Our team successfully represents a US multinational company before the Court of Appeals of the Canton of Ticino.
Stefano Lappe
Orlando Bianchetti
Alessandro Vanini
Landmark judgment concerning the reopening of bankruptcy proceedings following discovery of new assets belonging to the bankrupted entity.
Our client, a US-based logistics, transportation and supply chain company, is the creditor of a company based in the Lugano area that was declared bankrupt in October 2020.
At the end of 2020, a few months after the bankruptcy declaration, the proceedings were suspended in application of Section 230 of the Swiss Debt Enforcement and Bankruptcy Act (DEBA) for lack of assets. It was only after this event that a claim belonging to the bankrupted entity came to light: a claim of over USD 9 million of the bankrupt against a Vietnamese company originating from the failure to perform the delivery of a large order of nitrile gloves.
However, both the bankruptcy office and the district judge of Lugano rejected our client's request to reopen the bankruptcy proceedings, which led our client to bring the case before the Debt collection and Bankruptcy Chamber of the Court of Appeals of the Canton of Ticino (CEF).
The Court first recalled that – although the law does not explicitly provide for the reopening of bankruptcy proceedings that had been suspended for lack of assets – its admissibility following the discovery of new assets has been recognised by case law and doctrine. In this context, an analogy must be drawn between the suspended proceedings and Section 269 DEBA, which applies to assets that are only discovered after the bankruptcy proceedings have been concluded.
The Court further stated that the applicant has to make the existence of new assets belonging to the bankruptcy estate plausible. The discovered assets must at least cover the costs of the bankruptcy proceedings to be reopened. The appeal judges then followed our lawyers' pivotal reasoning according to which an asset can be considered as "new" if it was not notorious or should not have been notorious to the bankruptcy administration and the majority of the creditors at the time the bankruptcy proceedings were suspended. Accordingly, so the Court, an asset has to be considered notorious if it has been included in the bankruptcy inventory, if its existence was known or if – although it emerged from the bankrupt's examination – its non-inclusion in the bankruptcy inventory can be interpreted as a tacit waiver of its inclusion in the bankruptcy estate.
With regard to the core issue of the present case – namely that of the requirement of cumulative knowledge of the bankruptcy administration and the majority of the creditors – the Court concluded that this condition was not met: firstly, the lower court had not examined whether the bankruptcy administration had knowledge of the bankrupt’s claim against the Vietnamese company at the time of the suspension of bankruptcy proceedings (a fact which is not reflected in the documents anyway). Secondly, it had not examined whether the claim was also known to the majority of the other creditors. The appealed judgment only stated that the applicant (i.e. the bankruptcy creditor) was probably already aware of the existence of an asset belonging to the bankruptcy estate at the time of the suspension at the end of 2020. However, this circumstance alone was not sufficient to refuse to reopen the bankruptcy. The Court thus ruled that the contested judgment contained an error of law and set it aside, ordering the bankruptcy proceedings to be reopened. The judgement, against which no appeal was filed with the Federal Supreme Court of Switzerland, has since become final and thus res judicata.
