Insolvency Law at Norway
Norway's insolvency framework is primarily governed by two key statutes:
The Bankruptcy Act (Konkursloven) – Regulates bankruptcy proceedings for both individuals and companies.
The Creditors Recovery Act (Dekningsloven) – Addresses creditors' rights, asset access, and claim priorities during insolvency.
These laws apply uniformly to both corporate and personal insolvency cases. (Country report - the Norwegian bankruptcy system - Konkursrådet)
⚖️ Key Features of Norwegian Insolvency Law
1. Initiating Insolvency Proceedings
Bankruptcy: Proceedings can be initiated by the debtor or a creditor. A creditor must guarantee the estimated costs (approximately NOK 61,150) when filing a petition. (Norway collection profile)
Debt Settlement: Only the debtor can apply for debt settlement proceedings. These proceedings aim to reach a voluntary or compulsory composition with creditors. (Country report - the Norwegian bankruptcy system - Konkursrådet)
2. Conditions for Bankruptcy
A debtor is considered insolvent if:
Illiquidity: Unable to meet debt obligations as they fall due.
Insolvency: Liabilities exceed assets. (Country report - the Norwegian bankruptcy system - Konkursrådet)
3. Role of the Trustee
Upon commencement of bankruptcy proceedings, the court appoints a trustee (typically a lawyer) to manage the estate. The trustee's responsibilities include: (Country report - the Norwegian bankruptcy system - Konkursrådet)
Securing and liquidating assets.
Investigating the debtor's financial conduct.
Distributing proceeds to creditors. (Norway collection profile)
Reporting to the court and creditors.
4. Priority of Claims
In bankruptcy proceedings, claims are settled in the following order:
Secured Claims: Claims backed by collateral.
Super-Priority Claims: Costs of the bankruptcy proceedings.
First Priority Claims: Employee wages and holiday pay. (Insolvency 2023 - Norway | Global Practice Guides | Chambers and Partners)
Second Priority Claims: Tax liabilities, including VAT and social security contributions. (Insolvency 2023 - Norway | Global Practice Guides | Chambers and Partners)
Ordinary Claims: Unsecured debts, such as trade payables.
Subordinated Claims: Claims with agreed-upon subordination.
5. Personal Bankruptcy
In personal bankruptcy, the debtor is obligated to:
Provide comprehensive financial information. (Personal bankruptcy - Konkursrådet)
Cooperate with the trustee. (Personal bankruptcy - Konkursrådet)
Attend creditor meetings.
Surrender assets and documents relevant to the estate.
Failure to comply may result in legal consequences, including imprisonment. (Personal bankruptcy - Konkursrådet)
6. Reconstruction Act
Introduced as a temporary measure to mitigate the effects of the COVID-19 pandemic, the Reconstruction Act allows companies facing financial difficulties to seek court-supervised restructuring. The aim is to enable businesses to continue operations and avoid bankruptcy. The Act is set to expire on 1 July 2025, but there are discussions about making it permanent. (Insolvency 2024 - Norway | Global Practice Guides | Chambers and Partners)
🌐 Cross-Border Insolvency
Nordic Bankruptcy Convention: Norway participates in this convention, facilitating mutual recognition of bankruptcy proceedings among Nordic countries. (Norwegian Bankruptcy Proceedings: A Comprehensive Overview)
Foreign Proceedings: Norway may recognize foreign insolvency proceedings if there is an agreement with the foreign state. However, as of 2020, Norway has not entered into any bankruptcy conventions beyond the Nordic agreement. (How To Pursue Money Claims In Norway – An Overview - Insolvency/Bankruptcy - Norway)
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