Survey on: Claw-back of security in insolvency. Questionnaire Switzerland. Marcel Tranchet / Roland Fischer. Lenz & Staehelin, Zurich

Survey on: Claw-back of security in insolvency Questionnaire Switzerland Marcel Tranchet / Roland Fischer Lenz & Staehelin, Zurich marcel.tranchet@lenzstaehelin.com / roland.fischer@lenzstaehelin.com 1. Introductory questions 1.1 Please briefly describe the main type of security in your jurisdiction (per type of asset; per perfection technique; per type of secured obligation). In a corporate lending and structured finance context, security is frequently taken over shares in Swiss corporate entities, bank accounts, certain receivables and other contract rights. Depending on their commercial significance, security is sometimes taken over real estate assets and intellectual property rights. In turn, no security is typically taken in relation to movable assets such as inventory and machinery located in Switzerland, the main reason being that the valid creation of a security interest in relation to such assets, as a matter of Swiss law, requires taking physical possession over such assets which is not typically practicable. Other asset classes, including securities such as bonds, notes and other instruments as well as ships and aircraft, may serve as security for special financing transactions. The main types of security interests under Swiss law are pledges (Pfandrechte), transfers or assignments for security purposes (Sicherungsübereignung und abtretung) and mortgages with respect to real estate property, aircraft and ships (Grundpfandverschreibung, Luftfahrzeugverschreibung und Schiffsverschreibung). Pledges and mortgages are so-called accessory security interests (akzessorische Sicherungsrechte) which implies, inter alia, that the valid existence of the pledge or mortgage is dependent on the continuing valid existence of the secured obligations and that the holder of the secured obligations must be identical with the holder of the relevant security interest. Also, upon a transfer of the secured obligations, the security interest is being transferred to the transferee of the secured obligations by operation of law. Such principles have to be properly addressed when a third party (such as a security agent) administers a security interest on behalf of the secured parties. In turn, a transfer or assignment for security purposes is a non-accessory security interest (nicht-akzessorische Sicherheit) where the aforementioned principles do not apply. Based on the foregoing, the concept of a pledge is typically used for the following asset categories: (c) Shares: The valid creation of a security interest with respect to certificated shares requires a written pledge agreement and the transfer of possession of the share certificate. If the share certificate is in registered form (Ordrepapier), an additional endorsement or transfer declaration (Indossament oder Abtretungserklärung) is required. The articles of association of the corporate entity the shares of which are being pledged may establish additional requirements for the creation and/or perfection of a right of pledge. Bank accounts: The valid creation of a right of pledge requires a written pledge agreement. Enforceability of the pledge vis-à-vis the account bank further requires notification of the pledge to the account bank. The agreements between the account bank and the pledgor may provide for a security interest (or rights with a similar commercial effect) for the benefit of the account bank with respect to the balance on the bank account which would prevail over any subsequent security interest unless a waiver can be obtained. Intellectual property rights: The valid creation of a right of pledge again requires a written pledge agreement. Registration of the pledge in the relevant registers for patents, trademarks 1

and designs is not required for the valid creation of the right of pledge. However, the right of pledge cannot be opposed against third parties acting in good faith who acquired rights in the intellectual property right before registration of the right of pledge. (d) (e) Movable assets: In addition to a pledge agreement (for which the written form is not required but strongly recommended) the creation of a valid right of pledge with respect to movable assets such as inventory and machinery requires the depossession of the pledgor. A security interest is not validly created as long as the pledgor has unrestricted access to the relevant assets. Accordingly, lenders do not typically request security over movable assets such as inventory and machinery where operating companies are concerned. Other securities: Uncertificated securities (Wertrechte) are pledged by way of a written pledge agreement. If the securities are in the form of book entry securities (Bucheffekten) either of the following must occur for the creation of a valid security interest: (i) a transfer to an account of the pledgee or (ii) an irrevocable instruction from the pledgor to the intermediary regarding adherence of the intermediary to instructions from the pledgee without consent or cooperation from the pledgor. The concept of an assignment for security purposes is frequently used for receivables and other contract rights and is sometimes used also where security is taken over a bank account. A written assignment agreement is required for the creation of the valid security interest. Subject to the below, notification to the third party debtor is generally not required for the valid creation but for the perfection of the security interest and enforceability vis-à-vis the third party debtor. Transfer restrictions in the underlying arrangements governing the assigned receivables / rights may jeopardize the valid creation of the assignment and may require the consent of the third party debtor. A transfer for security purposes is regularly chosen for the creation of a security interest with respect to mortgage certificates over real estate (Schuldbriefe). In addition to a transfer agreement (for which the written form is generally not required but strongly recommended) the valid creation of the security interest requires the transfer of the relevant mortgage certificate. If the mortgage certificate is in registered form (Namensschuldbrief), an endorsement (Indossament) is required. The endorsement must not be in blank (Blankoindossament). A security interest with respect to ships and aircraft has to be in the form of a mortgage which requires a written mortgage agreement and registration of the relevant security interest in the ship register (Schiffsregister) or the aircraft record (Luftfahrzeugbuch), respectively. 1.2 Please briefly describe whether your jurisdiction provides for a procedure of protection against creditors (usually initiated by a debtor at a time when the debtor is yet not insolvent) and if so what are its basic assumptions? Under the Swiss Federal Act on Debt Enforcement and Bankruptcy ("DEBA") a debtor may file a request for the grant of a moratorium (Nachlassstundung) even prior to such debtor being insolvent (zahlungsunfähig), i.e. unable to pay its debts as and when they fall due, or over-indebted (überschuldet), i.e. when the assets of the debtor are no longer sufficient to cover its debts. The grant of a moratorium generally prevents creditors from initiating or progressing debt enforcement proceedings with the exception of debt enforcement proceedings for employees' claims and certain social security claims as well as debt enforcement proceedings for the realisation of a mortgage over real estate (realisation of the relevant real estate property and distribution of sales proceeds is not possible during the moratorium phase, though). Interest stops to accrue for unsecured claims and statutes of limitation and peremptory deadlines (Verjährungs- und Verwirkungsfristen) do not run. 2

Upon receipt of such a request for a moratorium the competent court typically orders provisional measures deemed appropriate and necessary for conserving the debtor's assets. In particular, the court may grant a provisional moratorium (provisorische Nachlassstundung) of up to two months which has the same effects on creditors' rights as set forth above. Furthermore, the court may appoint a provisional administrator (provisorischer Sachwalter) who will assess the debtor's assets, its financial condition and the prospects of a successful reorganisation. If, in the court's view, it is likely that a composition agreement is achievable, it must grant the definitive moratorium (definitive Nachlassstundung) for a period of four to six months (in complex cases up to 24 months) and appoint an administrator (Sachwalter). During the definitive moratorium the administrator seeks to negotiate a composition agreement with the creditors. The debtor is restricted in its ability to dispose of certain of its assets and there are certain restrictions as to its power to manage the company s affairs. If a corporate debtor is over-indebted and, thus, generally under an obligation to file for bankruptcy under Swiss law, it may under certain circumstances request the postponement of bankruptcy. Such request will only be granted if the debtor is able to evidence that there are good prospects of a financial restructuring of the company in the long run. Pursuant to published court precedents and legal doctrine, this requires a detailed restructuring plan to be submitted to the court which outlines the steps to implement the financial restructuring of the company and the applicable time frame. If the postponement of bankruptcy is granted by the competent court, such decision will not necessarily have to be published. However, creditors are not entitled to progress debt enforcement proceedings beyond the stage of a request for realization (Verwertungsbegehren) or a request for bankruptcy (Konkursbegehren). Statutes of limitation and peremptory deadlines (Verjährungs- und Verwirkungsfristen) continue to run and interest continues to accrue. The financial restructuring may occur under the supervision of an administrator which is instated by the court. 1.3 Please briefly describe the types of insolvency proceedings contemplated by your legislation (liquidatory proceedings; reorganisation or recovery proceedings). The two main types of insolvency proceedings in Switzerland are bankruptcy (i.e. liquidation) proceedings (Konkursverfahren) and composition proceedings (Nachlassverfahren). Composition proceedings can either be used to liquidate and realise the debtor's assets in a more flexible manner than in bankruptcy (composition agreement with assignment of assets) or result in a debt restructuring (be it through a debt-rescheduling or a dividend agreement or a combination thereof). Bankruptcy Proceedings A company may be declared bankrupt by the competent court and placed into bankruptcy proceedings if a creditor whose claim has not been settled but upheld within the course of debt enforcement proceedings (Betreibung) has successfully requested the opening of bankruptcy proceedings (Konkursbegehren), upon a debtor's request by declaring to the court that it is insolvent, upon a creditor's request if the company has committed certain acts to the disfavour of its creditors or if it has ceased payments or if certain events have occurred during composition proceedings or upon a notification of the court by the board of directors (or the statutory auditors) of the company that the company is over-indebted. As a first step, the bankruptcy court will determine whether summary or ordinary proceedings will apply or whether the bankruptcy proceedings are closed because the assets are not sufficient to cover the expected costs of the proceedings. For such purpose the receiver in bankruptcy has to draw up an inventory. Summary proceedings are ordered if the proceeds of the bankrupt's assets are unlikely to cover the expected costs of ordinary proceedings or in non-complex circumstances, in each case unless one or more creditors explicitly request ordinary proceedings and are willing to advance the additional costs. 3

If the rules for ordinary bankruptcy proceedings apply, the receiver in bankruptcy publishes a notice of bankruptcy instructing all creditors and debtors to file their claims and debts within 30 days and inviting creditors to a first creditors' meeting (erste Gläubigerversammlung). The first creditors' meeting may appoint a private receiver in bankruptcy acting instead of the state bankruptcy office as well as a creditors' committee which has certain supervisory (and limited decisive) responsibilities. A second creditors' meeting (zweite Gläubigerversammlung) is convened to pass resolutions as to all important matters, including the commencement or continuation of claims against third parties (such as avoidance claims) and the method of realisation of the assets belonging to the bankruptcy estate (the actual realisation, however, is reserved to the receiver in bankruptcy). If the rules for summary bankruptcy proceedings apply, there are, in principle, no creditors' meetings and the bankruptcy office will proceed to liquidation and realisation of the assets (including collateral) without participation of the creditors. Certain rights of the secured parties to oppose particular realisation methods of their collateral remain reserved. Composition Proceedings Composition proceedings are typically initiated by the debtor (see Section 1.2 above), but can also be requested by a creditor if such creditor is entitled to request the opening of bankruptcy proceedings. As a first step, a reasoned formal application for a moratorium has to be submitted to the composition court. Furthermore, composition proceedings may also be opened ex officio if it appears to the bankruptcy court that a composition agreement is likely to be concluded with the creditors. Composition proceedings start with the grant of a moratorium, upon which the administrator takes the necessary preparatory measures for the following process of creditor and court approval of the composition agreement. An inventory is taken and the assets are valued. The administrator makes a public announcement instructing the creditors to file their claims within 20 days (Schuldenruf). All claims which have come into existence either before the public announcement of the moratorium or without the administrator's consent during the moratorium are subject to the composition agreement. As soon as a draft composition agreement is proposed, the administrator convenes a creditors' meeting by public notice. Only creditors who have filed claims are admitted with the right to vote to the creditors' meeting. The creditors' meeting receives a report of the administrator, elects the liquidator and the members of the creditors' committee and ultimately decides whether to approve or to reject the proposed composition agreement. Approval of the proposed composition agreement requires the affirmative vote by a quorum of either a majority of creditors representing two-thirds of the total debt or one-fourth of the creditors representing three-fourths of the total debt. Creditors with privileged claims and secured creditors (to the extent that their claims are covered by the estimated liquidation proceeds of the collateral) will not be entitled to vote on the composition agreement. After approval by the creditors, the composition agreement requires confirmation by the composition court. With the court's approval, the composition agreement becomes valid and binding upon all creditors of claims subject to the composition agreement, irrespective of whether or not such creditors have participated in the composition proceedings. 1.4 Please briefly describe the types of claw-back actions available in your jurisdiction. Please address, in particular, any of the following questions: Is claw-back automatic or does it require a positive assessment of the existence of the relevant conditions by the court or the receiver? Does your legislation differentiate between transactions (including the granting of security) with consideration and without consideration? 4

(c) (d) Does your legislation differentiate, in cases of security in general, between security taken concurrently with the granting of the secured debt and security taken in a different period of time? Are there special provisions for intra-group transactions and transactions between related parties? Certain acts of a Swiss debtor may become subject to challenge under the avoidance regime set forth in Articles 285 et seq. DEBA if such Swiss debtor is subsequently declared bankrupt (Konkurseröffnung) or if a composition agreement with assignment of assets (Nachlassvertrag mit Vermögensabtretung) is approved. If the third party beneficiary of the targeted act is unwilling to comply with the relevant request from the liquidator (or a creditor to whom the relevant right to pursue the avoidance action has been assigned pursuant to Article 260 DEBA), a court proceeding must be commenced which may be instituted before the courts at the Swiss domicile of the defendant or, if no such Swiss domicile exists, at the place of the insolvency proceedings. If the challenge succeeds, the third party must, as a rule, return the assets formerly belonging to the debtor to the bankruptcy office. Only if restitution in kind is no longer possible is there a subsidiary obligation of the defendant to pay a corresponding amount to the insolvency estate. For all avoidance actions it is required that the challenged transaction caused damages to other creditors of the relevant Swiss debtor which is generally presumed by law but may be overcome by counterproof of the defendant in an avoidance action. The most recent case law of the Swiss Federal Supreme Court suggests that this requirement is to be interpreted extensively and that it is met if (i) the act to be set aside caused actual damages to the creditors by reducing the assets available for distribution or the quota of a specific creditor or (ii) if the position of the creditors in the insolvency proceeding has otherwise been adversely affected. The targeted acts may be summarised as follows: (c) Article 286 DEBA targets donations and all dispositions made by a Swiss company without any or without adequate consideration within a period of one year prior to the opening of bankruptcy proceedings or the grant of a moratorium in the case of a subsequent composition agreement with assignment of assets. The adequacy or inadequacy of the consideration is to be interpreted objectively with respect to the facts existing at the time the relevant transaction was entered into. Consequently, it is irrelevant whether or not the Swiss debtor and/or the counterparty were aware of the disproportionate nature of its consideration. The burden of proof for the inadequacy of the consideration lies with the party challenging the transaction. Article 287 DEBA targets certain specific acts carried out by a Swiss company when it was over-indebted, provided that the disposition took place within a period of one year prior to the opening of bankruptcy proceedings or the grant of a moratorium in the case of a subsequent composition agreement with assignment of assets. The targeted acts are (i) the grant of a security interest for existing debts if the Swiss company was not by prior agreement contractually obligated to create the relevant security interest, (ii) the payment of claims other than by means of cash or other ordinary means of payment or (iii) payment of a claim which has not yet fallen due. Even if such requirements are met, avoidance is not available if the relevant counterparty can substantiate that it did not know (and did not need to know) of the over-indebtedness of the Swiss company. In addition, Article 287 para. 3 DEBA confirms in a more declaratory way that avoidance is not available if securities, book entry securities or other financial instruments which are traded on a representative market have been granted as collateral and if the Swiss debtor previously entered into an obligation to provide top-up collateral or previously reserved the right to substitute one collateral for another. Finally, Article 288 DEBA targets dispositions made by the Swiss debtor within a period of five years before the opening of bankruptcy proceedings, if the disposition was made with 5

the intent to disadvantage its creditors or to prefer certain of its creditors to the detriment of other creditors and if the privileged creditor knew or should have known of such intent. The intent on the debtor's side is presumed where the debtor could and must have recognised that the challenged act would prefer or disadvantage creditors. It is sufficient, though, that the debtor, while not directly aiming at such preference or disadvantage by its act, merely accepts such preference or disadvantage as a possible consequence of its act. Jurisprudence holds that such intent is recognisable to the counterparty, if the counterparty, using the diligence warranted under the specific circumstances, should have foreseen a disadvantage to the other creditors as the consequence of the act of the debtor. If there are signs of a potential disadvantage to other creditors, then the counterparty has to interrogate the debtor and make the necessary further inquiries. If the conditions of a successful avoidance under Article 286 DEBA are met, and further assuming that the inadequacy of the assignment was or should have been known to the parties, such assignment may become subject to challenge under Article 288 DEBA as it involves a disadvantage of other creditors or a preference of the counterparty. In cases of successful avoidance the debtor, and under certain circumstances also the favoured creditor, may also be liable for criminal prosecution for bankruptcy fraud. Swiss law currently has no specific provisions for intra-group transactions and transactions between related parties. Accordingly, the aforementioned general avoidance rules apply. A respective legislative proposal which would have lead to a certain inversion of the burden of proof for intra-group transactions is currently on hold in the Swiss parliament. 2. Specific questions 2.1 Is claw-back subject to specific rules with respect to any type of security available in your jurisdiction? If so, please describe any such rules. There are no specific avoidance rules with respect to any type of security which is available in Switzerland. Accordingly, the aforementioned general avoidance rules apply. 2.2 Are there any total or partial exemptions from claw-back, depending on (for example): (c) (d) (e) (f) The type of security; The type of transaction secured (including its legal form); The type of (wider) transaction within which the financing is granted and the relevant security is taken (e.g. financings granted in the context of certain reorganisation proceedings); The nature of the grantor of security; The nature of the beneficiary of security; Other. Article 287 para. 3 DEBA states that avoidance under Article 287 DEBA is not available if securities, book entry securities or other financial instruments which are traded on a representative market have been granted as collateral and if the Swiss debtor previously entered into an obligation to provide top-up collateral or previously reserved the right to substitute certain collateral. Pursuant to some authors in legal doctrine, this exception should not be understood as a specific rule which only applies to securities, book entry securities or other financial instruments which are traded on a representative market. Rather, the provision should be interpreted as being merely declaratory in nature and the rules set forth therein should also apply to other types of collateral in Switzerland. 6

If security is granted in exchange for and prior to or concurrently with making available new money (rather than for an existing debt or within the context of a re-financing of existing debt) it is the general view under Swiss law that no damage has been caused to other creditors of the Swiss debtor as the security was granted in exchange for receiving the new money. Accordingly, avoidance is generally not available in this context unless the security provider knows or, by applying the diligence warranted by the specific circumstances, should have known that the new money would be used to selectively repay certain creditors with preference over others in which case avoidance under Article 288 DEBA may again be available. In addition, security which is being posted by a third party for obligations of the Swiss debtor can generally not be avoided in an insolvency proceeding of the latter (see Section 2.6 below). 2.3 How does your legal system address the claw-back of quasi-security transactions, e.g. a sale of a property in return for a price payable in instalments may hide a financing transaction secured by the property; which legal regime applies in this case: that of the claw-back of security, or that of the termination of pending (sale and purchase) agreements? Swiss law does not provide for a special avoidance regime for quasi-security transactions. Rather, the rules set forth in Articles 285 et seq. DEBA (as summarized above) apply generally to all sorts of transactions. However, in a quasi-security context certain additional insolvency law related issues may become relevant. In particular, an analysis of the rules regarding performance of contracts upon the occurrence of insolvency may be warranted by the circumstances. From a Swiss law perspective, these rules result from a fairly complex interplay between contract and insolvency law which differs for each type of contract. As a general rule, though, Swiss insolvency law recognizes ipso facto rules which stipulate that a contract will be terminated with immediate effect upon the occurrence of a bankruptcy event. The same arguably holds true if the contract provides for a termination right, provided, however, that such termination right is exercised without undue delay. The impacts of a termination of a pending agreement on the in rem rights have to be analyzed on a transaction specific basis. A further issue which may come up is whether a quasi-security transaction will be recharacterised as a secured transaction upon the occurrence of an insolvency event which may trigger further questions as to the valid creation of the relevant security interest. Again, this aspect has to be analyzed on a transaction specific basis. 2.4 What are the legal consequences of the claw back for the parties involved? For example: Is an agreement, deed or transaction subject to claw back invalid or just ineffective between the debtor an the party to the agreement; To what extent can claw-back affect the successful exercise or enforcement of security rights as may have occurred prior to the adjudication in bankruptcy (e.g. claims cashed by the secured lender under a security assignment of receivables prior to the adjudication in bankruptcy)? Is there any difference between the case of self-enforcing security (e.g. the cashing of claims referred to above) and a court-driven enforcement (e.g. the enforcement of a mortgage)? Successful avoidance of a security interest would not have the effect that the relevant agreements and the creation of the security interest become void or invalid from a civil law perspective. Rather, the civil law effects of the targeted transaction will simply be disregarded for the purposes of the insolvency proceedings. Accordingly, the party benefitting from the voidable security interest will generally be treated as an unsecured party following successful avoidance and will further be under an obligation to return the security to the bankruptcy office for realisation to the benefit of all creditors. 7

If the security has already been enforced by the secured party prior to the adjudication of bankruptcy or the grant of a moratorium, a return of the relevant assets is generally no longer possible unless realisation occurred by way of a purchase of the relevant assets by the secured party (Selbsteintritt). In all other circumstances, the secured party will have to hand over the realisation proceeds to the bankruptcy receiver. In turn, the claim of the secured party will be increased by an amount corresponding to the realisation proceeds. If avoidance is made under Article 286 DEBA and further assuming that the recipient was in good faith at the time of the transaction, it will only have to hand over the realisation proceeds to the extent it is still enriched at the time of the successful avoidance. 2.5 What are the rights of the parties involved once the claw back had been enforced (as a result of operation of law or court ruling)? If a security interest is being avoided under Articles 286 to 288 DEBA, the secured party will be treated as an unsecured party. As mentioned under Section 2.4 above, the secured party will generally be under an obligation to hand in the assets to the insolvency administrator for realisation to the benefit of the creditors generally. If it has already realised the relevant assets, the secured creditor will alternatively have to hand in the relevant proceeds for distribution to creditors generally, in which case, however, the secured creditors' claim will be increased by a corresponding amount. 2.6 What is the claw-back regime for security granted by third parties/in respect of third party indebtedness? Please analyse from the perspective of the insolvency of the debtor and of the insolvency of the third party grantor of security. Does the possibility for the third party grantor to act in recourse against the insolvent debtor make a difference? In the insolvency of the third party security provider, the main issue from an avoidance perspective is whether the security interest has been granted by the third party for no or inadequate consideration. If so, there is an avoidance risk under Article 286 DEBA or, if the one year suspect period has already elapsed, under Article 288 DEBA. This question becomes particularly sensitive in an intra-group context where third party security is often granted for no direct consideration. While some scholars are of the view that the consideration must have been received from the beneficiary of the security interest (i.e. the lenders), it would appear more appropriate to us to apply a more liberal view and to also take into account any consideration received from the debtor of the secured amounts. There is, however, no court precedent available which would confirm this view. In any event, it will generally not be sufficient that the security provider is subrogated to the rights of the beneficiary of the security provider upon enforcement of the security interest. Pursuant to the Swiss Federal Supreme Court and the predominant view in legal doctrine such subrogation rights (if permitted at all under the relevant agreements) cannot be viewed as a consideration for the posting of the third party security and are frequently not recoverable when the security is being enforced. Rather, a meaningful consideration must have been received by the third party security provider at the time of the posting of the security interest. Such consideration may be in the form of a fee for the granting of the third party security. Arguably, the consideration may also consist of indirect benefits, such as access to funding for the third party security provider, be it that the third party security provider directly receives certain sums under the financing or that certain funds are made available to the third party security provider by way of on-lending. However, it is unclear from court precedents whether access to funding would indeed be deemed a sufficient consideration for the purposes of Article 286 or 288 DEBA. In the insolvency of the debtor, there are no specific claw-back issues for the third party security as clawback requires that the debtor has participated in the act which becomes subject to challenge. Hence, the posting of third party security cannot be challenged in the insolvency of the debtor. 8

If the third party security was posted for a debt which has been repaid by the debtor and if such repayment is being successfully challenged in the insolvency of the debtor this may reinstate the third party security which has been released. Depending on the circumstances such reinstatement may occur by operation of law (as would be the case for a surety or a guarantee provided by the third party) or the beneficiary may have a contractual claim for the reinstatement of the security (e.g. in the case of a pledge where the relevant asset has already been released to the third party security provider). It should be noted for the sake of completeness that the posting of third party security is subject to a number of additional requirements and limitations under Swiss corporate and tax laws which, depending on the specific set of facts, may in effect limit the value of the security interest. 2.7 What is the claw-back regime for security which has been agreed (i.e. the relevant security agreement has been executed) but not yet perfected at the time of the adjudication in bankruptcy of the debtor/grantor? A distinction must be made between the valid creation of the security interest and its perfection. Under Swiss substantive laws, valid creation of the security interest may or may not occur simultaneously with the execution of the relevant security agreement. For certain types of security interests, the debtor and security provider may have to take additional steps such as the transfer of possession in a physical share certificate (see Section 1.1 above). If such steps for the valid creation of the security interest have not yet occurred at the time the debtor is being declared bankrupt, such steps can no longer occur as a matter of Swiss insolvency law and the security interest, thus, would not be recognized. Similarly, upon the grant of a moratorium the posting of collateral requires the consent from the administrator and the composition court. If, based on the foregoing, the security interest has not yet been validly created upon the occurrence of an insolvency event, the claw-back regime would not be relevant. For various types of security interests certain additional steps may have to occur to make the security interest enforceable vis-à-vis third parties (e.g. the registration of a right of pledge with respect to intellectual property rights in the relevant registries or the notification of an assignment to the debtors of the assigned claims). If such steps do not require the assistance of the receiver in bankruptcy or the administration, the relevant beneficiary of the security interest may proceed with the relevant steps. If, in turn, the receiver in bankruptcy's or the administrator's assistance would be required (such as, for instance, for the filing of the relevant notices with the intellectual property authorities), it may be difficult to obtain the relevant signatures. In any event, if the security interest has been validly created under applicable law the Swiss insolvency official would be bound by the relevant security interest. In particular, a validly created but not yet perfected security interest does not give the insolvency official additional claw-back rights. Rather, the aforementioned general rules set forth in Articles 286 et seq. would apply. 2.8 Other? Recent precedents of the Swiss Federal Supreme Court suggest that such court is moving to applying a stricter approach towards avoidance, namely where subjective elements are concerned. In particular, courts tend to apply a relatively low threshold when it comes to the question of the existence of an intent to prefer certain creditors over others on the debtor's side and the other party's ability to recognize such intent pursuant to Article 288 DEBA. This holds true, in particular, where bank counterparties are involved which have certain contractual information rights. 9