Denmark—restructuring and insolvency guide
Produced in partnership with Gorrissen Federspiel
Denmark—restructuring and insolvency guide

The following Restructuring & Insolvency practice note Produced in partnership with Gorrissen Federspiel provides comprehensive and up to date legal information covering:

  • Denmark—restructuring and insolvency guide
  • Questions
  • What legislation is applicable to insolvencies and reorganisations? What criteria are applied in your country to determine if a debtor is insolvent?
  • What courts are involved in the insolvency process? Are there restrictions on the matters that the courts may deal with?
  • What entities are excluded from customary insolvency proceedings and what legislation applies to them? What assets are excluded from insolvency proceedings or are exempt from claims of creditors?
  • Has your country enacted legislation to deal with the financial difficulties of institutions that are considered 'too big to fail'?
  • What principal types of security are taken on immovable (real) property?
  • What principal types of security are taken on movable (personal) property?
  • What remedies are available to unsecured creditors? Are the processes difficult or time-consuming? Are pre-judgment attachments available? Do any special procedures apply to foreign creditors?
  • What are the requirements for a debtor commencing a voluntary liquidation case and what are the effects?
  • More...

Questions

What legislation is applicable to insolvencies and reorganisations? What criteria are applied in your country to determine if a debtor is insolvent?

Bankruptcies and restructurings (reorganisations) are governed by the Danish Bankruptcy Act (Konkursloven), which provides for the following regimes:

  1. restructuring (rekonstruktion)

  2. bankruptcy (konkurs)

  3. rescheduling of debt (gældssanering)

The restructuring and bankruptcy regime is available to insolvent individuals as well as legal entities (companies), whereas the rescheduling of debt regime is only available to individuals.

Pursuant to the Danish Bankruptcy Act, a debtor is insolvent when it is unable to meet its liabilities as and when they fall due, unless such inability must be deemed to be only temporary. The final decision is based on an assessment of the debtor’s liquidity (a cash flow test). The fact that the debtor’s liabilities exceed its assets is not generally of importance.

Apart from the insolvency regimes available under the Danish Bankruptcy Act, an insolvent debtor may advance a proposal for a voluntary composition. Such composition constitutes an agreement between the debtor and the creditors comprised by the proposal and is governed by general rules of contract law.

Moreover, the Danish Companies Act (Selskabsloven) provides for voluntary winding-up (likvidation) of companies (not individuals). However, these rules are applicable only if the company in question is solvent. If the company is insolvent, winding-up of the company must be carried out by way of

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