How we deal with un-cooperative Swiss banks at Grant Thornton

In our capacity as Liquidators of BVI companies, we frequently discover that the company holds/held accounts at banks in Switzerland.  These banks often refuse to co-operate with the Liquidator.  Grant Thornton BVI in conjunction with Fraudnet Swiss member firm Baldi & Caratsch have pioneered a more economical approach to obtaining information from these banks.

The problem

It’s essential that the Liquidator obtains control of these accounts to recover any remaining assets and enable the Liquidator to undertake a detailed forensic analysis of the operations of the accounts.  This analysis is often crucial to allow the Liquidator to inter alia:

• Identify additional parties who acted for/on behalf of the company;
• Identify additional assets of the company not held at the bank,
• Investigate misappropriation of company assets; and
• Consider causes of action arising from the misappropriation.

All too often, however, the Swiss banks refuse to acknowledge the powers of an overseas liquidator and refuse to co-operate with our requests, often citing the protection provisions of the Swiss Criminal Code.

The common solution

To the extent that assets are still located on Swiss accounts, it is possible to apply to the Swiss Courts to ‘recognise’ the BVI liquidation in Switzerland, if successful, the Court will commence a ‘Swiss mini-bankruptcy’ (Bankruptcy Proceeding), and appoint a Swiss bankruptcy trustee (“Trustee”) to oversee the proceeding.

Whilst this is a powerful tool and has been used by Grant Thornton on a number of occasions it is not always a viable or appropriate option, for example:

• it can be costly, both in terms of the application and the need to fund the Trustee’s costs;
• depending on the Court’s workload it can take a number of months to obtain a recognition decision;
• the application can be complex with a need to make detailed submissions to Court, possibly including the submission of an expert opinion; and
• it does not apply if the BVI company has closed down the accounts or does no longer hold any assets in Switzerland.

What should the Liquidator do if he is aware there are no assets remaining in the account and he simply wants information on the conduct account or he wants to understand what balance, if any, is in the account before committing to the costs of the full bankruptcy proceeding?

Our solution

It is possible to apply to the relevant local Swiss Court (where the bank is registered) for an exequatur order, which requires the bank to provide information to the overseas Liquidator relating to the conduct of the account.

This order does not permit the Liquidator to take possession of any assets (the Bankruptcy Proceeding is needed for that) but it does provide information relating to the account at a much lower cost, and generally in a shorter timescale than the Bankruptcy Proceeding.

Grant Thornton have used this approach on a number of matters and it has proved a highly useful tool which has enabled us to identify and pursue assets and wrongdoers without the need to incur the costs of the Bankruptcy Proceeding.

Whilst this article focuses on the use of the exequatur order against banks in Switzerland, the provisions of the law are such that it should equally apply to other parties in Switzerland who hold information, documentation and/or assets for or on behalf of the company in liquidation.  We look forward to testing this soon and will update you accordingly!

For more information please contact:

Mark McDonald on + 1 284 494 6041 or at Mark.McDonald@uk.gt.com

Matt Richardson on + 1 284 494 6161 or at Matt.Richardson@uk.gt.com

Michele Caratsch on + 41 44 250 2525 or at mcaratsch@bclaw.ch