Companies with sound market prospects, which for various reasons have had financial issues, can often avoid bankruptcy by way of a company reorganisation. Our task is to assist such companies in reorganising their business and if necessary, to restructure their finances. Please contact us if you want to know more about our work with company reorganisation.
You can read more about the company reorganisation procedure here and in the text below.
A new law regarding company reorganisation
A new law regarding company reorganisation enters into force on 1 August, 2022. The new law regulates formal company reorganisation procedure as did the previous law (1996: 764). An application is to be made to one of the district courts that will be specified in the regulation to the Company Reorganisation Act.
In order for a District Court to decide on company reorganisation it is required that the company can show that there exist grounds for the viability of the business being secured by way of a reorganisation. The requirement regarding the content of the application is stricter than in the previous law. In the application, the company is to propose an administrator that is to be appointed, and the requirement regarding the administrator’s level of competence has been further strengthened under the new legislation. As a basic prerequisite, the proposed administrator is required to be a bankruptcy trustee that has experience from the continual handling of bankruptcy estates or other equivalent experience.
A company benefits from protection against the termination of its contractual undertakings even in the application phase of company reorganisation. Further protection regarding bankruptcy and foreclosure is triggered following the decision. In the course of the reorganisation the company together with the administrator shall draw up a reorganisation plan that incorporates all the necessary measures that can ensure the company's profitability. This may include the transfer of an unprofitable part of the business, and a write-down of the company’s debts. In the former law it was referred to as a composition.
The reorganisation plan is to be approved by a court. In order for it to be approved, it is required that the company's viability is secured and that certain majority rules and the grouping of different creditors are both fulfilled pursuant to the legislation.
Please contact us for more information or if there is anything else that you want to discuss.