Midway through the structural shell completion of a Zurich residential development exceeding CHF 25 million in project volume, the general contractor unexpectedly entered insolvency proceedings and halted all operations. More than twenty subcontractors faced unpaid invoices and immediately prepared court filings to register provisional statutory contractor liens (Bauhandwerkerpfandrechte under Art. 837 of the Swiss Civil Code) on the owner’s property. The financing bank reacted instantly by freezing all disbursements under the construction credit line. The developer was confronted not only with a multi-month work stoppage and severe delay penalties, but also with the threat of having to pay already settled subcontractor claims a second time.

Traditional construction lawyers recommended posting expensive bank guarantees, which would have drained the developer’s remaining cash reserves. FiPAX chose a radically different path: taking charge of the jobsite within 24 hours, FiPAX terminated the general contractor agreement with immediate effect for cause under SIA Norm 118 and Art. 366 of the Swiss Code of Obligations, instantly shutting off any further capital leakage.

Concurrently, FiPAX deployed independent building experts across the site to execute an exhaustive audit of all planning and execution defects. These construction flaws were legally structured as actionable damage claims of the developer and directly offset against the subcontractors’ outstanding wage demands. In a single day of focused negotiations, FiPAX presented the subcontractors with a fair settlement: adjusted direct payments disbursed through a FiPAX fiduciary escrow account—strictly conditional on the immediate, irrevocable withdrawal of all lien petitions pending before the district court.

After only four days of downtime, construction resumed on site, and the bank reopened the credit tranches. The project was completed on schedule. Any public exposure was unthinkable: had the development been publicly branded as a distressed or litigious project, future rental rates and its institutional exit valuation would have suffered lasting damage.

Facing a similar situation? Get in touch – confidentially and without obligation.