Swiss won't extend pandemic-linked emergency bankruptcy steps

ZURICH, Oct 14 (Reuters) - The Swiss government will not extend beyond next week emergency measures it imposed in April designed to prevent the coronavirus pandemic from driving otherwise healthy companies into bankruptcy, it said on Wednesday.

The decree that suspended companies’ obligation to report overindebtedness will expire as planned on Oct. 19, it said.

“The (government) is convinced that there is a need for great restraint when interfering with the economic cycle. Relief for debtors, for example a deferral, always means a burden for creditors and for the entire economy. Both interests must be adequately taken into account, even in an emergency,” it said after a cabinet meeting.

The move reflects concern that government steps to prop up ailing companies could create “zombie” firms with no real future once the pandemic fades.

Data compiled by creditor association Creditreform showed Swiss corporate insolvencies fell by nearly 16% in the first half of the year.

The government is also putting into effect next week a provision passed by parliament that doubles to eight months the time that companies can use a debt moratorium while they restructure. (Reporting by Michael Shields Editing by Alexandra Hudson)