In finance, the term bankruptcy denotes the state of financial insolvency. This occurs when a borrower is unable to repay their debts within a given time frame.
In Switzerland, a legal entity can be declared bankrupt if it is unable to settle its debt within 20 days of receiving a court-issued summons for payment.
Bankruptcy proceedings are usually initiated by creditors. During proceedings, creditors present their debt claims in a court of law and debtors have the opportunity to present possible evidence proving that the stated debts either do not exist or have already been settled.
If debt claims are found to be genuine, the debtor is declared bankrupt and the bankruptcy is entered into the commercial register. The bankruptcy is also listed in cantonal and national commercial journals.
A bankrupt entity is removed from the commercial register and its assets are seized to repay its debts.
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