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.