Practitioner's note: composition proceedings for a sanctioned company in Zug

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The Nord Stream 2 case offers lessons for advisers of companies that become insolvent because of sanctions. A Swiss company that loses access to its banks and its revenues because of foreign sanctions may be over-indebted within days. Its board must then notify the court unless a restructuring is possible, since Swiss company law obliges it to do so in the case of over-indebtedness.¹ The Swiss composition proceedings allow the company to obtain a moratorium, during which it is protected from enforcement by its creditors while it seeks an agreement with them.

The administrator appointed by the court must deal with the sanctions in the proceedings. Payments to or from sanctioned persons require authorisation from the State Secretariat for Economic Affairs. Frozen assets can be used to pay creditors only with such authorisation. Foreign sanctions, particularly those of the United States, may make banks and service providers unwilling to cooperate, even when Swiss law does not prohibit the transaction. Since the proceedings can take years for these reasons, the adviser must plan for close coordination with the State Secretariat, the court and the foreign authorities.

Notes

Art. 725b para. 3 and 4 OR (SR 220), version in force since 1 January 2023, swissrights.ch: if the two interim accounts show over-indebtedness, the board of directors notifies the court, unless creditors subordinate their claims or there is a reasonable prospect of remedying the over-indebtedness within a reasonable period, at most 90 days after the audited interim accounts. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of September 2025.

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Dr Alexander Ressos, TEP

Rechtsanwalt/Attorney-at-Law

I am a Swiss attorney-at-law and also admitted as a solicitor in Hong Kong and in England & Wales, with almost 25 years of experience.

Together with my multilingual team, including Chinese, Japanese, Korean, Russian, Ukrainian and French native speakers, I advise companies and their owners from around the world on the full range of banking, corporate, commercial and tax law matters in Switzerland, including international tax planning, fiduciary services, and legal family office services including immigration & relocation or real estate investments. My practice has a particular focus on clients from growth and frontier markets in Greater China, Central Asia and the Caucasus, the rest of Asia, the Middle East, Africa and Latin America, and I equally advise clients from Europe and North America. Through an affiliated Swiss trust company, we also take care of the incorporation and ongoing administration of their companies and other structures, including accounting, tax returns and corporate secretarial services, and I serve as a professional director where required. With the support of a network of first-class cooperation partners, I also implement solutions worldwide.

My approach is to act as a trusted advisor who works directly with decision-makers, on an equal footing: I start from what you want to achieve and shape every structure, contract and tax decision around your commercial goals and how it improves your after-tax return. As “lawyers who make it happen”, my team and I stay involved until your company is set up, your structure is in place and your transaction has closed, and we remain available for any follow-on work that may be required. You benefit from bespoke solutions and personal attention, and sound, friendly and practical advice. We are not the lowest-cost provider in the market, nor do we intend to be; our aim is to deliver well-founded, proper solutions and excellent value for money.

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Practitioner's note: composition proceedings for a sanctioned company in Zug

Notes

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