Over-Indebted with 90 Days to Act – How a Timber Builder Avoided Bankruptcy
Key facts
- Area
- Law & restructuring
- Company
- Timber builder, 30 employees
- Over-indebtedness
- CHF 600,000
- Deadline
- 90 days after interim accounts
- Measures
- Subordination of CHF 700,000, standstill agreement, capital increase
- Result
- No notification to the court, business continues
Names, figures and details have been changed to protect confidentiality.
At half past four on a Friday afternoon, the auditor calls. Reto S. is standing in the workshop between two finished roof elements due on a building site on Monday. The auditor speaks calmly and gets straight to the point: the audited interim accounts show over-indebtedness of CHF 600,000. He will confirm it in writing. Reto S. knows what that means. From today a clock is ticking, and it has 90 days.
A healthy business with a bad year
The timber construction company is a second-generation family business with 30 employees, four apprentices and an order book that runs for fourteen months. Anyone walking through the workshop sees no crisis. They see joinery machines running and carpenters with no time for a chat.
The crisis lies in two contracts from the previous year. On the first, a school building at a fixed price, timber prices rose sharply after the contract was signed. On the second, the general contractor went bankrupt before paying the last two invoices. Together the two projects wiped out the equity and tore a hole bigger than anything his father had ever experienced.
On top of that come unpaid taxes of CHF 180,000. In the past this would have been an uncomfortable but negotiable item. Since 1 January 2025, however, tax debts owed by companies entered in the commercial register can also be enforced through bankruptcy proceedings. The tax authority has gone from a patient creditor to one that can push the business into bankruptcy with a single step.
What the law requires of the board
On Monday Reto S. and his sister, who sits on the board, meet FiPAX. The first hour is not about figures but about duties. In the event of over-indebtedness, the board must notify the court. It may refrain from doing so only if creditors subordinate their claims to the extent of the shortfall, or if there is a reasonable prospect of eliminating the over-indebtedness within a reasonable period, and no later than 90 days after the audited interim accounts are available.
Directors who let this deadline pass without a credible plan are personally liable. This is the moment when many boards freeze. FiPAX turns the question around: the focus is not on what might happen, but on what can be done in 90 days and who needs to be convinced.
The situation is serious but not hopeless. According to CRIF, bankruptcy proceedings were opened against 11,412 companies between January and September 2026, 36.5 percent more than in the previous year, and construction tops the statistics with 1,380 cases. Many of them had full order books. They did not fail for lack of work, but for lack of liquidity at the wrong moment.
90 days, six steps
From the auditor’s call to a clean balance sheet
FiPAXEvery decision is minuted and documented with its rationale.
First, the truth about the money
The first piece of work is unspectacular and decisive. Together with the bookkeeper, FiPAX builds a rolling 13-week liquidity plan. Every invoice, every salary payment, every advance is entered. For the first time the board sees not only that things will get tight, but exactly when and by how much. The critical point is week nine, when wages and the timber delivery for two projects fall in the same week.
This plan becomes the most important document of the next three months. It shows the bank that the company is not flying blind. It shows the tax authority when it will be paid. And every Friday it shows the board whether the restructuring is on track.
Subordination buys time
Over the years the family has lent the business CHF 700,000. On FiPAX’s advice, the shareholders sign a subordination agreement for these loans and the interest on them. In a bankruptcy they would rank behind all other creditors, which allows the board to refrain from notifying the court. Subordination does not solve the problem, but it buys the time to solve it.
With the liquidity plan and the subordination in hand, FiPAX goes to the house bank. The meeting is shorter than feared. The bank signs a temporary standstill agreement and refrains from terminating the operating credit line as long as the agreed milestones are met. The tax authority also agrees to payment in instalments. A creditor who has a credible plan in front of them rarely files for bankruptcy.
For weeks I felt my back was against the wall. With the liquidity plan, I finally had something in my hands again.
Equity instead of new debt
To eliminate the over-indebtedness rather than merely cover it, the company needs equity. FiPAX proposes a two-part capital increase. CHF 400,000 of the existing shareholder loans are converted into share capital without a single franc of cash leaving the business. In addition, CHF 250,000 is paid in cash, half by the family and half by the long-serving workshop manager, who thereby becomes a shareholder.
That last point changes more than the balance sheet. For the workforce it is a sign that someone from their own ranks believes in the company’s future. For the bank it is proof that succession is not just settled on paper.
How the gap was closed
Amounts in CHF
FiPAXThe remaining CHF 300,000 of shareholder loans stay subordinated.
The outcome
On day 88 the new interim accounts are ready. The over-indebtedness has been eliminated and there is no need to notify the court. The business carries on without interruption, none of the 30 jobs is lost, and the four apprentices complete their training in their own company. The board has documented every step and can demonstrate that it fulfilled its duties under Art. 725 et seq. of the Swiss Code of Obligations.
A year later the company only prices fixed-price contracts with a timber price escalation clause. Reto S. still looks at the liquidity plan every Friday, even though he no longer has to.
Are your figures showing early warning signs?
Over-indebtedness rarely happens overnight. Those who act early have more options than 90 days: subordination, talks with the bank and tax authority, or new capital can be prepared calmly rather than under pressure.
Talk to us while you still have room to manoeuvre.
Out of respect for our clients’ confidentiality, names, figures and other details have been altered or are illustrative.