Bankruptcy Switzerland (Konkurs): Corporate Insolvency Process (2026)
Swiss corporate bankruptcy (Konkurs) is the formal insolvency procedure for insolvent Swiss AG and GmbH companies. It is administered by the cantonal bankruptcy office (Konkursamt) following a court order (Konkurseröffnung). This article explains the triggers under the Federal Act on Debt Enforcement and Bankruptcy (SchKG) and the Code of Obligations (Art. 725 CO), the step-by-step process, creditor priority, director duties in insolvency, and alternatives to formal bankruptcy.
Triggers for Bankruptcy in Switzerland
A Swiss company may enter formal bankruptcy through three routes set out in Swiss law:
Overindebtedness (Überschuldung) — Art. 725a/725b CO: A company is overindebted when its liabilities exceed its assets at both book value and going-concern value. When the board of directors (for an AG) or managing directors (for a GmbH) have reasonable grounds to suspect overindebtedness, they must:
- Immediately prepare an interim balance sheet
- Have it audited by a licensed audit expert
- If overindebtedness is confirmed: notify the court — unless creditors with subordination agreements (postponement of ranking, Rangrücktritt) restore solvency on paper
Inability to pay (Zahlungsunfähigkeit): A company that cannot meet its payment obligations as they fall due is insolvent. Creditors can trigger bankruptcy through the debt collection Switzerland (SchKG) process — filing a Betreibung at the Betreibungsamt, obtaining a Konkursandrohung (notice of bankruptcy threat), then petitioning the district court to open bankruptcy proceedings.
Loss of capital (Kapitalverlust) — Art. 725 CO: If half of the share capital and statutory reserves are no longer covered by assets, the board must convene the general meeting and propose remediation measures. Failure to act exposes directors to personal liability.
The Bankruptcy Process Step by Step
Step 1 — Court order (Konkurseröffnung): The district court (Bezirksgericht) issues a bankruptcy order. This can be triggered by a creditor’s application following the SchKG process, or by the company itself notifying the court of confirmed overindebtedness.
Step 2 — Konkursamt takes control: The cantonal bankruptcy office seizes all assets, assumes control of business operations (or immediately ceases trading), and produces a full inventory of assets. Directors lose authority to act on the company’s behalf.
Step 3 — Creditors’ call (Schuldenruf): The Konkursamt publishes the bankruptcy in the Swiss Official Gazette of Commerce (SHAB). All creditors are invited to file their claims within 20 days. The Betreibungsamt cantons directory lists the relevant local offices.
Step 4 — Proof of claims (Kollokation): The Konkursamt evaluates all creditor claims and establishes the Kollokationsplan — the ranked schedule of creditors showing who is paid in what order and in which priority class.
Step 5 — Asset realisation: Assets are sold, typically at public auction. Secured assets (pledged property, mortgaged real estate) are realised separately for the benefit of secured creditors.
Step 6 — Distribution: Proceeds are distributed to creditors strictly in priority order. Third-class unsecured creditors receive payment only after first- and second-class claims are satisfied in full.
Step 7 — Closure: Once distributions are complete and the estate is exhausted, the company is dissolved and deleted from the Commercial Register (Handelsregister).
Creditor Priority: Three Classes Under Art. 219 SchKG
Swiss bankruptcy law creates three statutory priority classes under Art. 219 SchKG:
First class (privileged):
- Employee salary claims — up to four months’ unpaid salary per employee
- Claims from social insurance schemes (AHV, BVG) for employee contributions
Second class (privileged):
- AHV social insurance claims for employer contributions
- Claims under KVG (health insurance premiums for employees)
- Certain maintenance claims
Third class (ordinary):
- All other unsecured creditors — trade creditors, landlords, banks, bondholders
Secured creditors (pledge, mortgage): Secured creditors are paid first from the specific pledged or mortgaged asset and stand outside the three classes. Any shortfall after realisation of the secured asset joins the third class.
In practice, third-class creditors in a typical corporate bankruptcy recover little or nothing — the assets are consumed by priority claims and Konkursamt administration costs.
Director Duties and Liability During Insolvency
Swiss directors face substantial personal liability exposure once insolvency indicators appear:
Art. 754 CO (AG) / Art. 827 CO (GmbH): Directors are personally liable for damage caused by intentional or negligent breach of their duties. In insolvency contexts, liability claims arise from:
Failure to notify the court of overindebtedness: Directors who delay notifying the court despite confirmed overindebtedness under Art. 725b CO are personally liable for the additional debt incurred during the delay period (Insolvenzverschleppung).
Preferential payments during insolvency: Payments to creditors after the onset of insolvency that favour one creditor over others are voidable (paulianische Anfechtung under Art. 285–292 SchKG). Directors who authorised such preferential payments may be personally sued by the bankruptcy estate.
Fictitious losses and asset concealment: Criminal liability arises under Art. 163/164 StGB (Swiss Criminal Code) for bankruptcy fraud, including concealing assets, fabricating liabilities, or destroying records.
Resignation does not extinguish liability: A director who was aware of overindebtedness and resigned without first following the Art. 725b CO notification procedure remains personally liable for the period of inaction. See the FAQ below.
For an overview of the formal company liquidation Switzerland process — which applies when a solvent company voluntarily winds down — see our separate guide.
Alternatives to Formal Bankruptcy
Nachlassvertrag (composition agreement) — Art. 293–336 SchKG: A structured alternative to formal bankruptcy. The debtor and creditors agree on a restructuring plan or partial debt discharge, subject to court approval and creditor super-majorities. A Nachlassvertrag allows the company to continue as a going concern if the restructuring is financially viable.
Debt moratorium (Nachlassstundung): A court-supervised moratorium suspending enforcement proceedings, granted for up to four months initially and extendable to 24 months. It provides breathing space to negotiate with creditors and prepare a restructuring plan. Related to corporate restructuring Switzerland.
Voluntary liquidation: If the company is solvent but wishes to close, voluntary liquidation under the Code of Obligations is faster and more controlled than bankruptcy. It is only available where all liabilities can be paid in full.
What Happens to Directors After Bankruptcy
Directors of a bankrupt Swiss company are not automatically disqualified from future directorships. However:
- The SHAB bankruptcy publication is publicly accessible
- The Betreibungsregister (debt enforcement register) records the bankruptcy and can be inspected by third parties
- Directors who breached their duties face personal claims brought by the bankruptcy administrator on behalf of the creditor estate
- A criminal investigation may follow if fraud, preferential transfers, or intentional asset concealment is suspected
Frequently Asked Questions
Can a director resign to avoid liability in an insolvent Swiss company?
No. Resignation does not extinguish liability for acts or omissions during the period of directorship. A director who was aware of overindebtedness and resigned without following the Art. 725b CO court-notification procedure remains personally liable for losses arising from that inaction.
What triggers the Art. 725 CO overindebtedness notification duty?
Art. 725a/725b CO requires the board to act as soon as there are reasonable grounds to suspect overindebtedness — not only when it is confirmed. The board must commission an interim balance sheet, have it audited, and notify the court if the audit confirms the deficit. Acting early reduces personal liability exposure significantly.
What is the role of the Betreibungsamt versus the Konkursamt?
The Betreibungsamt (debt enforcement office) administers the pre-bankruptcy debt collection process under the SchKG — receiving Betreibung applications, issuing payment orders, and recording enforcement actions. The Konkursamt (bankruptcy office) takes over after the court opens bankruptcy proceedings (Konkurseröffnung), seizing assets, administering the estate, and distributing proceeds to creditors.
How does the SchKG bankruptcy process differ from voluntary liquidation?
The SchKG bankruptcy process applies to insolvent companies — those unable to pay debts or whose liabilities exceed assets. Control passes to the Konkursamt. Voluntary liquidation under the Code of Obligations applies to solvent companies that choose to close, and the directors remain in control as liquidators throughout the process.
What are the three creditor classes in Swiss bankruptcy?
Art. 219 SchKG establishes three priority classes. First class: employee salary claims (up to four months) and employee social insurance contributions. Second class: employer AHV contributions and health insurance premiums. Third class: all other unsecured creditors. Secured creditors (pledges, mortgages) are paid first from their specific collateral and stand outside all three classes.
What is a Nachlassvertrag and when is it used?
A Nachlassvertrag (composition agreement) under Art. 293–336 SchKG is a court-supervised restructuring agreement between a debtor and its creditors. It can involve a partial debt write-down, an extended repayment schedule, or a transfer of assets to a new entity. It requires approval by a qualified creditor majority and the court. It is the main alternative to formal bankruptcy for companies with viable underlying operations.
What happens to ongoing contracts when a Swiss company is declared bankrupt?
The Konkursamt administrator may choose to continue or reject ongoing contracts. Counterparties may terminate contracts containing insolvency or change-of-control clauses. Landlords have specific rights under Swiss lease law. Employment contracts are not automatically terminated, but the administrator will typically give notice to employees shortly after the Konkurseröffnung.
How long does a Swiss corporate bankruptcy typically take?
Simple bankruptcies — few assets, limited creditors, no litigation — are typically closed within 6 to 12 months. Complex cases involving real property, contested creditor claims, director liability proceedings, or cross-border elements routinely take three to five years or longer.
What is paulianische Anfechtung (preferential debt challenge) in Swiss insolvency law?
Art. 285–292 SchKG allows the bankruptcy administrator to challenge transactions completed before bankruptcy that unjustly reduced the assets available to creditors. Payments made to connected parties within one year of bankruptcy, and gratuitous transfers within five years, are most at risk. Successful challenges result in the payment or asset being clawed back into the estate.
How is cross-border insolvency handled when a Swiss company has foreign assets?
Switzerland applies a modified universality principle under the Private International Law Act (IPRG). Swiss bankruptcy proceedings cover Swiss-domiciled assets as of right. Foreign assets are collected through parallel proceedings in the relevant jurisdiction or via international legal assistance. Switzerland has no bilateral insolvency treaty with the EU, so recognition of foreign bankruptcy orders must be sought through Swiss courts under Art. 166–175 IPRG.
What are the criminal consequences of bankruptcy fraud in Switzerland?
Art. 163 StGB (fraudulent bankruptcy and debt enforcement) and Art. 164 StGB (reduction of assets to the detriment of creditors) carry custodial sentences of up to three years or a monetary penalty. Actions that trigger criminal liability include deliberately destroying records, concealing assets, creating fictitious liabilities, and making preferential payments to connected parties with knowledge of insolvency.
Can a Swiss company in financial difficulty use a debt moratorium instead of bankruptcy?
Yes. A Nachlassstundung (provisional moratorium) under Art. 293a SchKG gives the debtor court protection from enforcement proceedings for an initial period of up to four months, extendable to 24 months. During this period the debtor works with a court-appointed commissioner to negotiate a composition agreement or restructuring plan. It is the preferred first step for companies with restructuring potential. See our guide to corporate restructuring Switzerland for the full process.
Get Expert Advice on Swiss Insolvency
Swiss corporate insolvency law — from Art. 725 CO overindebtedness triggers to SchKG creditor claims and director liability — is technically demanding and time-critical. Delayed action by directors is the single most common cause of personal liability in Swiss bankruptcy cases.
Morgan Hartley and the Lawsupport team advise AG and GmbH directors on insolvency triggers, restructuring options, and creditor negotiations from our office in Zug.
Related Guides
- Debt Collection Switzerland (SchKG process) →
- Company Liquidation Switzerland →
- Corporate Restructuring Switzerland →
- Betreibungsamt by Canton →
- Company Formation Switzerland →
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