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What is the bankruptcy procedure for an ApS in Denmark in 2024?

Almost every person that has ever tried to start their own company, knows the fear of running out of money. When you have a company, the technical term for that, is to go “bankrupt” – or to be declared “bankrupt”. The whole process leading up to being bankrupt, we call the bankruptcy proceedings. This blog explains the bankruptcy procedure for the ApS.

What is the bankruptcy procedure for an ApS in Denmark in 2024?

What is the bankruptcy procedure for an ApS in Denmark in 2024?

In this blog, we discuss what is the bankruptcy procedure for an ApS in Denmark in 2024.

Almost every person that has ever tried to start their own company, knows the fear of running out of money.

When you have a company, the technical term for that, is to go “bankrupt” – or to be declared “bankrupt”.

The whole process leading up to being bankrupt, we call bankruptcy.

This blog only explains the bankruptcy process for limited liability companies in Denmark (ApS and A/S).

For sole proprietors, bankruptcy can be much more serious since you are personal liable for debts.

If you are interested in closing your ApS or A/S without going bankrupt, then read our blog here

You risk going bankrupt when your debts are higher than your assets

Just because you have a short period of time, where you run out of money, does not mean that you are bankrupt.

This is called a temporary insolvency.

Very often entrepreneurs somehow always manage to pay their bills.

Maybe they get a loan from someone.

Or maybe they all of a sudden get a new client.

Usually, things turn out just fine.

But if you keep having more costs than income, then over time, you will be steering more and more towards bankruptcy.

This is called insolvency.

As a director you are required by law to terminate the activity of the company, once you have passed the point of “no return”, meaning the point where you must have known that other people would lose money.

If you continue to operate the company beyond the point of “no return”, you can end up having personal liability for other peoples losses.

This is not common in Denmark, but over the years lawyers have become persistent in their efforts to reclaim losses.

We operate with 2 terms, each defining if you can go bankrupt:

1: Solvency

You are solvent – and therefore have solvency – if you have more assets than liabilities (debt).

Imagine that you owe the bank 10.000 DKK, but you have 11.000 DKK standing on a bank account.

If you would simply transfer the money from one bank account to the other bank account, there would still be 1.000 DKK left on your bank account.

This means you are solvent.

Or written in another way; you can pay all your liabilities (debt).

2: Insolvency

You are insolvent – and therefore have insolvency – if you have more liabilities (debt) than assets.

Imagine that you owe the bank 11.000 DKK, and you have 10.000 DKK standing on a bank account.

If you transfer all the money from your bank account to repay the bank, there would still be 1.000 DKK left that you owe to the bank.

This means you are insolvent.

Or written in another way; you are not able to pay all your liabilities right now if asked.

But, if the bank does not ask to get paid right now, there is naturally no problem.

However, you should always as the director pay special attention to this situation and act responsibly if you can see that the company will not be able to pay the debt in the future.

This can mean filling for bankruptcy.

Insolvency can be for a temporary period of time, even if you have more assets than debts, when the assets are not liquid, which is a situation that is common and generally accepted, also called “technical insolvency”.

What is the bankruptcy procedure for an ApS in Denmark

When you stop paying your bills

When you stop paying your bills, for whatever reason, then at some point, your creditors will get tired of waiting for their money.

If you are not paying, because you are not satisfied with a product or service delivered, then make sure to write the creditor.

So there can be no doubt, that you have expressed your dissatisfaction.

Sometimes maybe a settlement can be reached.

If you keep failing to pay, and no complaints have been made by you about the product or service, then the creditor can take you to court.

The first reminders

Once you start receiving the first reminders and threats of legal action, then it is time to act.

And at this stage, when you already know it is too late to turn things around, then it is not relevant if you have some money left or not.

Take action.

Take action – speak with your creditors

If you are not satisfied with a product or service delivered, write a mail and state what the problem is.

And also suggest a solution.

Maybe a discount will solve your problem.

If the main reason is a lack of money, then call the creditor, and explain the situation.

Be honest.

Most companies understand, that we can all have bad times.

The worst is having a client that does not call, and continues to not pay.

A client like that, most companies will take to court.

If a client has called and explained the situation, chances are that the debt will be cancelled.

Naturally, it depends on how much the debt is.

And the circumstances regarding your lack of payment.

Use leverage to make settlements

By being completely honest and transparent about your situation, you can often use this as leverage.

Send your PnL (profit and loss statement) and balance to the creditor.

Show them your financial situation.

If they can see, that you do not have any money, chances are they are not going to court.

This is because they will have to pay for the court, and their own lawyer as well if your company has no money.

Try instead and use this to get a settlement.

Maybe a discount.

Or a payment plan.

Most creditors will understand, that it is better to get something than nothing.


And try to save your company.

What is the bankruptcy procedure for an ApS in Denmark

Setting up a new company – moving activities and assets

You can decide to set up a new company.

That can happen before or after the bankruptcy starts.

Often it makes very good sense to do it before.

Especially if you owe the tax office money.

Otherwise, you might be in a situation later, where the tax office will refuse to register your new company for VAT or as an employer unless you deposit an often large amount as a security deposit (usually 100.000 – 200.000 DKK).

The good news is, that this security deposit can be used to pay for VAT or employee taxes in the new company, once the registration is in place.

Repaying loans, bank credits and suppliers prior to a bankruptcy

Repayments you do prior to bankruptcy can always be questioned.

This is because you are not allowed, to have some “favourite” creditors, which get paid while others do not get paid.

Sometimes a curator will look 1-2 years back in time.

And he has the power to reverse repayments and ask creditors to refund the money to the company.

In terms of banks, then repayments of a credit f.ex. can only be deemed invalid, if you tell the bank before, that you have problems.

So avoid telling the bank, that you are on the verge of bankruptcy if you do not want the money to go back to the curator.

Often credits in the bank are signed with personal assets as collateral.

So people often pay these credits first.

To avoid having to pay themselves.

So be careful who you tell in the bank.

If they know you will go bankrupt anytime soon, they are not allowed to accept the repayment.

Someone needs to take action before your ApS goes into bankruptcy proceedings

Before you can be taken to court, then someone naturally needs to take action.

And this can take a long time.

The first letter from the court

Make sure that your accounting is done

Be prepared for the bankruptcy process.

This is done by having your accounting done.

In addition to serving as a tool for the curator, it will also help you not be banned from managing future companies.

We call this a “bankruptcy quarantine” – read more about a bankruptcy quarantine below.

Court day

When a creditor has contacted the court, then you will receive information about a court day.

Normally you are able to participate via a telephone session as well.

But make sure to contact the court, if you want to participate via a telephone session.

And if you are not able to come on the date, then also make sure to call the court.

Failing to show up in court, can get you arrested.


The curator is a lawyer who is appointed by the court.

The job of a curator is to try and secure as much money as possible for the creditors.

What is the bankruptcy procedure for an ApS in Denmark

You no longer control the company – including the bank account

Once the bankruptcy procedure starts you are no longer in control of the company.

From now on the curator makes all the decisions.

It also means that your access to the bank account will not work anymore.

If you have a shop, then most likely you will find, that the locks will be changed.

Often without any warning.

And often during the first court meeting.

This is because the curator wants to make sure, that you do not remove any assets from the shop.

Receivables from clients

If you have any receivables from your clients, that have not yet been paid in full, then your clients will need to pay to the curator.

And not to you.

Other assets

The curator will try to sell all the company assets.

Often the price is low since it has to go fast.

You can also buy the assets from the company

If the price for the asset is low, then remember that you can also buy the assets from the curator.

Just place an offer on the assets you want to buy.

How long time does a bankruptcy process last?

From the time a creditor takes you to court, it can take 1-2 months before a court date is set.

If you add the time, from when you started failing to pay the creditor, then often 3-6 months are already gone.

A curator usually works on the bankruptcy proceedings for 1-2 years.

Sometimes even longer.

The end of the bankruptcy

Once the curator is done, he will send an overview of the bankruptcy:

How much money was realised from the assets?

How much will be paid to the creditors?

That will end the bankruptcy.

And the company will change its status on CVR to “bankrupt”.

The aftermatch

Usually, you will not hear more from the curator or court, once the bankruptcy is finished.

The company is closed.

And the last unpaid debts disappeared with the company’s closure.

Banned from managing companies

If you are tried in court by the public prosecutor for having conducted your management in a bad way, f.ex. failing to do your accounting ongoing, if invoices are missing and similar, then you will often be banned from managing other companies for a duration of 1-3 years.

We call this a “bankruptcy quarantine”.

Should you breach the bankruptcy quarantine later, then you can be fined.

And in very severe situations you can even be imprisoned for up to 6 months.

Read more about “bankruptcy quarantaine” here

How to avoid the hassle of a bankruptcy procedure and make a voluntary dissolution instead

If you are in a situation where you are able to close the company using a voluntary dissolution we recommend reading our blog here

(This blog was update last time: 1.4.2024)


What triggers bankruptcy for an ApS in Denmark?

Bankruptcy can occur when a company's debts surpass its assets, indicating insolvency.

How can insolvency be temporary?

A temporary insolvency situation arises when assets are not liquid but still exceed debts.

What actions should an ApS take upon facing insolvency?

Directors must act responsibly, potentially filing for bankruptcy if they foresee inability to pay debts.

What should you do if you can’t pay or don´t want to pay bills due to a dispute?

Communicate your dissatisfaction to the creditor to potentially reach a settlement.

How to negotiate with creditors during financial difficulties?

Being transparent about your financial situation can help negotiate terms, such as a discount or a payment plan.

What considerations exist for setting up a new company before bankruptcy?

It can be strategic, especially to avoid VAT or employer registration issues with the Danish Tax Agency.

What are the legal ramifications of repaying certain loans before declaring bankruptcy?

Favoring certain creditors over others can be legally challenged and reversed by a curator.

Who is responsible for initiating bankruptcy proceedings?

A creditor or the company itself must take action for the process to start, which can be a lengthy process.

What changes once bankruptcy proceedings begin?

Control of the company, including bank accounts and decision-making, transfers to the appointed curator.

What happens at the end of the bankruptcy process?

The curator concludes the process with a financial summary, leading to the company being officially declared bankrupt.