Sweden

A look at corporate, personal and, where relevant, partnership insolvency proceedings in Sweden, with a brief description to explain key features, as part of our Dictionary of Insolvency Terms in EU Member States. In particular, we highlight who controls the procedure and whether it is likely to be accompanied by a moratorium to prevent enforcement.


Företagsrekonstruktion

Company reorganisation

  • Used when a company or a partnership is unable or likely to become unable to pay its debts (the substantive test). 
  • The reorganisation lasts for 3 months with a potential extension of up to 12 months. 
  • Usually combined with a public composition and is initiated by either: (i) the creditors; or (ii) the debtor, applying to court. 
  • If the court approves the application, it appoints an administrator. The debtor retains control over its property but must consult the administrator, whose duty it is to protect creditors’ interests. 
  • Secured creditors can take action to recover their debts during the reorganisation, but there is a moratorium on actions by unsecured creditors. If the debtor acts in a way that jeopardises creditors’ interests during the reorganisation, the debtor can be declared bankrupt.

Offentlig ackord

Public composition

  • Used when a company or a partnership is unable or likely to become unable to pay its debts (the substantive test) and is initiated by the debtor applying to court. 
  • All unsecured creditors take part in the negotiations; however secured creditors and those who rank above unsecured creditors need not take part in the procedure as they are already fully compensated. 
  • The composition must be accepted by at least 60-75% of unsecured creditors. 
  • The composition lasts for 3 months with a potential extension of up to 12 months. 
  • The court supervises the procedure but the debtor retains control over its property and must consult with the administrator. 
  • All unsecured creditors can be forced to accept a reduction of up to 75% (or more in certain circumstances) of the value of their claims.

Privat ackord

Private composition

  • A private arrangement proposed by a company or a partnership to reduce its debts. 
  • An entirely voluntary procedure, which is not regulated by law. For example, there is no stay prohibiting secured creditor enforcement action; no time limits to comply with; no asset supervision or control (by the court or an insolvency practitioner). 
  • All creditors must approve the composition.

Konkurs

Bankruptcy

  • Initiated by either a creditor or the debtor (company or partnership) applying to court.
  • The applicant must prove that the company or partnership is insolvent, i.e. not only temporarily unable to pay its debts. 
  • The period of bankruptcy can last between three months and several years. 
  • The court appoints a receiver who takes charge of the company or partnership and its assets. 
  • A creditor’s financial claim should be filed and determined in the bankruptcy proceedings. 
  • A statutory moratorium is imposed on creditors and, generally, only a creditor holding a pledge can continue to enforce its rights. 
  • At the end of the procedure, the company or partnership ceases to exist.

Frivillig likvidation i kombination med ackord

Voluntary liquidation in combination with composition

  • Initiated by the debtor (company or partnership). 
  • The liquidation typically lasts between 7 and 12 months.
  • The Swedish Companies Registration Office (Bolagsverket) appoints a liquidator who takes charge of the company or partnership.
  • The liquidator is able to summon unidentified creditors by applying to publish a summons in the Official Gazette (Post- och Inrikes Tidningar) for a minimum period of six months. During this period, creditors must submit proofs of their claims (an unproven unidentified creditor’s claim is generally invalid). 
  • There are no substantive tests for the procedure and neither consent to nor approval of the procedure is required.
  • There is no stay prohibiting secured creditor action. 
  • At the end of the procedure, the company or partnership ceases to exist.

Tvångslikvidation

Compulsory liquidation

  • Initiated by the Companies Registration Office, which appoints a liquidator. 
  • The liquidator can also be appointed by court order if the company: (i) has not registered its board, managing director or auditor; or (ii) has not provided the Companies Registration Office with annual audited reports. 
  • The liquidator takes charge of the company. 
  • The liquidation typically lasts between 7 and 12 months.
  • There is no stay prohibiting secured creditor action.
  • At the end of the procedure, the company ceases to exist. 
  • The procedure also applies to partnerships.

Skuldsanering

Debt rescheduling

  • The Swedish Enforcement Authority (Kronofogdemyndigheten) decides if the procedure should be initiated and, if so, takes charge of it. 
  • Creditor consent or approval of the procedure is not required.
  • The debtor remains in control of their assets.
  • Claims of unidentified creditors are invited by advertisement and all debts are reduced. Every creditor has an equal right to be paid. The Enforcement Authority decides how much the debtor will pay their creditors. Secured creditors are not included in the debt rescheduling and their security remains unaffected.

Personlig konkurs

Bankruptcy

  • Initiated by either a creditor or the debtor applying to court, which appoints a receiver. 
  • Only a creditor holding a pledge can continue with enforcement proceedings. 
  • The general rules of corporate insolvency apply. 
  • Payment can be demanded from the debtor even after the bankruptcy procedure is finalised.

Secured creditor enforcement procedures

  • In the case of disputed claims, in order to enforce the payment of a loan or security, an enforcement order must generally be obtained through the public courts or arbitration, as the claim itself is not enough.
  • Once the creditor has obtained the enforcement order and applied to the Enforcement Authority or bailiffs, the borrower’s assets can be seized. 
  • In the case of undisputed claims, there is a simplified bailiff procedure.

Anticipated changes in the next two years

The EU Directive on Restructuring and Insolvency1 requires Member States to incorporate minimum common standards into their national restructuring and insolvency laws by 17 July 2021. The intention of the Directive is to reduce barriers to the free flow of capital stemming from differences in Member States’ restructuring and insolvency frameworks, and to enhance the rescue culture in the EU.

Notable features required to be included in Member States’ national laws include:

  • An effective preventive restructuring framework to enable debtors experiencing financial difficulties to restructure at an early stage, with a view to preventing insolvency and ensuring their viability. 
  • A stay of up to four months extendable to up to 12 months to support negotiations of a restructuring proposal, which should prevent individual enforcement action and include rules preventing the withholding of performance, termination, acceleration or modification of essential contracts.
  • An ability to cram down dissenting classes of creditors.
  • Adequate protection for financing needed to allow the business to survive or to preserve the value of the business pending a restructuring, and for new financing necessary to implement a restructuring plan. 
  • Provision for honest, insolvent entrepreneurs to have access to a procedure that can lead to a full discharge of their debts (subject to limited exceptions) within three years.

Contact: Kent Hägglund


Directive (EU) 2019/1023 of the European Parliament and of the Council of 20 June 2019 on preventive restructuring frameworks, on discharge of debt and disqualifications, and on measures to increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt, and amending Directive (EU) 2017/1132.