Luterkort Advokatbyrå works with corporate reconstructions that are regulated in law. In everyday terms, this usually involves a business reaching some form of arrangement – a “composition” – by which its liabilities to its creditors are reduced.
A business that may have run into temporary liquidity problems, but which is still considered to be fundamentally sound, may be permitted to undergo a formal change in the company’s capital structure – a company reconstruction – under certain conditions. A decision on this is reached by a court in response to an application from the company.
In the event that a corporate reconstruction is approved, the District Court appoints an administrator to carry out the work of reorganising the company. The administrator is normally a lawyer with specialist expertise in insolvency law, and in most cases is a receiver in bankruptcy. It is also worth mentioning that Swedish government salary guarantees may now be payable in connection with a company reconstruction. Previously this was only possible in the event of bankruptcy proceedings against a company. The salary guarantee is a payment made by the Swedish state to a company’s employees for a specific period of time to cover loss of earnings (up to a maximum amount).