Sweden: Lending & Secured Finance

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This country-specific Q&A provides an overview to lending and secured finance laws and regulations that may occur in Sweden.

This Q&A is part of the global guide to Lending & Secured Finance. For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/practice-areas/lending-and-secured-finance/

  1. Do foreign lenders require a licence/regulatory approval to lend into your jurisdiction or take the benefit of security over assets located in your jurisdiction?

    Lending to Swedish borrowers (other than consumers) or taking the benefit of security over assets located in Sweden does not in itself require a license or regulatory approval for foreign lenders. A license may however be required if the foreign lender also conducts other types of financial activities (e.g. accepts deposits from the public). Also, if the foreign lender has a permanent establishment in Sweden, lending to Swedish borrowers (other than consumers) requires that the lender applies for registration with the Swedish Financial Supervisory Authority (Sw: Finansinspektionen) in accordance with the Swedish Currency Exchange and Certain Financial Activities Act (Sw: lag (1996:1006) om valutaväxling och annan finansiell verksamhet).

  2. Are there any laws or regulations limiting the amount of interest that can be charged by lenders?

    In relation to commercial loans, there are no restrictions on the amount of interest that can be charged, save if the applicable rate amount to usury. If no default interest rate has been agreed, default interest is payable at a statutory rate pursuant to the Swedish Act on Interest Rates (Sw: Räntelag (1975:635)).

    In relation to consumers, the Swedish Act on Consumer Credits (Sw: Konsumentkreditlag (2010:1846)) imposes restrictions on how high the applicable interest rate may be by stating that neither the annual interest rate nor the default interest rate may exceed the official reference rate (as set from time to time by the Central Bank of Sweden) plus 40 per cent.

  3. Are there any laws or regulations relating to the disbursement of foreign currency loan proceeds into, or the repayment of principal, interest or fees in foreign currency from, your jurisdiction?

    There are no restrictions applicable to the disbursement of foreign currency loan proceeds into, or the repayment of principal, interest or fees in foreign currency from, Sweden.

  4. Can security be taken over the following types of asset: i. real property (land), plant and machinery; ii. equipment; iii. inventory; iv. receivables; and v. shares in companies incorporated in your jurisdiction. If so, what is the procedure – and can such security be created under a foreign law governed document?

    Security can be taken over each of the assets listed above in Sweden. In order to create a security interest under Swedish law, the pledgor must grant the security interest, typically in the form of a pledge agreement, and the security interest must be perfected.

    The pledge agreement can be governed by foreign law, but perfection of the security interest must meet the Swedish law requirements.

    The procedure and the perfection requirements for creating a security interest in respect of the assets listed above are as follows:

    i. Real property (land), plant and machinery

    Security interests over real property are created in the form of real property mortgages. In order to obtain a mortgage (Sw: inteckning) on real property, a two-step procedure must be followed.

    First, the registered owner must apply to the relevant Land Registration Authority (Sw: inskrivningsmyndighet) for a mortgage, stating the mortgaged amount in SEK (i.e. the loan amount). When granting the application, the National Land Survey (Sw: Lantmäteriet), at the request of the Land Registration Authority, issues a mortgage certificate (Sw: pantbrev). The mortgage certificate is a bearer document which can be replaced by an entry on a computerised register (Sw: datapantbrev). Stamp duty of two per cent. of the amount of the mortgage certificate is levied on the issuance of the mortgage certificate (there is no additional stamp duty payable when pledging the mortgage certificate).

    Secondly, a security interest in the real property is created when the owner of the real property pledges the mortgage certificate as collateral for a credit or a claim, and delivers the mortgage certificate to the pledgee. A computerised mortgage certificate is considered delivered when the mortgagee or his authorised representative receives the computerised mortgage into its electronic archive kept by the National Land Survey. The security created by the original delivery of the mortgage certificate is generally deemed to be transferable together with the credit or claim which is secured by the mortgage.

    The real property mortgage encumbers both the underlying land and the property together with fixtures (Sw: fastighetstillbehör), including any forest and buildings located on the real property.

    Fixtures and other equipment to buildings that are devoted to permanent use for the building or part thereof (Sw: byggnadstillbehör) are deemed to pertain to the building, and thus to the real property, provided that they are owned by the property owner. Also fixtures and equipment for industrial use and for the particular business carried out on the property (Sw: industritillbehör) are deemed to pertain to the real property. Fixtures and equipment for industrial use may however be separated from the property if the owner has made a declaration to that effect and such declaration has been registered in the land registry, in which case such fixtures and equipment may be separately pledged as set out under item (ii) (equipment) below.

    The aggregate amount to which the holder of a first ranking mortgage certificate is entitled to be paid to cover its claim as a secured creditor in respect of each real property during any bankruptcy or enforcement proceedings, with respect to any borrower, will be equal to (depending on priority of mortgage certificate and sale proceeds) the amount shown on the mortgage certificate as being its nominal amount, plus 15 per cent. of the nominal amount of the certificate, plus interest from the date of the application for bankruptcy (or, as the case may be, the enforcement decision) to the date of payment to the creditor, calculated on the nominal amount of the mortgage certificate at a rate per annum equal to the official reference rate (as set from time to time by the Central Bank of Sweden) plus four per cent.

    ii. Equipment

    Security interests over equipment are generally (indirectly) achieved through taking security over corporate mortgages, which inter alia will include the pledgor’s equipment. Security over equipment can also be taken over specific equipment, either by way of a registered chattel sale (Sw: lösöresköp) or by way of pledging the equipment (in which cases the specific equipment will no longer be included in the corporate mortgage). Please see below for further details on the various ways of taking security over equipment.

    Corporate mortgage

    A corporate mortgage (Sw: företagshypotek) entitles the holder to a security over those of the debtors' movable assets that are included in the company's business in Sweden. The corporate mortgage is not applicable for cash and bank deposits, shares, or other financial instruments intended for public sale, including assets that can be pledged in a specific manner or assets that can neither be foreclosed for a debt nor part of the debtors' bankruptcy.

    It is commonly used by local banks when granting loans or lines of credit to their corporate clients rather than for structured finance transactions.

    The debtor obtains the registration of a corporate mortgage by applying to the Company Registration Office (Sw: Bolagsverket) using a standardised form. The document evidencing the registration is called a corporate mortgage certificate (Sw: företagsinteckningsbrev). The value of the corporate mortgage can be fixed for any chosen amount. In addition to a nominal registration fee, a stamp duty of one per cent. of the value of the corporate mortgage is payable when the corporate mortgage certificate is issued.

    Security through a corporate mortgage is obtained by the debtor pledging the corporate mortgage certificate to the creditor and the security is perfected by the certificate being physically transferred to the creditor or the creditor being registered as the holder of an electronic corporate mortgage. The creditor is then in bankruptcy or upon an enforcement given priority to receive payment for its claim from the sale proceeds from the assets included in the corporate mortgage up to the amount of the corporate mortgage certificate in accordance with the Swedish Rights of Priority Act (Sw: Förmånsrättslag (1970:979)).

    To the extent the amount stipulated in the corporate mortgage certificate is not sufficient to satisfy the debt, the creditor is entitled to a supplementary payment. The supplement may not exceed 15 per cent. of the amount stipulated in the corporate mortgage certificate. The creditor is also entitled to interest from the day the asset was foreclosed or from the day the application for bankruptcy was filed.

    Registration of a corporate mortgage gives a right of priority in relation to another registration according to the chronological order in which the application for the registrations were made.

    Registered chattel sale

    As mentioned above, equipment will normally be included in a pledge over the company’s movable assets by way of corporate mortgage. Individual equipment can however also be secured separately by way of a registered chattel sale, which is a way to take security without actually transferring possession of the asset to the creditor. Along with perfection requirements, the title of an asset is transferred to the lender who, at the end of the term, will transfer it back to the borrower. This can also be achieved through sale and leasing of the asset and conditional sale.

    Pledge

    Equipment can also be pledged separately provided that it is kept separate from the pledgor. The pledgor may, in other words, not have access to the equipment once pledged. A security agent can be used to maintain and service the inventory on behalf of the pledgee.

    iii. Inventory

    Security interests over inventory can be achieved in the same way as security interest over equipment, i.e. either by a corporate mortgage, a registered chattel sale of specific inventory or by way of pledging the inventory (please see above).

    iv. Receivables

    A pledge over accrued receivables (which are receivables that have been earned by the creditor but need not necessarily have fallen due) is possible. It is also possible to have a pledge over unearned receivables, if the parties agree. However, a pledge of such receivables cannot normally be perfected until the receivables have accrued. If the obligation that the pledged receivables secured arose before the receivables accrued, the perfection of the pledge is delayed and due to such fact, the pledge may, in the event of the pledgor's insolvency, be subject to challenge.

    A pledge over receivables is perfected if two criteria are fulfilled. First, the debtor of the underlying receivable must be notified. There is no requirement as to the form for such notification other than that the notification sufficiently identifies the pledged receivable, the identity of the pledgee, and contains information that the receivables have been pledged and an instruction to the effect that payment of the pledged receivable only may be made to the pledgee. Secondly, the pledgor must no longer be able to deal with the pledged receivable, e.g. to collect it in its own name or agree to amendments to its terms, but servicing in all other aspects as per a securitisation or factoring transaction would be allowed as this would not be for the pledgor's benefit.

    The above perfection requirements apply as a matter of Swedish law, which is applicable if the debtor of the underlying receivable is domiciled in Sweden. In case of foreign debtors, local perfection requirements may apply.

    Please note that receivables are included in corporate mortgages unless separately pledged as set out above.

    v. Shares in companies incorporated in Sweden.

    A pledge over the shares in a Swedish company is perfected by transferring the original share certificate(s) representing the shares, duly endorsed in blank, to the pledgee. If no share certificate has been issued by the company, the pledge is perfected by notifying the company’s board of directors of the pledge.

    In the event the shares are in dematerialised registered form, the share pledge is perfected (i) if the shares are held on a securities account, through registration with a central securities depository (Euroclear Sweden AB), or (ii) if the shares are held on a deposit account, through notification of pledge to the relevant account bank.

  5. Can a company that is incorporated in your jurisdiction grant security over its future assets or for future obligations?

    A company incorporated in Sweden can grant security over its future assets and for future obligations provided that relevant assets or obligations are (or will be) sufficiently identifiable. However, in the event of the company’s insolvency, security over future assets may be challenged in respect of assets over which the security was perfected during a three months hardening period preceding the commencement of the relevant insolvency proceedings.

    For instance, security over receivables will not be perfected until the receivables arise. Consequently, a hardening period may apply for every new receivable, even if the debtor has previously been notified of the security, to the extent the new receivable secures previously incurred obligations.

  6. Can a single security agreement be used to take security over all of a company’s assets or are separate agreements required in relation to each type of asset?

    A single agreement may be used to take security over all of a company’s assets. Nevertheless, as certain provisions need to be adapted for the asset type (e.g. in relation perfection and enforcement), it is preferred in Sweden to use separate security agreements in relation to each type of asset.

  7. Are there any notarisation or legalisation requirements in your jurisdiction? If so, what is the process for execution?

    There are no notarisation or legalisation requirements in Sweden.

  8. Are there any security registration requirements in your jurisdiction?

    Security over trademarks and patents shall be registered with the Swedish Patent and Registration Office (Sw: Patent- och registreringsverket), and security over dematerialised financial instruments held on a securities account shall be registered with Euroclear Sweden AB.

    Please also refer to question 4 and the registration procedures related to security over dematerialised corporate mortgage certificates and shares held on a securities account.

  9. Are there any material costs that lenders should be aware of when structuring deals (for example, stamp duty on security, notarial fees, registration costs or any other charges or duties), either at the outset or upon enforcement? If so, what are the costs and what are the approaches lenders typically take in respect of such costs (e.g. upstamping)?

    Except for stamp duties in relation to the issuance of mortgage certificates and corporate mortgage certificates (as set out in our answer to question 4), no material notarial fees, registration costs or other charges or duties need to be considered when structuring deals in Sweden.

  10. Can a company guarantee or secure the obligations of another group company; are there limitations in this regard?

    Subject to the limitations described in our answers to questions 11 and 12 below, a Swedish company can guarantee or secure the obligations of another group company.

  11. Are there any issues that lenders should be aware of when requesting guarantees (for example, financial assistance or lack of corporate benefit)?

    Lenders should be aware of that a guarantee or security provided by a Swedish limited liability company (Sw: aktiebolag) for obligations of any person that is not a wholly owned subsidiary of it may be considered as a value transfer unless the guarantor or pledgor receive consideration on market terms for its undertakings or that otherwise sufficient corporate benefit accrues to it. Such value transfer is unlawful if and to the extent it, at the time when the guarantee or security is granted, impairs the restricted equity of the company providing the guarantee or security, as per its most recently adopted balance sheet (taking any subsequent adjustments into account).

    An unlawful value transfer must be reimbursed by the recipient (e.g. a lender) if the company that provided the guarantee or security shows that the recipient knew, or ought to have known, that the guarantee or security constituted a value transfer.

    It should also be noted that a Swedish limited liability company may not provide security or a guarantee as security for a loan raised by certain closely related parties from a third party (subject to certain exceptions, including if such closely related party is part of the same group as the security provider).

  12. Are there any restrictions against providing guarantees and/or security to support borrowings incurred for the purposes of acquiring directly or indirectly: (i) shares of the company; (ii) shares of any company which directly or indirectly owns shares in the company; or (iii) shares in a related company?

    A Swedish limited liability company (Sw: aktiebolag) is prohibited from providing guarantees, and/or security to support borrowings incurred for the purpose of acquiring shares in the company or in any superior company in the same corporate group. The same prohibition applies to loans and advance payments. There are however opportunities under Swedish law to provide such financial assistance after the acquisition has been completed (e.g. if sufficient time have lapsed).

    A prohibited loan and advance payment must be returned by the recipient. A prohibited guarantee or security may be declared void if the company that provided the guarantee or security shows that the recipient knew or should have known that the guarantee or security was prohibited. A violation of this prohibition may also cause criminal liability.

  13. Can lenders in a syndicate appoint a trustee or agent to (i) hold security on the syndicate’s behalf, (ii) enforce the syndicate’s rights under the loan documentation and (iii) apply any enforcement proceeds to the claims of all lenders in the syndicate?

    Even though Swedish law does not have its own trustee concept, it allows for lenders to appoint a trustee/agent to represent them in matters relating to the loan documentation, including to hold security on the syndicate’s behalf, enforce the syndicate’s rights under the loan documentation and apply any enforcement proceeds to the claims of all lenders in the syndicate. However, in order to enable the trustee/agent to represent the syndicate lenders in an enforcement scenario in Swedish courts, each syndicate lender will have to submit a written power of attorney in favour of the trustee/agent for legal proceedings. As the title trustee is no legal institute per se under Swedish law, the titles trustee/agent may be used interchangeably.

  14. If your jurisdiction does not recognise the role of an agent or trustee, are there any other ways to achieve the same effect and avoid individual lenders having to enforce their security separately?

    Please refer to question 13.

  15. Does withholding tax arise on (i) payments of interest to domestic or foreign lenders, or (ii) the proceeds of enforcing security or claiming under a guarantee?

    Swedish law does not levy withholding tax on interest payments to domestic or foreign lenders or the proceeds of enforcing security or claiming under a guarantee.

  16. If payments of interest to foreign lenders are generally subject to withholding tax, what is the standard rate and what is the minimum rate possible under double taxation treaties?

    Please refer to question 15.

  17. Are there any other tax issues that foreign lenders should be aware of when lending into your jurisdiction (for example, will any income become taxable in your jurisdiction solely because of a loan to or guarantee and/or grant of security from a company in your jurisdiction)?

    There are no particular tax issues that foreign lenders not having a permanent establishment in Sweden should be aware of when lending into Sweden (such as that any income would become taxable in Sweden solely because of a loan to or guarantee and/or grant of security from a company in Sweden).

  18. Are there any tax incentives available for foreign lenders lending into your jurisdiction?

    There are no tax incentives available for foreign lenders lending into Sweden.

  19. Is there a history in your jurisdiction of financing structures being challenged by tax authorities, and if so, can you give examples.

    We are not aware of financing structures being challenged by tax authorities. However, limitations regarding the right to deduct interest expenses on debt owed to affiliated companies was introduced some years ago which has given rise to tax challenges by the tax authorities.

  20. Do the courts in your jurisdiction generally give effect to the choice of other laws (in particular, English law) to govern the terms of any agreement entered into by a company incorporated in your jurisdiction?

    Swedish courts do generally give effect to the choice of other laws to govern the terms of any agreement entered into by a Swedish company, unless the result of applying such laws would manifestly contravene fundamental principles of the legal system in Sweden (ordre public).

  21. Do the courts in your jurisdiction generally enforce the judgments of courts in other jurisdictions (in particular, English and US courts) and is your country a member of The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (i.e. the New York Arbitration Convention)?

    A final and conclusive judgment rendered by a court in a contracting state to:

    (i) the Regulation (EU) No. 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (“Brussels I Regulation”);

    (ii) the Convention on jurisdiction and the enforcement of judgments in civil and commercial matters made in Brussels on 27 September 1968 (as amended) (“Brussels Convention”); or

    (iii) the Convention on jurisdiction and the enforcement of judgments in civil and commercial matters made in Lugano on 16 September 1988 (the “Lugano Convention”),

    and which is enforceable in such state, will be recognised and enforceable by the courts of Sweden according and subject to the Brussels I Regulation, Brussels Convention or Lugano Convention.

    Hence, a final and conclusive judgment rendered by the courts in England, which is enforceable in England would be recognised and enforceable by the courts of Sweden according and subject to the Brussels I Regulation.

    Judgments of courts in other jurisdictions (e.g. US courts), would not be enforceable in Sweden as a matter of right without a retrial on its merits, but will be of persuasive authority as a matter of evidence before the courts. However, there is Swedish case law to indicate that such judgments should be acknowledged without retrial on its merits if (i) based on contract which expressly acknowledge the jurisdiction of courts outside Sweden, (ii) rendered under observance of due process of law, (iii) there lies no further right to appeal and (iv) the recognition would not manifestly contravene the Swedish public policy.

    Sweden is a member of the New York Arbitration Convention. Accordingly, a final and conclusive arbitral award will be recognised and enforceable by the courts of Sweden according and subject to the New York Arbitration Convention and the Swedish Arbitration Act (Sw: lag (1999:116) om skiljeförfarande).

  22. What (briefly) is the insolvency process in your jurisdiction?

    Under Swedish law, a debtor company may be subject to one of two types of insolvency proceedings – (i) bankruptcy pursuant to the Swedish Bankruptcy Act (Sw. konkurslag (1987:672)) and (ii) reorganization pursuant to the Swedish Company Reorganization Act (Sw. lag (1996:764) om företagsrekonstruktion)).

    Bankruptcy

    Pursuant to the Swedish Bankruptcy Act, if a company is unable to rightfully pay its debts as they fall due and such inability is not merely temporary, it is deemed insolvent and can be declared bankrupt following a bankruptcy petition filed with the court by the debtor or by a creditor of the debtor.

    When declared bankrupt, a receiver in bankruptcy (Sw: konkursförvaltare) is appointed by the court and will work in the interest of all creditors with the objective of realizing the debtor’s assets and distributing the proceeds among the creditors. The purpose of bankruptcy proceedings is to wind up the company in such a way that the company’s creditors receive as high a proportion of their claims as possible. The receiver in bankruptcy is required to safeguard the assets and can decide to continue the business or to close it down, depending on what is deemed preferable for all the creditors. In general, the receiver in bankruptcy is required to sell the assets of the debtor as soon as possible and to distribute the proceeds in accordance with statutory rules. In the interim, the receiver will take over the management and control of the company and the company’s directors and/or managing director will no longer be entitled to represent the company or dispose of the company’s assets. All creditors (unless they have a right to separate an asset from the bankruptcy estate) wishing to assert claims against the company that is declared bankrupt need to participate in the bankruptcy proceedings.

    When distributing the proceeds, the receiver must follow the mandatory provisions of the Swedish Rights of Priority Act (Sw: Förmånsrättslag (1970:979)), which states the order in which creditors have a right to be paid. As a general principle, in bankruptcy proceedings competing claims have equal right to payment, in relation to the size of the amount claimed, from the debtor’s assets. However, preferential or secured creditors, where such preference follows by law, have the benefit of payment before other creditors. There are two types of preferential rights: specific and general preferential rights. Specific preferential rights are vested in certain specific property and give the creditor right to payment out of such property. General preferential rights cover all property belonging to the insolvent company’s estate in bankruptcy, which is not covered by specific preferential rights. Claims that do not carry any of the abovementioned preferential rights or exceed the value of the security provided for such claim (to the extent of such excess), are non-preferential and are of equal standing as against each other.

    Company reorganization

    The Swedish Reorganization Act provides companies facing economic difficulty with an opportunity to resolve these without being declared bankrupt. A petition for company reorganization may be presented by the debtor or a creditor of the debtor. Corporate reorganization proceedings may as a main rule continue for an initial period of three months from commencement but may, under certain conditions, be extended for up to one year.

    An administrator is appointed by the court and supervises the day to day activities and safeguards the interests of creditors. However, the debtor remains in full possession of the business except that, for important decisions such as paying a debt that has fallen due prior to the order of reorganization, granting security for a debt that arose prior to the order, undertaking new obligations or transferring, pledging or granting rights in respect of assets of a substantial value for the business, the consent of the administrator is required. However, the absence of such consent does not affect the validity of the transaction.

    Upon an order by the court under the Swedish Reorganization Act, the administrator must notify the creditors of the reorganization proceedings and will draw up a reorganization plan specifying the proposed action to be taken to resolve the debtor’s problems. A creditors’ meeting will be held at which the creditors will be given the opportunity to express their opinions as to whether the reorganization should continue. Upon the request of any of the creditors, the court shall appoint a creditors’ committee of at most three persons. The administrator shall, if possible, consult with the creditors’ committee prior to taking any important decisions.

    The corporate reorganization proceedings do not have the effect of terminating contracts with the debtor and, during the reorganization procedure, the debtor’s business activities continue as normal. However, the procedure includes a suspension of payments to creditors and the debtor cannot pay a debt that fell due prior to the order without the consent of the administrator and such consent may only be granted should there be exceptional reasons for doing so and any petition for bankruptcy in respect of the debtor will be stayed. A moratorium also applies to execution in respect of a claim or enforcement of security during corporate reorganization proceedings unless the security assets are in the physical possession of the secured creditor or any agent acting on behalf of such creditor.

    The debtor may apply to the court requesting public composition proceedings (Sw: offentligt ackord), which means that the amount of a creditor’s claim may be reduced. The proposal for a public composition must meet certain requirements such as that a sufficient proportion of the creditors which are allowed to vote, in respect of a sufficient proportion of the outstanding claims, vote in favor of such public composition. Creditors with set off rights and secured creditors will not participate in the composition unless they wholly or partly waive their set off rights or priority rights. Should the security not cover a secured creditor’s full claim, the remaining claim will, however, be part of a composition.

  23. What impact does the insolvency process have on the ability of a lender to enforce its rights as a secured party over the security?

    In general, no independent enforcement is available for a secured party following the bankrupcty order. However, regarding a security provided by way of a pledge on movable assets (Sw. handpanträtt), enforcement through private enforcement procedures is permitted (i.e. the secured party may itself sell the pledged asset at a public auction, subject to such auction occurring no earlier than four weeks after the meeting for administration of oaths and the receiver in bankruptcy having been offered to purchase the relevant collateral). Security over financial instruments, currency, gold provided as security in favor of a central counterparty and certain monetary claims may further be immediately sold or enforced through private enforcement procedures by the secured party, provided it is carried out in a commercially reasonable way. As regards security over shares not admitted to trading in a subsidiary of the bankrupt debtor, the secured party must first offer such shares to the receiver in bankruptcy.

  24. Please comment on transactions voidable upon insolvency.

    In Swedish bankruptcy and, if certain conditions are met, company reorganization proceedings, transactions can (in certain circumstances and subject to different time limits) be recovered. The goods or monies shall then be redistributed to the bankruptcy estate or the company subject to company reorganization. Broadly, these transactions include, among others, where the debtor has conveyed property fraudulently or preferentially to one creditor to the detriment of one or more of its other creditors before the initiation of the relevant insolvency proceedings, created a new security interest, granted a guarantee or security that was either not stipulated at the time when the secured obligation arose or not perfected without delay after such time and the delay is not considered to be ordinary or paid a debt that is considerable compared to the value of the debtor’s assets or which is made by using unusual means of payment.

    In the majority of situations, a claim for recovery can be made concerning actions which were made during the three months preceding the commencement of the relevant insolvency proceedings, notably in relation to such granting of security where perfection is delayed. In certain situations longer time limits apply and in others there are no time limits. These include, among others, situations where the other party to an agreement or other arrangement is deemed to be a closely related party to the debtor, such as a subsidiary or parent company.

  25. Is set off recognised on insolvency?

    Assuming set-off would be permitted outside insolvency, a creditor may use a claim against a bankrupt debtor to set-off against a claim which the bankrupt debtor had against the creditor prior to the bankruptcy order (regardless of whether the creditor’s claim is due and payable or not). It should however be noted that there are certain restrictions limiting the right of set-off in certain situations where set-off opportunities have been created for improper purposes.

    The right of set-off in the context of company reorganization is similar to that in bankruptcy. In general, a creditor may use a claim against the debtor, which arose prior to the company reorganisation proceedings were applied for, to set-off against a claim which the debtor then had against the creditor (regardless of whether the creditor’s claim is due and payable or not).

  26. Can you comment generally on the success of foreign creditors in enforcing their security and successfully recovering their outstandings on insolvency?

    Our experience is that there is no difference between Swedish and foreign creditors as it relates to the success in enforcing their security and successfully recovering their outstandings on insolvency. Swedish courts and enforcement authorities shall treat Swedish and foreign creditors in the same way.

  27. Are there any impending reforms in your jurisdiction which will make lending into your jurisdiction easier or harder for foreign lenders?

    We are not aware of any such reforms.

  28. What proportion of the lending provided to companies consists of traditional bank debt versus alternative credit providers (including credit funds) and/or capital markets, and do you see any trends emerging in your jurisdiction?

    The Swedish lending market has traditionally been dominated by domestic and Nordic banks. The lending market has however been diversified during recent years and borrowers can now obtain funding from mezzanine lenders, direct lending funds and other alternative debt providers, as well as increasingly through corporate bonds. The traditional banks still account for the vast majority of the lending provided to companies in Sweden, but the alternative sources of funding provide borrowers with more options than previously.