A limited company that does not have sufficient funds to cover its debts can be declared bankrupt upon petition from the company itself or a creditor. Bankruptcy essentially means that a bankruptcy estate seizes and sells the debtor's limited assets before the proceeds are distributed among creditors according to legally established claims. How the final distribution will be depends in part on the extent to which the company has pledged its assets as security for certain creditors, the extent to which transactions carried out shortly before the opening of bankruptcy can be reversed, and the rules for distributing assets among unsecured creditors.

The ability to pledge assets is significant for how a company's funds are distributed in the event of bankruptcy. The ability to pledge can make it easier and cheaper for a company to receive loans, thus having a significant impact on the business community's access to financing. The subject covers the frameworks for pledging assets typically owned by limited companies—real estate, movable property, simple monetary claims, and shares.

Bankruptcy proceedings entail costs and are not always economically desirable. Therefore, in some cases, it may be preferable for creditors, the company itself, and other stakeholders for creditors to waive parts of their claims against the company, thereby reducing the debt burden to a sustainable level. To facilitate this, the rules of the reconstruction law concerning compulsory arrangements grant courts the authority to approve changes to companies' debt obligations even if not all affected creditors have consented. The subject discusses when companies can be granted a request for so-called reconstruction negotiations and the conditions for writing down debts through reconstruction with a compulsory arrangement.