The branch of bankruptcy law involves the procedure or legal method by which a debtor is relieved of financial liability for its debts by establishing court-approved reorganization plan or plan for partial repayment. The purposes of bankruptcy laws in Switzerland are to give honest, financially insolvent individuals and debtors of commercial enterprises relief from indebtedness.

A bankruptcy proceeding can either be entered into voluntarily by a debtor or initiated by creditors. After a bankruptcy proceeding is filed, creditors generally may not seek to collect their debts outside of the proceeding. The debtor is not allowed to transfer property that has been declared part of the estate subject to proceedings. Furthermore, certain pre-proceeding transfers of property, secured interests, and liens may be delayed or invalidated. Various provisions of the bankruptcy also establish the priority of creditors’ interests.