Facts

The [B.] (respondent, creditor) applied on 8 December 2020 to the Regional Court Prättigau/Davos to declare bankruptcy of [A.] (appellant, sole proprietor operating the hotel and mountain hut '[C.] ') without prior debt enforcement proceedings. The bankruptcy hearing took place on 8 February 2021. On 8 March 2021 the appellant applied for a provisional composition moratorium and requested that the bankruptcy proceedings be stayed.

By decision of 16 March 2021, the Regional Court declared bankruptcy on the basis of the creditor's bankruptcy petition (Art. 190 para. 1 no. 2 DEBA) and on the same day rejected the application for a provisional composition moratorium. The Cantonal Court of Graubünden, Debt Enforcement and Bankruptcy Chamber, dismissed by decision of 2 June 2021 the appeals against the declaration of bankruptcy (KSK 21 12) and against the rejection of the provisional composition moratorium (KSK 21 13). The suspensive effect was limited to the prohibition of further enforcement measures.

The appellant's financial situation: He is the owner of [D. GmbH] , whose only significant asset is the mountain hut '[C.] '. The property is encumbered by a mortgage debt (CHF 1,350,000.--) in favour of [E. AG] . In the provisional debt enforcement proceedings (Rechtsöffnung), the Regional Court granted provisional lifting of debt enforcement; [D. GmbH] filed a negative declaratory action and asserted damages claims (CHF 1,450,000.-- and CHF 117,000.--, respectively) for set-off by way of reverse piercing of the corporate veil. On the liabilities side, loan interest of approximately CHF 630,000.-- was taken into account. The lower court assumed uncovered debts of over CHF 450,000.-- and saw no restructuring prospects.

Before the Federal Supreme Court, the appellant requested in proceedings 5A_556/2021 (declaration of bankruptcy) and 5A_557/2021 (provisional composition moratorium) the annulment of the preliminary decisions, the granting of the provisional composition moratorium for two months or the rejection of the bankruptcy petition, alternatively a stay, and subsidiarily remittal.

Considerations

The appeals against final decisions in debt enforcement and bankruptcy matters are admissible (Art. 72 para. 2 lit. a, Art. 74 para. 2 lit. d, Art. 90 FSCA). The declaration of bankruptcy and the rejection of the provisional composition moratorium are not interim measures within the meaning of Art. 98 FSCA, so federal law may be invoked without restriction (Art. 95 lit. a FSCA). The proceedings are joined because of the close factual connection (Art. 71 FSCA in conjunction with Art. 24 FCPA), which renders the application for a stay moot.

With regard to the provisional composition moratorium, the Federal Supreme Court explains that the provisional moratorium may only be refused if there is manifestly no prospect of restructuring or of confirmation of a composition agreement (Art. 293a para. 3 DEBA). The composition court must undertake an overall assessment of the current and future financial situation, and no high requirements are to be placed on the granting. The lower court's choice of words ('open', 'possible', 'not excluded') does not exceed the scope of discretion but expresses a certain reserve in the prognosis. The plausibility of the submitted documents, in particular the 'pro forma balance sheet', was permissibly examined against the principles of accounting (Art. 293 lit. a DEBA); accepting the applicant's prognosis without scrutiny would lead to an almost unconditional entitlement, which the law does not provide for.

As to timing, the appellant complained that the conclusion of the negative declaratory proceedings should not be presupposed. The Federal Supreme Court rejects this: the appellant does not specify how a composition agreement could realistically be achieved as long as the release of the pledge, and thus the sale of the property, is blocked by the pending negative declaratory action. There is no violation of the duty to state reasons or of the right to be heard, since the reasoning allowed a substantive challenge.

With respect to the complaints concerning the facts (arbitrariness, assessment of evidence), the restriction of Art. 97 para. 1 FSCA applies; a differing view by the appellant does not yet demonstrate arbitrariness. The composition court was entitled to take the loan interest into account, even though it had not granted provisional lifting of debt enforcement for that interest in the debt enforcement proceedings: in provisional lifting proceedings only the existence of a sufficient enforcement title is decided (Art. 80, 82 DEBA), whereas the composition court undertakes an overall assessment with a specific orientation and is not bound by the decision on provisional lifting. The…