For the owner of an established Zurich-based mechanical engineering firm, the end seemed imminent: global supply chain disruptions had severely drained liquidity, causing a breach of key financial covenants with the primary lending bank. The bank issued an unmistakable ultimatum: inject fresh equity within 60 days, or face immediate loan acceleration and transfer to the bank’s restructuring department. Conventional corporate turn-around consultants advised an emergency fire-sale of profitable business divisions or bringing in opportunistic equity investors at distressed valuations—resulting in the effective loss of entrepreneurial control.

Rather than succumbing to panic, FiPAX conducted a deep forensic review of both balance sheet and land register. This revealed an overlooked asset: the industrial premises had been paid off decades earlier, and fully amortized, historic first-rank paper owner mortgage notes (Eigentümerschuldbriefe) were still registered in the land records. Instead of giving up equity, FiPAX leveraged its institutional network to arrange a sale-and-lease-back transaction with a Swiss public pension fund.

The decisive tactical move lay in the tax and contract structuring: sale proceeds were strategically reinvested into operationally essential equipment, fully avoiding real estate capital gains tax by invoking the statutory instrument of tax-neutral replacement acquisition (steuerneutrale Ersatzbeschaffung). Simultaneously, FiPAX secured a contractually guaranteed repurchase option (call option) for the founding family after ten years and reactivated the existing mortgage notes to immediately establish a competitive working capital facility with a cantonal bank—eliminating costly notary and registration fees.

The existing bank was paid off in full, annual interest expenses were cut by a third, and 100 percent of business independence was preserved. A public testimonial was out of the question: had suppliers, key accounts, or credit insurers learned of the bank’s covenant ultimatums, commercial credit lines would have collapsed, causing severe collateral damage.

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