Tuesday, November 11, 2008

Swedish Bankruptcy Law - Effects of the Initiation of Bankruptcy Proceedings

The bankrupt may not dispose of property which belongs to the estate and he is not entitled to engage in any business activities. If the bankrupt is a company all rights to represent the company transfer to the receiver upon the bankruptcy decision by the court. Thus, the bankrupt is not entitled to enter into any agreements, sell assets or pay debts belonging to the estate.

All the bankrupt's property is included in the estate in bankruptcy and must as far as possible be used to pay off the debts. Certain exemptions apply if the bankrupt is a natural person.

The receiver administers the bankruptcy estate. He/she will consider all of the creditors’ common rights and wind up the estate as quickly as possible and will take charge of the bankrupt's property, sell the assets and finally distribute the balance, if any, among the creditors in the order of preference set out in the Preferential Claims Act (1970:979) (“Förmånsrättslagen”).

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