The European black insolvency hole – the Danish non-recognition of foreign bankruptcies
Denmark has been a member state of the European Union since 1973. However, in 1992 Denmark voted "no" to the Maastricht Treaty in a referendum and in 1993 a new referendum was only possible due to 4 opt-outs to the Treaty of Mastricht. One of the opt-outs is in relation to legal cooperation in the EU. As a result, Denmark is not included in the EU Regulation on Bankruptcy Proceedings (1346/2000). Furthermore, Denmark has not entered into any bilateral agreements regarding recognition of foreign bankruptcies – the Nordic countries excluded.
As a direct consequence, a ruling made in the past by the Danish Supreme Court finds that Danish creditors seeking satisfaction on an individual basis can do so even though a foreign bankruptcy has been declared against the debtor.
However, the consequences of this non-recognition vary between bankruptcies declared against judicial and physical persons. Even though a foreign bankruptcy estate does not exist in its own capacity according to Danish law, it is generally agreed that a foreign trustee-in-bankruptcy in a bankrupt company has the same powers as the management would have if the bankruptcy had not been declared. This is derived from the fact that the regulation of the company's management is in accordance with the company's home country. If the bankrupt person is a living physical person, the trustee-in-bankruptcy's powers can only be exercised in Denmark according to power of attorney from the bankrupt person.
Lars Berg Dueholm, Attorney
Hansen|Sønderby Law Firm, Copenhagen, Denmark
T: +45 70 300 500
Attorney Lars Berg Dueholm specialises in insolvency law. He joined Hansen|Sønderby this summer after a position with the privately owned Legal Advisor to the Danish Government. Dueholm has a long track record of managing bankruptcy estates, and has worked in a series of cases on cross-border insolvency proceedings. Lars Berg Dueholm now heads the newly formed Hansen|Sønderby Copenhagen office, which is located in the historic city centre.
Hansen|Sønderby Law Firm is located in Randers, but opened an office this summer in the capital Copenhagen. Hansen|Sønderby specialises in a broad spectrum of business law, with a focus on EU regulations, real estate and insolvency proceedings.