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Bankruptcy of an economic association 

Bankruptcy of an economic association 

If an association is unable to pay its debts, it must go bankrupt. A receiver then takes care of the association's assets and uses them to pay the association's debts. 

Bankruptcy means an economic association is terminated by the liquidation of all its assets which are used to pay off the debts.

Apply for bankruptcy at the District Court  

If the association is unable to pay its debts, you can apply to the District Court for bankruptcy. Then a receiver takes care of the association's assets and uses them to pay off its debts.   

The District Court decides on bankruptcy  

The District Court decides on bankruptcy and appoints a receiver. During the bankruptcy proceedings, the receiver manages the association's assets and liabilities. It is also up to the receiver to decide whether to continue the activity or to sell the association's assets outright  

Once the District Court has decided that the association has gone bankrupt, it sends a notification to the Companies Registration Office, which registers that the bankruptcy has been initiated. After that, it is not possible to change the association's details, such as the name of the association, at the Companies Registration Office.  

Contact the District Court if you have any questions about bankruptcy, such as fees and waiting times, and how to appeal.  

The Swedish Tax Agency deregisters the association  

The Tax Agency receives information from the District Court about the bankruptcy. The Tax Agency registers that the association no longer has F-tax no longer has to pay VAT and is not an employer.

Deregistering an economic association in bankruptcy

During bankruptcy   

When an association has gone bankrupt, the representative of the association must file income statements, and report its activities as usual until the association is deregistered.  

Accounting during bankruptcy of an economic association

When the bankruptcy ends  

The receiver reports his work to the District Court, which concludes the bankruptcy.   

You may become personally liable for payments  

If you are a representative of an association, you may become personally liable for paying the association's taxes and fees. It is called representative liability. The representative is usually the person or persons who sit on the board. However, another person who has a controlling influence in the association can also be a representative.  

A representative may be held personally liable if he or she has acted with wilful or gross negligence. To avoid this, you should file for bankruptcy in good time. You will not be considered to have been wilfully or grossly negligent if you have taken the necessary steps in good time to bring about a comprehensive settlement of the debts, taking into account the interests of all creditors. One such measure could be to file for bankruptcy.

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