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Swedish Law ? Company Reorganisation ? Compulsory Composition

According to the old Composition Act of 1970 the creditors could be force to accept a composition provided a majority of the creditors voted for such a solution. The procedure under the old act was not part of a reorganisation procedure but a separate institute.

When the new legislation on company reorganisation was introduced in 1996 the old Composition Act was recalled and the composition procedure was integrated as a part of the new reorganisation procedure. It is, thus, no longer possible to obtain a forced composition outside the scope of a reorganisation.

Under normal circumstances and in order to be valid

• the composition must provide all similarly entitled creditors with similar rights,
  
• the composition must provide at least 25 percent of the amount of the claims, and
  
• the prescribed minimum distribution shall be paid within one year following the composition order.
  

(to be continued)

Full post as published by Swedish Law Blog on March 24, 2009 (boomark / email).