Liquidator works away to wind up Swissair

Wüthrich still has plenty of work with Swissair files Keystone

The liquidator of the collapsed Swissair, Karl Wüthrich, tells swissinfo there's still much to do before the finances of the former national airline can be settled.

Wüthrich warns that it could take up to another decade before all the issues relating to the bankruptcy can be finally laid to rest.

These include lawsuits against former board members of the SAirGroup regarding payments made to other companies shortly before the spectacular grounding of Swissair on October 2, 2002 over a lack of sufficient liquid funds.

After a rescue operation from the government, cantons and others, the airline Swiss was created from the rump Swissair and the regional carrier, Crossair. The new operator has since been sold to Germany’s Lufthansa.

Wüthrich is also a member of a committee of experts commissioned in the summer of 2003 to look into revising Switzerland’s debt prosecution and bankruptcy law.

One of the main points of discussion has been whether there is a need for a Chapter 11 procedure in Switzerland, similar to that in the United States.

Chapter 11 normally allows a company to stay in business while a bankruptcy court supervises the reorganisation of its contractual and debt obligations.

swissinfo: Does Switzerland need a Chapter 11 debt restructuring procedure?

Karl Wüthrich: I don’t think Switzerland needs such a statute. I believe that our [current] law is quite good and we just need to make some corrections. We can make improvements because it is quite old. An insolvency statute needs to have clear rules, flexibility and be easy to apply. That’s very important.

swissinfo: Would a Chapter 11 procedure have saved Swissair from collapse?

K.W.: No, I don’t think so because in October 2001, one of the big problems of Swissair was that there was no liquidity and no one else was prepared to give any. It was the Swiss [federal] administration at the end of the day that put money into Swissair and we were able to transfer the airline business from Swissair to the new Swiss International Air Lines. I think it would not have changed with a Chapter 11 procedure.

swissinfo: What lessons should be learned from the whole Swissair bankruptcy case?

K.W.: I think we can learn lessons not from the bankruptcy but from what happened before. One of the important lessons is that if you are in a crisis, you need to have a worst-case scenario… and if the worst case happens you know what you will do and you are prepared.

swissinfo: This obviously wasn’t the case at Swissair?

K.W.: It wasn’t. There were no worst-case scenarios and from my point of view that was the reason behind the grounding of October 2. It was not announced and it happened out of the blue because there was no worst-case scenario.

swissinfo: What major issues are there left for you to solve as the liquidator?

K.W.: There are still quite a lot of assets I need to sell – for example shares [of various companies]. There are shares in a leasing company in the United States. There are some properties abroad, for example in Rio de Janeiro, Madrid, London, Hong Kong, Singapore and Mumbai, so there are some tangible assets left.

Then of course we have some intangible [assets], for example the brand. I would like to sell the brand and we are trying to do that now. And there are claims against the managers and board members. We also have avoidance claims against creditors who got money just before the beginning of the insolvency proceeding. What will be the end result of these lawsuits is not [yet] possible to say.

swissinfo: How long do you think it’s going to be before the whole liquidation process is over?

K.W.: I think the tangible assets […] will be sold in the next two to three years and then we will be left with the intangible assets, particularly the lawsuits I mentioned. And probably we will still have to clear up the list of claims and that can also take time. It depends on how quickly we can clear up the claims and solve all the lawsuits. My experience is that it can last for the next five to ten years.

swissinfo-interview: Robert Brookes in Zurich

Key facts

Karl Wüthrich says that he has been “quite successful” in winding up Swissair, saving between 60 and 80 per cent of the substance of the group.
The airline business was transferred to the new Swiss International Air Lines.
Swissport (handling), Gate Gourmet (catering) SR Technics (aircraft maintenance) and Atraxis (IT) were sold off.