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Bankruptcy of limited companies

Bankruptcy of limited companies

If a business cannot pay its debts on time, it must go bankrupt. A receiver then takes care of the business's assets and uses them to pay off the business's debts.

Bankruptcy means a business is closed down by the liquidation of all assets to pay off debts.   

Sale of qualified shares, bankruptcy or liquidation at the Swedish Tax Agency (in Swedish)

Apply for bankruptcy at the District Court  

A limited company may itself file for bankruptcy. Someone to whom the limited company owes money (creditor) can also apply. Applications must be submitted to the District Court, which decides on the bankruptcy and appoints a receiver. During the bankruptcy proceedings, the receiver is responsible for managing the company's assets and liabilities. It is also up to the receiver to decide whether to continue the activity or to sell the business's assets outright. 

Once the District Court has decided that the business 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 certain details of the limited company at the Companies Registration Office, such as the name of the company.  

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

The Swedish Tax Agency deregisters the company  

The Tax Agency receives information from the District Court about the bankruptcy. The Tax Agency registers that the company no longer has F-tax, no longer has to pay VAT and is no longer an employer.  

Deregistering a limited company in bankruptcy

During bankruptcy: tax, income statements and tax returns  

Someone must submit income statements during the bankruptcy period. It is common for the receiver to take over this responsibility, but you must agree on this in such cases. Tax returns must be filed by the business's representative, not by the receiver.   

The company must pay tax on all its income even during the bankruptcy period.  

You may become personally liable for payments   

If you are a representative of a limited company, you may become personally liable for paying the company's taxes and charges. 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 limited company may 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 ensure that the debts are settled in a concerted manner, taking into account the interests of all creditors. One such measure could be to file for bankruptcy.  

The business may continue to operate  

The receiver may decide to continue to operate the activity. The bankruptcy estate will then receive a special company registration number and will have to pay the business's taxes. The bankruptcy estate also becomes the employer.  

When the bankruptcy ends  

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