Bankruptcy disqualification in Denmark

The legal basis: Bankruptcy Act chapter 20

Bankruptcy disqualification is governed by chapter 20 of the Danish Bankruptcy Act (konkursloven, LBK nr 1162 of 9 November 2024), sections 157-164a. The 2024 revision clarified and expanded the grounds for disqualification, codified case law and introduced new procedural rules.

When can disqualification be imposed?

Three conditions must all be met under section 157:

• Participation in management: You participated in the management of the bankrupt company within the one-year period before the filing date (fristdagen). Both registered and de facto managers are covered.
• Grossly irresponsible business conduct: You engaged in conduct that section 157(2) lists as grossly irresponsible, or other conduct of comparable gravity, including material failure to comply with tax obligations, material failure to comply with accounting and bookkeeping obligations, unjustified reduction of the company's assets to the detriment of creditors, participation in a nominee director arrangement, or trading after the point of hopeless insolvency.
• Proportionality: The court must assess whether it is reasonable in light of all circumstances to impose disqualification - even where the other conditions are met.

What disqualification means in practice

A disqualification order prohibits you from forming new limited liability companies (aktieselskaber A/S and anpartsselskaber ApS), and from participating in the management of any existing limited liability company as director, board member, authorised signatory or proxy holder. Disqualification does not prevent you from working as an employee, owning shares, or operating a sole trader business (subject to the aggravated provisions in section 159).

Duration of disqualification

The standard period is three years. Where conduct is characterised as 'particularly grossly irresponsible', the period can be up to five years. The maximum cumulative disqualification period is ten years. Shorter periods can be agreed in settlement.

The defence process

When the trustee files a claim (stævning) with the probate court, you have a deadline to file a defence (svarskrift). Globe Advokater reviews the trustee's grounds, identifies weaknesses in the case and prepares the most effective defence strategy. Settlement negotiations with the trustee are common and can result in a shorter disqualification period. If the court's decision is unfavourable, it can be appealed (kæret) to the High Court.

Consequences of breaching disqualification

Breaching a disqualification order is a criminal offence under section 131 of the Danish Criminal Code, punishable by a fine or imprisonment of up to six months. The breach can also trigger a new, potentially extended disqualification and personal unlimited liability for the new company's debts if it subsequently goes bankrupt.

Can a non-Danish citizen or foreign director be subject to konkurskarantæne?

Yes. The 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 national who served as director of a Danish company that has gone bankrupt, you may be subject to a disqualification claim.

What is the difference between konkurskarantæne and criminal prosecution?

Disqualification (konkurskarantæne) is a civil sanction imposed in a civil court case. Criminal prosecution under the Bankruptcy Act or the Criminal Code is a separate process. Both can run in parallel - disqualification does not prevent criminal prosecution, and vice versa.

Can I continue operating my existing business under disqualification?

Operating as a sole trader (personal unlimited liability) is generally permitted. Working as an employee is also permitted. However, if you are subject to the aggravated prohibition under section 159(2) - triggered when a new disqualification is imposed while a previous one is still running - even sole trader activity may be restricted. Globe Advokater can advise on your specific situation.