is doubtful whether this position will be protected by Swiss Courts.

The development and the debate just started are to be followed closely.

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