Avoidance actions and prohibited set-off in debt-to-equity swaps

Introduction In recent Swiss restructurings the question has arisen of whether a debt-to-equity swap, executed as a restructuring measure, can be challenged through an avoidance action or can constitute a prohibited – and thus voidable – set-off if the company becomes bankrupt upon execution of the debt-to-equity swap. This update elaborates on these risks and describes a scenario where bank­ruptcy proceedings are opened or a composition moratorium is announced shortly after the com­pletion of a debt-to-equity swap. http://www.internationallawoffice.com/Newsletters/Detail.aspx?g=cf805111-1185-4bd4-99ac-ca34ec0bb81c&utm_source=ILO+Newsletter&utm_medium=email&utm_campaign=Insolvency+%26+Restructuring+Newsletter&utm_content=Newsletter+2010-10-29