1. When are you declared bankrupt?
The petition for bankruptcy can be filled by a court appointed liquidator, creditor or the company itself. Bankruptcy is declared if the debtor has ceased his payment and this is not merely temporary.
2. How long does it take to process a petition for bankruptcy?
The court has to schedule a court meeting within 3 days if the company/debtor itself has filed for bankruptcy, but the courts are not always able to meet this requirement, which has no consequences. It normally takes 2-3 weeks if the petition comes from a creditor. The courts normally only process the petition if the manager is present, but there are exceptions.
3. What can you do if you disagree with the bankruptcy order by the court?
You can appeal to the High Courts. It is not necessary to be represented by a lawyer, but It is recommended. The decision will in general be made on basis of written.
4. What happens if you are declared bankrupt?
The court appoints a lawyer as trustee. The trustee takes over control of the bankruptcyestate and the company/debtor loses control of his assets. The trustee will sell the assets and distribute the dividend in accordance with the Bankruptcy act. The trustee can ask for the mail to be intercepted at the address of the bankrupt and have this forwarded to his office. Any employee will be terminated by the trustee if he or she is not transferred to another company as part of a transfer agreement.
5. What duties and powers does the trustee have?
The trustee has to sell the assets of the bankrupt and investigate the dispositions made in the companyand thereby recover as much money as possible. The trustee is first to receive has salary for this work and thenthe creditors will divide the rest according to the dividend classes in the Danish bankruptcy act. The trustee is furthermore obliged to investigate if the management has fore filled his or her duties. The trustee will file a petition for quarantine if this is not the case. The matter will then go to trial and it is hereafter up to the courts to decide if the manager should be quarantined from acting as a manager for a period up to 3 years.
6. What kind of obligations do I have as a bankrupt?
The bankrupt should provide information to the trustee. The trustee can call for a hearing if the bankrupt fails to do so. If these obligations are not met the trustee will file a petition for the above-mentioned quarantine.
7. How can I monitor the progress of the bankruptcy?
The bankruptcy order and the finalizing of the bankruptcy is published by the court at www.statstidende.dk. The trustee will also send creditor informationwhich mainly includes information about the bankrupt’s assets and debts.
8. How long does a bankruptcy last?
This depends on the individual process and there are no rules that regulates this. The courts can appoint another trustee, if they court find that the trustee acts to slow, but this rarely happens.
9. Can I make arrangements with my creditors?
The debtor has the possibility to make arrangement with the creditors before and during the bankrutcy. During the bankrutcy this requires that all claims are paid or settled as well as the cost of the bankruptcy.
10. How can an employee collect outstanding salary from his bankrupt employer?
LønmodtagernesGarantifond (LG) ensures that employees receive wages and pension benefits if a company goes into bankruptcy.
The objective of LG (the Employees’ Guarantee Fund) is to ensure that employees receive wages, holiday allowance, accrued pension benefits etc. if their employer is declared bankrupt, dies or otherwise goes out of business.
LG also helps to ensure that the employer pays wages to employees when a company is subject to financial reconstruction. This not only benefits the employees; it also increases the chances of preserving the workplace.
11. What important advice can be given to a company director in the event of imminent bankruptcy?
It is important that a proper administration and accounting has been kept and can be provided to the trustee. If the company has funds it is advisable to contact a lawyer who can assist in the process. The company will also be able to affect the appointment of the trustee.
12. Is there a special arrangement for a private person who is in danger of going bankrupt?
A private person has the possibility to file for restructuring of his or her debt. This process will last for up to 12 months. During this period of time the debtor will be under supervision by a lawyer and an accountant. They will try to find a solution were the creditors receive a dividend. If it is not possible to reach a solution the debtor will be declared bankrupt.
By Niels JuulMathiassen, Attorney