Tightening of the rules on impartiality
The proposal entails a number of amendments regulating how the bankruptcy court appoints a trustee of a bankruptcy estate. The objective of the amendments is to ensure that the trustee is impartial under section 238 of the Danish Bankruptcy Act and that a trustee does not safeguard interests that are irrelevant to the bankruptcy estate during the estate administration.
In particular, the proposal entails that the debtor (and the debtor's management) is not to be able to influence the appointment of the trustee. It means that the bankruptcy court is not to attach any importance to any proposal that the trustee should make as to the appointment of the trustee, including in connection with the debtor's own petition in bankruptcy. The clear starting point is that it will only be the creditors against the debtor that will be able to influence the appointment of the trustee.
It has also been proposed that the creditors that are the debtor's connected persons are not to have any voting right in connection with the appointment of the trustee. The objective is to reduce the risk that irrelevant considerations or fictitious claims between the debtor and the debtor's connected persons influence the appointment of the trustee.
The proposal also contains a number of examples of cases where the trustee will be disqualified for conflict of interest. According to the proposal, a trustee will be disqualified for conflict of interest if the trustee has provided advice to the debtor to a significant extent less than one year before the reference date. In this connection the trustee is obliged to inform the bankruptcy court if such advice has been provided. The reason is that if the trustee has previously provided advice, there could be doubts about the trustee's impartiality due to the relationship that existed before the bankruptcy.
Companies compulsorily dissolved without any investigations
The Danish Bankruptcy Council has also proposed amendments to the Danish Companies Act (selskabsloven) so that companies in compulsory dissolution cannot be dissolved by the bankruptcy court without prior examinations.
It happens in practice that the bankruptcy court dissolves companies by analogy with section 143 of the Danish Bankruptcy Act without the companies in compulsory dissolution being subject to any procedure, meaning that neither a liquidator nor a trustee is involved. This has been the case for 2,150 companies annually on average in the period from 2021 to 2023. It means that it is possible that financial crime etc may have been committed that will not be uncovered and which will not be dealt with by way of bankruptcy-related disqualification and reports to the police.
The Danish Bankruptcy Council has proposed two models:
- Model A: a liquidator is always to be appointed. The liquidator is to conduct the preliminary examinations and assess whether a petition in bankruptcy is to be filed after which a trustee will be appointed.
- Model B: the starting point is appointment of a liquidator. But no appointment will be made if the bankruptcy court summons the management of the company to a bankruptcy court hearing and it is found based on the statement made by the management at the hearing and the other circumstances of the case to be unobjectionable to dissolve the company without a liquidator.
The Danish Court Administration (Domstolsstyrelsen) has estimated that the first model will result in an annual additional expense for the Danish State of DKK 42 million. The Danish Parliament is to consider the choice of model, and a political decision is to be made on the financial consequences compared to the wish of the Danish State to combat financial crime in society.
The Danish Government expects that a bill on the above matter will be tabled in autumn 2025.
