If a Danish company goes bankrupt and you were involved in its management, the bankruptcy trustee may seek to have you disqualified from participating in company management for up to three — or in serious cases five — years. This guide explains how the Danish bankruptcy disqualification system (konkurskarantæne) works and what you can do to protect yourself.
⚠️ The rules were significantly revised by Act no. 656 of 11 June 2024, effective from 1 July 2024. The new rules apply to bankruptcies commenced on or after that date. Earlier cases are governed by the previous rules.
How does the process work?
When a company enters bankruptcy, the bankruptcy trustee (kurator) is required to assess whether grounds for disqualification exist. If so, the trustee must file a claim (stævning) with the probate court within four weeks of completing the final estate report. You then have a deadline to file a defence.
The case is decided by the probate court (skifteretten). The decision can be appealed to the High Court (landsretten). Throughout the process, you have the right to legal representation.
The three conditions
Disqualification can only be imposed if three conditions are met simultaneously:
- You participated in the management of the bankrupt company within the one-year period before the filing date.
- You engaged in grossly irresponsible business conduct during that period (or failed to remedy such conduct from an earlier period).
- It is reasonable in all the circumstances to impose disqualification.
What counts as grossly irresponsible conduct?
Section 157(2) of the Bankruptcy Act now sets out five types of conduct that are deemed grossly irresponsible in ordinary circumstances:
- Material failure to comply with tax and VAT obligations.
- Material failure to comply with bookkeeping and accounting obligations.
- Unjustified reduction of the company’s assets to the detriment of creditors.
- Acting as a nominee director (allowing someone else to run the company while being registered as director).
- Acting as the undisclosed real manager behind a registered nominee.
Other conduct can also qualify if the overall circumstances indicate gross irresponsibility, for example trading after the point where insolvency is inevitable.
Your defence options
There are several possible lines of defence: arguing you were not sufficiently involved in management; that the conduct does not meet the threshold of ‘gross’ irresponsibility; that external factors caused the bankruptcy rather than your conduct; or that the proportionality assessment weighs against disqualification. Settlement with the trustee on a shorter period is also a viable outcome in many cases.
What about foreign nationals?
The konkurskarantæne rules apply to any person who participated in the management of a Danish company, regardless of nationality or country of residence. If you are a foreign director or manager of a Danish company that has gone bankrupt, you are subject to the same rules as Danish nationals. Globe Advokater advises in English.
Facing disqualification proceedings? Contact Globe Advokater immediately for a free, confidential assessment.
