Making Guarantees

In the aftermath of the grounding of the Swiss national airline, the Swiss Federal Supreme Court passed another leading case on 16 October 2014. The focus of the decision was cash pooling, but the findings may also have an impact on intercompany lending and on up- and cross-stream guarantees. The company at the core of the case, Swisscargo AG, participated in the Swissair group's zero-balancing cash pool. At that time, Swisscargo had cash pool claims against its sister company, which acted as cash pool leader, and claims not related to the cash pool against its indirect parent based on an intercompany loan. Swisscargo paid a substantial dividend to its sole shareholder, but only after its statutory auditors confirmed that the company had sufficient profits on its balance sheet. The dividend was paid via the cash pool. After the collapse of the group in 2001, the auditors were sued for wrongfully confirming the legality of the dividend payment.