Bankruptcy is when companies are no longer able to pay their debts. It can be initiated by either the company or its creditors.
Bankruptcy occurs when a company finds itself in excessive debt; that is, when the value of its property, its assets, no longer covers the total amount of its debts. If the board of directors has good reason to believe that the company has reached this situation, it is required to notify the courts (Art. 725 CO). Bankruptcy can also be initiated by an external creditor. In fact, any legal proceedings automatically result in initiation of bankruptcy, barring a few exceptions (Art. 43 LP).
Last modification 03.05.2021
