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.

7 comments:

Anonymous said...

thank you sooooooo much, can I ask you some more questions on how a creditor of a foreign country can interact with the judicial administrator?
thank you.

diecipiccolindiani@tiscali.it

Krizz said...

Please find below a short answer to the above question regarding foreign creditor's interaction with the administrator.

There are, of course, no special rules for foreign creditors. The rules apply to all creditors.

The first point of interest is that the company seeking reorganisation has a legal obligation to attach a list of its creditors to the application for reorganisation. However, I would not be surprised if minor debts are left out of such a list; especially in situations where the decision to apply for reorganisation has been taken with short notice.

The second point is that nothing prevents a creditor from informing the administrator of his claim. At least at an early stage this can be made in an informal way; e.g. as a short letter or even email stating the name of the company under reorganisation, the name of the creditor, the amount and currency of the creditor’s claim and, perhaps, a very short description of the basis for the claim. This information does not have to be in Swedish, but would most likely be acceptable in English as well.

As I mentioned in the blog post, the administrator is obliged to inform all known creditors within one week from the court’s reorganisation decision of the Company’s situation. Such information will i.a. also include information about the assets and debts of the Company and the date for the court meeting with the creditors.

I will go into more detail on the actions to be taken by the administrator in later blog posts.

law offices of paul j lucas said...

Thank you for such a complimentary posting SwedishLawyer. And the list of procedures.

LLC

Anonymous said...

we are Italian agent of a Swedish company which has suffered a "reorganization". Are we entitled to get 100% paid for due commissions referred to before/during reorganization period?
Is the agent considered a preferential creditor?
We did not acceopt any transaction for part payment.
Thanks

SwedishLawyer said...

You are entitled to payment according to the rules on reorganisation and you should lodge a claim with the administrator for payment of commissions due. Claims for commission are not privileged claims. I do not know in what percentage the composition procedure will result but find it unlikely with a 100 % pay out.

Anonymous said...

We are a Spanish company and we need to know if it is possible to inlude a credit invoiced before de the declaration of reorganisation but not expired yet. Thank you so much in advance.

SwedishLawyer said...

I am afraid that I do not fully understand your question. It is never incorrect, however, to lodge a claim with the administrator for payment of commissions due.