Tuesday, November 24, 2009

Wednesday, June 03, 2009

Silence is the Enemy

Although this blog is intended to cover Swedish law issues I have to tell you about "Silence is the Enemy"

Silence is the Enemy is a campaign initiative against the rape and abuse of women and girls in Liberia and around the world started by Sheril Kirshenbaum in her blog The Intersection.

The initiative has also a Facebook Group to join.

In her original blog post Sheril Kirshenbaum wrote i a:
"Today begins a very important initiative called Silence Is The Enemy to help a generation of young women half a world away.Why? Because they are our sisters and children–the victims of sexual abuse who don’t have the means to ask for help. We have power in our words and influence. Along with our audience, we’re able to speak for them. I’m asking all of you–bloggers, writers, teachers, and concerned citizens–to use whatever platform you have to call for an end to the rape and abuse of women and girls in Liberia and around the world.

In regions where fighting has formally ended, rape continues to be used as a weapon. As Nicholas Kristof recently wrote from West Africa, ‘it has been easier to get men to relinquish their guns than their sense of sexual entitlement.’ The war has shattered norms, training some men to think that ‘when they want sex, they need simply to overpower a girl.’ An International Rescue Committee survey suggests 12 percent of girls aged 17 and under acknowledged having been sexually abused in some way over the previous 18 months. Further, of the 275 new sexual violence cases treated Jan-April by Doctors Without Borders, 28 percent involve children aged 4 or younger, and 33 percent involve children aged 5 through 12. That’s 61% age 12 or under. We read about their plight and see the figures, but it’s so easy to feel helpless to act in isolation. But these are not statistics, they are girls. Together we can do more. Mass rape persists because of inertia so let’s create momentum."

Many bloggers are blogging to support this initiative. I have noted i a Nicolas Kristof at the New York Times, Alun Salt in Archaeoastronomy and many many more

Friday, May 29, 2009

Swedish Bankruptcy Law – US Domiciled Swedish Debtor

I received the following comment/question to one of my posts on "Swedish Law – Company Reorganisation":

I'm not sure this is the right place to post this....I came across your blog doing some internet research on Swedish bankruptcy laws...

My husband is a Swedish citizen who took out a loan to start a photography business (I think it is actually a personal loan though). He met me in the US and we have been married here for a year now, struggling to make payments on just the interest alone as finding work for him here has been difficult. He could not afford the union dues for having his business open in Sweden so we closed that earlier this year.

This weekend our apartment was broken into and $7,000 of camera equipment that he used the loan to purchase was stolen. We do not have renter's insurance. He owes over twice that amount still ($17,000) on the loan, and now has no way of making money without his camera. We are considering filing bankruptcy in Sweden for his debt, but we are not sure how that works now that he is a resident here (still a Swedish citizen and the loan is Swedish). My income is barely enough to pay rent and buy groceries.

So it goes.

I would be incredibly grateful for any advice. If we go through with this, I am assuming we will need a lawyer to assist?


As the above question highlights an important difference between US and Swedish bankruptcy law I give my answer here as a separate blog post.

First of all I think it is very important to note that a private person is not released from his or her debts through bankruptcy proceedings according to Swedish law. This means that there is normally no reason for a private person to apply for bankruptcy in Sweden.

As your husband is domiciled in the US, I base the following short answer to that situation. Special rules apply to debtors domiciled in the Scandinavian countries and in an EU state.

A Swedish citizen domiciled in the US could be subject to an application for bankruptcy by a creditor. Such an application could be made with reference to the Swedish Code of Judicial Procedure, Chapter 10, Section 1, which reads:

A person with no known residence in or outside Sweden may be
sued at the place where he is sojourning. If he is a Swedish citizen
and sojourning outside the Realm or at an unknown place, he may
be sued at the place within the Realm where he last resided or

If he is declared bankrupt in Sweden, according to Swedish law, the bankruptcy estate will encompass, at least formally, all of his assets irrespective of whether such assets are in Sweden or outside. However, to what extent the Swedish bankruptcy receiver will get any cooperation from any state or federal authorities in the US in order to gain control of his US assets is a question for these authorities.

Swedish Law – SAAB Reorganisation - New Prolongation

The Vänersborg City Court announced this morning its decision that the SAAB reorganisation shall continue until August 20, 2009.

Wednesday, April 22, 2009

Swedish Law – Purchasing Real Estate in Sweden - Sale of Co-Owned Property

I have received a question about the sale of a property by a 50 % owner.


Is it possible for a 50% share owner of a property to order the sale of the entire property without the consent of the remaining partners?

As my answer may be hard to find among the old posts on Purchases of real estate in Sweden I publish it here.


Yes and no. I am a lawyer you know ;)

The rules of the Swedish Act on Co-Ownership (Lag (1904:48 s.1) om samäganderätt) apply.

According to this act, if a house or other real property is owned by more than one person, each co-owner, irrespective of the share he owns, has the right to go to court and ask the court to appoint a custodian, who will then arrange for the sale of the property through a public sale.

Friday, April 17, 2009

The Pirate Bay Sentence Today

The four men connected with The Pirate Bay were sentenced today to one year of imprisonment each for being accessories to copyright infringement. They shall also pay damages in an amount of SEK 30 million corresponding to about US$ 3.5 million. The Local has more in this article Pirate Bay guilty.

Monday, April 06, 2009

Swedish Law – SAAB Reorganisation

The Vänersborg City Court decided today at the creditors’ meeting that the SAAB reorganisation shall continue until May 20, 2009. At the request of some creditors the court appointed a creditors’ committee. As mentioned in an earlier blog post the administrator shall consult with the committee in all significant issues.

Swedish Law – SAAB Reorganisation

As mentioned in an earlier blog post the SAAB creditors’ meeting will take place in Vänersborg today. Further information can be found in this article in the Local.

Thursday, March 26, 2009

Swedish Law – Company Reorganisation – Compulsory Composition (continued)

Only creditors whose claims arose prior to the application for company reorganisation may participate in composition proceedings.

A creditor whose claim may be satisfied through set-off or whose claim is subject to rights of priority may not participate in the proceedings. If a creditor has a subordinated claim, he is not allowed to participate in the composition proceedings, unless the other creditors who are participating in the proceedings should consent to this.

If a creditor waives its rights of set-off or priority, in whole or in part, the creditor may participate in the proceedings to a corresponding extent. It should be noted that a creditor may participate in the proceedings, even if his claim is not due and payable or is tied to certain conditions in order to be payable.

(to be continued)

Tuesday, March 24, 2009

Swedish Law – Company Reorganisation – Compulsory Composition

According to the old Composition Act of 1970 the creditors could be force to accept a composition provided a majority of the creditors voted for such a solution. The procedure under the old act was not part of a reorganisation procedure but a separate institute.

When the new legislation on company reorganisation was introduced in 1996 the old Composition Act was recalled and the composition procedure was integrated as a part of the new reorganisation procedure. It is, thus, no longer possible to obtain a forced composition outside the scope of a reorganisation.

Under normal circumstances and in order to be valid

  • the composition must provide all similarly entitled creditors with similar rights,
  • the composition must provide at least 25 percent of the amount of the claims, and
  • the prescribed minimum distribution shall be paid within one year following the composition order.

(to be continued)

Tuesday, March 17, 2009

Swedish Law – Company Reorganisation – Termination of Reorganisation

Before I go into the next steps in a successful company reorganisation, I find it appropriate to mention the situations where the reorganisation will be terminated by the district court. They are:

  • when the purpose of the reorganisation is deemed to have been achieved,

  • if the company requests a termination and a decision to proceed to composition has not been passed,

  • if the company fails to participate in the creditors’ meeting,

  • if the administrator or a creditor so requests and the purpose of the reorganisation is deemed not to be possible to achieve and

  • if a special cause otherwise exists for a termination.

As mentioned in an earlier blog post, the time period during which the administrator should finalise his action to achieve a reorganisation is three months from the date of the reorganisation decision by the court. In line with that, the court has a duty to terminate the reorganisation three months from that decision.

However, if special causes exsist, the court may prolong this period by additional periods, each time of a maximum of three months, but the total reorganisation period may not exceed one year.

Monday, March 16, 2009

Swedish Law – Company Reorganisation – Right to Set-Off (continued)

The first of the exemptions from the right to set-off mentioned in my last blog post covers claims on the company acquired from a third party later than three months prior to the date when the application for company reorganisation was filed. Such a claim may only be offset against a claim which the company possessed at the time at which the creditor acquired its claim, if the acquisition could be deemed as ordinary.

Also exempted are claims where the creditor has incurred liabilities towards the company under such circumstances as may be equated with payment other than by customary means of payment, but only to the extent such payment could have been the subject of recovery procedures according to the recovery rules in the Swedish Company Reorganisation Act (1996:764). These rules will be covered later as they are part of the provisions regarding judicial composition.

It should be noted that a claim of a guarantor or other person who has acquired a claim, because he has satisfied an obligation (right of recourse), shall be deemed to have been acquired at the time when the obligation of the guarantor or such other person arose and not at the later date when the claim was acquired.

If, after the date when the application for company reorganisation was filed, the company transfers a claim in such a manner that a creditor thereby loses its right to set-off, the company shall compensate the creditor.

Thursday, March 12, 2009

Swedish Law – Company Reorganisation – Right to Set-Off

The basic rule concerning right to set-off is that anyone who held a claim against the company when the application for company reorganisation was filed has the right to offset such claim against claims which the company had at such date against such person. The right to set-off applies even if the claim was not due and payable.

There are, of course, some exemptions to this basic rule and I will cover them in my next blog post.

Wednesday, March 11, 2009

Swedish Law – Company Reorganisation –Company’s Agreements (continued)

The provisions about what happens to the agreements of a Swedish company undergoing reorganisation apply even if the parties have agreed otherwise. Any agreement contrary to the rules in the Act is null and void.

It should also be noted that the provisions do not apply to employment contracts not to creditors holding financial instruments or currency as security.

Thursday, March 05, 2009

Swedish Law – Company Reorganisation –Company’s Agreements

If a party to an agreement with the company was entitled to terminate the agreement prior to the reorganisation decision due to actual or anticipated delay in payment or performance, such party is prevented from effecting such termination provided the company with the administrator’s consent demands within a reasonable period of time that the agreement shall be performed. The company is also obliged at the request of the other party to provide notice whether the agreement will be performed.

There are of course certain conditions that have to be fulfilled by the company.

• If the performance of the other party is due, the company shall, if so requested, perform its corresponding obligations.

• If the performance of the other party is not due, the other party is entitled to receive security for the company’s future performance to the extent this is required by special cause in order to protect the other party against loss.

If the company should fail to provide a notice when requested by the other party or fail to fulfil the conditions mentioned above, the other party is entitled to terminate the agreement.

Tuesday, March 03, 2009

Swedish Law – Company Reorganisation - Enforcement Measures during Reorganisation

During the reorganisation period no levy of execution or other enforcement measures may take place against the company with the exception of claims where the creditor has a possessory pledge right or a right of retention.

No decisions regarding provisional attachment (arrest) or payment security may be passed during the reorganisation period.

If there is a special cause to believe that the company is acting in a way that may jeopardise a creditor’s rights, the creditor may apply for and the court may pass such decisions as it deems fit to secure such rights.

Should a creditor apply for bankruptcy during the reorganisation period, the court should stay the bankruptcy proceedings if so requested by the company.

Swedish Law – Company Reorganisation - Creditors’ Meeting

As mentioned earlier a creditors’ meeting should be held within three weeks from the date of the reorganisation decision or, if it is an unavoidable necessity, at a later date. Such an unavoidable necessity seems to have caused the SAAB creditors’ meeting to be held on April 6, 2009, more than six weeks from the date of the reorganisation decision.

The administrator will present at the meeting the information available to him concerning the financial status of the company and normally also a preliminary reorganisation plan setting out the manner in which the reorganisation can be achieved.

At the meeting the creditors are given the opportunity to express their opinion about whether the reorganisation should continue or not, but no formal vote is taken. It is of course of the outmost importance for the success of the reorganisation, that a substantial majority of the creditors agree to continue as a majority is needed in order to carry through an official composition with the creditors; although only a 40 % majority is needed to lodge an application for composition.

The creditors are entitled to request the court to appoint a creditors’ committee at the creditors’ meeting. If such a committee has been appointed the administrator shall consult with the committee in all significant issues.

It should be noted that during the reorganisation period, any creditor has the right to apply to the court for a decision to stop the proceedings. The court will agree to such an application if the court determines that the purpose of the reorganisation cannot be achieved.

Friday, February 27, 2009

Swedish Law – SAAB Reorganisation

Three points to note:

1. The future custom duties problem of SAAB seems to be solved through an agreement between SAAB and the company ”Tullxperten”. The release of the material already held by the Swedish Customs is, however, still a problem to be solved.

2. The sub-suppliers of SAAB consider the agreement they were asked by GM’s company, GPSC UK Ltd, to enter as tough. GPSC UK Ltd offered to purchase the claims of the sub-suppliers on SAAB but to this purchase were tied some tough conditions.

3. Saab AB, the defence and security company, and the car manufacturer Saab Automobile AB are two different companies with unrelated ownership structures. Since 2000 Saab Automobile AB is 100 percent owned by General Motors and Saab AB is listed on the Stockholm Stock Exchange. For further information check Saab – one name, two different companies.

Thursday, February 26, 2009

Swedish Law – Company Reorganisation - Company’s obligations

During the reorganisation the company has to provide the administrator with all financial information of significance in the reorganisation and shall comply with the administrator’s instructions regarding the way the company’s business shall be conducted.

The Company needs the consent of the administrator

  • to pay debts incurred prior to the reorganisation decision by the court,
  • to provide security for such debts,
  • to incur new obligations and
  • to transfer, pledge or grant any rights in property of material significance to the company’s business.

If the company fails to obtain the administrator’s consent this does not affect the validity of the company’s action.

It should be noted that the administrator may give his consent only where special cause exists.

Wednesday, February 25, 2009

Swedish Law – Company Reorganisation

Duties of the Administrator

The administrator is obliged to inform all known creditors of the company of the reorganisation decision within one week. Such information shall also include

  • a preliminary schedule of the assets and liabilities of the company,
  • the most recent balance sheet and any additional information required about the company’s financial position,
  • the reasons for the payment difficulties and how the business activities of the company may be reorganised and
  • information about the date of a creditors meeting set by the court in connection with the reorganisation decision.

The last mentioned court meeting shall be held within three weeks from the date of the reorganisation decision or, if it is an unavoidable necessity, a later date.

The Swedish Company Reorganisation Act requires the administrator to examine if the business activities of the company can be continued, in whole or in part, and, if so, how this can be achieved, and, finally, if it is possible for the company to obtain a composition with the creditors.

A plan which sets out the manner in which the goals of the reorganisation shall be achieved shall also be prepared by the administrator in consultation with the company.

What the act does not explicitly state is that the administrator, together with the management and board of the company, has to find ways to finance the continued activities and the possible composition with the creditors. Normally this is the major obstacle and less than 10 per cent of the Swedish company reorganisations are successful.

The administrator has to take these actions within a period of three months unless the court finds it necessary to prolong this period for additional periods of three months but no longer than one year.

Tuesday, February 24, 2009

Swedish Law – Company Reorganisation

Application and Court Decision

The application for reorganisation should be filed with the district court which has territorial jurisdiction over the company. The court will make a decision immediately if the application has been made by the company; normally on the day the application is filed. If the application is filed by a creditor, a court meeting to try the application will be held within two weeks.

If the court decides that a reorganisation shall take place, it will also appoint an administrator of the reorganisation and decided a date for a creditors meeting, which normally will be held within three weeks.

The decisions of the local court may be appealed to the applicable Court of Appeal, if permission is granted, and to the Swedish Supreme Court.

Monday, February 23, 2009

Swedish Law – Company Reorganisation – Administrator Appointed

As a very short update about the SAAB Automobile AB reorganisation I can tell you that the Swedish lawyer Guy Lofalk of Lofalk Advokatbyrå in Stockholm has been appointed administrator of the SAAB reorganisation by the City Court of Vänersborg.

The creditors meeting will take place in Vänersborg on April 6, 2009.

For further information about the SAAB reorganisation you may read this news item from The Local, "Sweden’s News in English".

Swedish Law – Reorganisation Requirements

I will in a couple of blog posts go in to more detail about the Swedish Company Reorganisation procedure. From the press coverage of the SAAB decision to avail itself of the Swedish reorganisation rules I note that some journalists do not seem to be very well informed of the content of the rules.

Provided it could be assumed that a Swedish company will be unable to pay its debts due or that such a situation is likely to arise in the near future, a court decision to reorganise the company may be passed, unless there is no good reason to assume that the purpose of the Swedish Company Reorganisation Act will be achieved. A further requirement is, of course, that the company either itself applies for reorganisation or consents to an application made by a creditor.

It is thus a clear legal requirement that that there is some chance of a reorganisation succeeding. However, as long as the possibility of the reorganisation is not excluded there still is such a chance.

It should also be noted that the possibility of success will be looked upon at the meeting of the creditors held within three weeks from the court’s reorganisation decision, when the additional information about the situation in the company will be presented by the administrator.

Friday, February 20, 2009

Swedish Law – Company Reorganisation

In view of today’s decision by the Swedish car manufacturer SAAB, belonging to the General Motors Group, to apply for company reorganisation according to the Swedish Company Reorganisation Act (1996:764), in Swedish only, it may be interesting to provide some information about the Swedish company reorganisation procedure. I will follow up today’s short outline with more detailed blog posts later.

Short Outline of Procedure

1. The company applies to the court for reorganisation.

2. The court decides on the same day that the company shall be subject to reorganisation and appoints an administrator.

3. The administrator will investigate if the business activities of the company can be continued, in whole or in part, and, if so, how this can be achieved, and, finally, if it is possible for the company to obtain a composition with the creditors. The administrator’s findings will be presented in a reorganisation plan presented to the court and the creditors.

4. The payments of the company are suspended and require the consent of the administrator.

5. Only certain secured debts of the company can be enforced.

6. Claims in respect of salary or other remuneration, which have preferential status, are at least partly covered by a ‘salary guarantee’ according to the Swedish Wage Guarantee Act of 1992, in Swedish only.

7. The administrator informs the creditors within one week of the situation.

8. A creditors meeting is held at court within three weeks.

9. At the meeting the administrator normally presents a preliminary reorganisation plan setting out the manner in which the reorganisation can be achieved.

10. In more than 90 per cent of the cases no reorganisation is achieved and the company becomes subject to normal bankruptcy proceedings.

11. In less than 10 per cent of the cases the reorganisation procedure continues and turns into a creditor composition procedure under the Company Reorganisation Act. The court will decide to initiate a composition procedure provided at least 40 per cent of creditors representing 40 per cent of the total unsecured debt of the company agree to the composition.

12. Depending on the dividend, a majority of either 60 per cent or 75 per cent is required for the composition to be enforced.

Thursday, February 19, 2009

Swedish Law – Aval

I was recently asked by a client what ”aval” or “avalize” meant. A foreign manufacturer had asked his customers for “avalized banker’s drafts”. From my legal studies – in a long distant past – I seemed to remember that it had something to do with guarantees of drafts or checks.

From the excellent Investopedia I obtained the following information:

What Does Aval Mean?
A guarantee added to a debt obligation by a third party who ensures payment should the issuing person default.

Investopedia explains Aval
The debt obligation could be a note, bond, promissory note, or draft. The third party providing the aval is usually a bank. Since avals can be forged, caution should be taken when accepting these notes. Banks usually only provide an aval to issuers with very good credit ratings.

The process of avalizing is performed mainly in Europe. In the United States, banks have restrictions as to what instruments may be provided an aval.

What Does Avalize Mean?

The act of having a third party (usually a bank or lending institution) guarantee the obligations of a buyer to a seller per the terms of a contract such as a promissory note or purchase agreement. The bank, by "avalizing" the document (usually "by aval" will be written on the document itself), acts as a cosigner with the buyer in the transaction.

Investopedia explains Avalize

To avalize means "to give one's accord". It is a rarely used but is an effective method of securing the rights of the receiving party in the transaction. This is an obligation that a bank will only take on with lucrative customers. It is seen as an act of good faith by both parties.

In Sweden you will find the rules about “aval” in the 4th chapter of the 1932 Draft Act and in the same chapter of the 1932 Check Act.

Thursday, January 15, 2009

Swedish Law - Civil limitations/ "preskription"

The rules on civil limitation/"preskription" are found in the Swedish Limitations Act/"Preskriptionslag (1981:130)". I can not find any English translation of the act on the internet. It can be found as a part of "Swedish Commercial Legislation" available here.

The ordinary period of limitation in Sweden is ten years. However, the period of limitation for claims against consumers is three years, where the claim relates to goods, services or other commodities supplied by a manufacturer in the course of its business activities, for primarily personal use by the consumer.