1. When can you be declared bankrupt in Sweden?

A debtor that is insolvent shall by their own or their creditor’s application be declared bankrupt unless otherwise mandated. Insolvency refers to when the debtor cannot rightfully pay their debts, and that this inability is not temporary. It is a general court that makes decisions on bankruptcy.

2. How long does it take to process a petition for bankruptcy in Sweden?

There is no statutory time. If you are applying for bankruptcy yourself, a bankruptcy decision is normally made on the same day as the application is lodged with the court. In the event a bankruptcy petition is lodged by a creditor, the court will call the creditor and debtor to a bankruptcy hearing. Normally, a decision concerning bankruptcy will be made within a couple of weeks after the hearing has concluded.

3. What happens if you are declared bankrupt in Sweden?

You can appeal a decision on bankruptcy to the court of appeal. No special review permit is required by the court of appeal for a review of the decision.

4. What duties and powers does the receiver have?

The court shall appoint an official receiver whose primary task is to take care of all of the bankruptcy estate’s assets and implement the custody and control of the property for the purpose of paying the creditor’s reported claims as far as possible. It follows from the law that certain creditors’ claims are prioritised. The object of bankruptcy loses all resources over its property.

The official receiver shall sell the bankruptcy estate’s property at the highest achievable price. The official receiver’s fees are paid primarily by the bankruptcy estate’s assets and secondly by the state. During the decision on the bankruptcy estate’s assets, the official receiver shall look after all of the creditor’s collective interests. The official receiver is under supervision of a specific authority. However, the court will also review the official receiver’s work. The official receiver has an obligation to hear the supervisory authority on matters such as the sale of property of more significant values, hiring an expert or initiating legal proceedings.

The official receiver has an obligation to take care of and archive the accounts.

The official receiver also has an obligation to investigate whether a crime has been committed before the bankruptcy and if necessary to report the suspicion to the Swedish Economic Crime Authority. The official receiver also has an obligation to investigate whether any transactions were made at a loss before the bankruptcy decision and in which case request the recovery of those assets for the bankruptcy estate.

5. What kind of obligations do I have as a bankrupt in Sweden?

The person or company that is declared bankrupt or previously acted on behalf of the bankrupt has an obligation to respond to questions from the official receiver. The official receiver draws up a bankruptcy estate inventory of the bankruptcy estate’s assets and liabilities at the time of the bankruptcy filing and of the accounting material that has been taken care of.

The person or company that has been declared bankrupt or the person who previously represented the bankrupt is called by the court to a meeting for administration of oaths. During the administration of oaths, the person who is declared bankrupt or previously represented the bankrupt shall take an oath that insofar as the person is aware (after any additions or modifications) the details of the inventory of the estate are correct.

The oath is taken under criminal liability. Before such an oath is taken, the person affected has a duty to obtain permission from the official receiver to leave the country. In the event that the person concerned is absent from the meeting for administration of oaths and absconds from taking the oath, the court can detain the person as a last resort.

6. How can I monitor the progress of the bankruptcy in Sweden?

The bankruptcy decision will be published by the court digitally throughout the country and in a local newspaper. The bankruptcy estate inventory is public and the general public have a right to be present at the meeting for administration of oaths.

Within six months from the bankruptcy decision, the official receiver submits a receiver’s report with a statement of the measures that have been taken from the bankruptcy decision. In the event the bankruptcy has not been completed six months after the meeting for administration of oaths, the official receiver is obliged one month afterwards to submit a so-called six-monthly statement with a report on what measures remain to be taken before the bankruptcy can be completed.

In connection with the completion of the bankruptcy, the official receiver will submit a final statement (which will also be public) to the court and will request that the district court determine the fees that the official receiver has requested. The district court shall examine the reasonableness of the fees that the official receiver is requesting and will hear this together with that supervisory authority. Together with the final report a proposed dividend may also be submitted in respect of the creditors concerned.

7. How long does a bankruptcy last in Sweden?

Most bankruptcies are completed within a year. But they can also last for several years if legal proceedings concerning the bankruptcy estate are initiated. A completed bankruptcy estate may be revived in the event previously unknown assets are discovered.

8. Can I make arrangements with my creditors in Sweden?

If the debtor shows that he has agreed on the payment of his debts or otherwise agrees with the creditor whose claims have been secured, the court shall decide at the request of the debtor to close down the bankruptcy. Before such a decision is made the receiver shall be heard. It is also possible for the court to decide to close down the bankruptcy if a sufficiently large number of creditors vote in favour of a particular settlement and that their claims amount to a certain percentage of the claims declared in total in the bankruptcy.

The procedure described above is almost never used nowadays since there are a number of laws on reorganisation which aim to apply to companies with financial problems so that bankruptcy can be avoided.

9. How can an employee collect outstanding salary from their Swedish bankrupt employer?

In the event of bankruptcy, the previous rights to so-called guaranteed salary from a special fund which all employers in the country helped to finance shall apply.

The former employees are entitled to a salary three months in arrears from the time the bankruptcy decision was made and paid holiday allowance for the current year and one year back in time. There is a ceiling for how much you can be paid from the salary guarantee fund. The ceiling is approx. EUR 18,000 per employee.

10. What important advice can be given to a company director in the event of imminent bankruptcy in Sweden?

The previous representative is personally responsible for all due tax liabilities in the event of bankruptcy.

Personal payment responsibility may also be considered from the time half of the registered share capital was used provided that it can be deemed to have been known to the representative and the measures that at that time should be taken by law were not taken.

11. Is there a special arrangement for a private person who is in danger of going bankrupt in Sweden?

For natural persons who are insolvent it is possible to apply for so-called debt reconstruction.

Debt reconstruction means that the person pays a part of their debts for a few years and then the remaining debt is written off. The person is entitled to retain a so called beneficiary property which means a property that is needed for the debtor’s supply.

Debt reconstruction may be granted before a bankruptcy decision or after completion of bankruptcy.