When a Customer Goes Bankrupt: How to Lodge Your Claim

What happens when a customer goes bankrupt?

When the Danish bankruptcy court (skifteretten) issues a bankruptcy order against a company, a bankruptcy estate (konkursbo) takes over the company's assets, and the court appoints a trustee (kurator), typically a lawyer, to wind up the estate. From then on you can no longer recover your claim directly from the customer. Reminders, debt collection and execution are ruled out. Instead you must lodge your claim in the bankruptcy estate.

Find out whether the customer is bankrupt

Bankruptcies are published in Statstidende, the Danish official gazette, where you can search by company name or CVR number. The status also appears in the CVR register on virk.dk. The notice, called a proclamation (proklama), contains the trustee's name and contact details and a request for creditors to lodge their claims.

How to lodge the claim

In the proclamation, the court asks creditors to lodge their claims with the trustee, as far as possible within 4 weeks. So lodge your claim quickly. The deadline does not finally exclude a claim in a bankruptcy estate, but claims lodged late risk missing a distribution.

The claim is sent to the trustee, often via a form on the trustee's website. It should contain:

• Your company's name, registration number and contact details
• The amount of the claim calculated at the date of the bankruptcy order: principal, interest and fees
• What the claim concerns, and documentation: invoices, account statements, the agreement and any correspondence
• Whether you hold security for the claim, for example a charge, a guarantee or retention of title
• Your bank details for any payment

The ranking: who gets what?

The Danish Bankruptcy Act (konkursloven) sets a ranking for which claims are covered first:

• Estate claims: the costs of administering the estate and debts the estate itself has incurred
• Preferential claims: including certain claims from employees
• Ordinary (unsecured) claims: this is where most supplier claims belong
• Subordinated claims: including interest accrued after the bankruptcy order

If there is not enough money for a group, the creditors in that group receive a proportionate share: a dividend. As an ordinary supplier you should be prepared for the dividend to be low or nothing at all, and for the administration of a bankruptcy estate to take time.

Do you hold security?

If you hold security for the claim, you are in a stronger position:

• A valid retention of title may entitle you to take the goods back if they are still there.
• If you have a bank guarantee or a personal guarantee from, for example, a director or owner, you can claim against the guarantor.
• If you have credit insurance, report the loss to the insurer within the policy's deadlines.

Examination of the claim

The trustee reviews the claims lodged and recommends whether they should be accepted. If you disagree with the trustee's recommendation, there are short deadlines for reacting. So watch for post from the trustee, and seek advice if your claim is not accepted.

VAT on the loss

If you have paid Danish output VAT on an invoice the customer never pays, you can in principle adjust the VAT once the loss is established. Check the detailed rules with the Danish Tax Agency (Skattestyrelsen) or your accountant.

Prevent it next time

• Credit check new customers and set credit limits
• Follow up systematically on overdue invoices
• Consider security (prepayment, a guarantee or retention of title) on large orders

Getting started

If a customer goes bankrupt, lodge your claim quickly and with good documentation. If the claim is large, or you hold security, it can pay to have a lawyer look after your interests. Through InkassoHurtig you can get no-obligation quotes from police-authorised debt collection agencies and lawyers. This content is general information and not legal advice.