Bankruptcy petition: who can file, and what happens?

What is a bankruptcy petition?

A bankruptcy petition (konkursbegæring) is a formal, written request to the probate court (skifteretten) to declare a debtor, a person or a business, bankrupt. When the probate court receives a bankruptcy petition, it opens an examination of whether the conditions for bankruptcy are met. If they are, the debtor is declared bankrupt by a bankruptcy decree from the court.

Bankruptcy proceedings are governed by the Bankruptcy Act (konkursloven). It is important to understand that a bankruptcy petition does not in itself cause bankruptcy. It is the court's subsequent decision that does.

Who can file for bankruptcy?

The right to file a bankruptcy petition belongs to two categories:

A creditor

A creditor, a person or business the debtor owes money, can petition to have another declared bankrupt. The condition is that the debtor is insolvent, that is unable to meet their obligations as they fall due, unless the inability to pay must be assumed to be only temporary (section 17(2) of the Bankruptcy Act).

The creditor must document the claim, typically via unpaid invoices, judgments or other evidence of the debt, and submit this to the probate court.

The debtor themselves

A debtor can also file a bankruptcy petition against themselves (a self-petition). This happens when the debtor acknowledges their insolvency and wants to submit to bankruptcy proceedings rather than continue trading at others' expense. The management of a limited company (ApS, A/S) does not have a general duty to petition for the company's bankruptcy, but management can incur personal liability if it continues loss-making operations beyond the point where it is clear that the business has no realistic hope, so that the debt grows to the detriment of the creditors.

When is a business insolvent?

Insolvency is the central condition for bankruptcy. A debtor is insolvent when:

1. Illiquidity: the debtor cannot pay their due debts, and
2. Not temporary: the inability to pay is not temporary

It is not enough that the debtor is in a temporary liquidity crisis. Bankruptcy proceedings are reserved for cases of genuine insolvency with no prospect of improvement.

A business can have negative equity (technical insolvency) without being illiquid, and vice versa. It is primarily the current ability to pay that is decisive for the assessment of insolvency.

The process: what happens when a bankruptcy petition is filed?

1. Filing with the probate court

The bankruptcy petition is filed with the probate court that covers the debtor's home venue. The petition must be in writing and contain:

• Identification of the parties (creditor and debtor)
• The size and basis of the claim
• Documentation of the claim

A court fee is payable to file the petition (DKK 1,500 in 2026). If you petition for your own company's bankruptcy, no court fee is payable. In addition, the probate court will normally make the bankruptcy decree conditional on the petitioner providing security for the bankruptcy costs, often around DKK 40,000. The security must cover the trustee's fee and the other costs of administering the estate.

2. The cut-off day and notification

The probate court notifies the debtor and sets the cut-off day (fristdagen), a central concept in insolvency law. The cut-off day is as a rule the day the probate court received the bankruptcy petition (or a petition for reconstruction). The cut-off day is decisive for the rules on avoidance (omstødelse): certain dispositions the debtor made in a period before the cut-off day can be avoided (annulled). The periods vary by the type of disposition, typically up to 3 months before the cut-off day, but up to 2 years for dispositions to closely related parties.

3. A hearing at the probate court

A hearing is held at the probate court where the debtor can present their view of their finances. The probate court then assesses whether the conditions for bankruptcy are met.

4. A bankruptcy decree or dismissal

The probate court can either:

• Declare the debtor bankrupt and appoint a trustee who takes over the administration of the estate
• Dismiss the petition, for example because the debtor is solvent or has paid the claim. If the estate lacks funds to cover the costs, the proceedings can be discontinued and the estate closed under the rules on estates without funds.

5. Administration of the bankruptcy estate

The trustee maps the estate's assets and liabilities, collects claims from creditors and distributes the estate's funds proportionally to the creditors according to the order of priority. The process can take from a few months to several years depending on the complexity of the estate.

Business bankruptcy vs. personal bankruptcy

Business bankruptcy (a company)

When a limited company (ApS or A/S) is declared bankrupt, the company ceases as a legal person after the bankruptcy is concluded. The company's owners are as a rule not personally liable for the company's debt, apart from cases where management can be held personally liable (management liability), where avoidance occurs, or where criminal liability is incurred.

Personal bankruptcy

Private individuals and personally liable businesses (sole proprietorships, general partnerships) can likewise be declared bankrupt. The consequence is that the debtor's personal assets are realised for the benefit of the creditors. Certain assets are protected, for example necessary household goods and necessary work equipment.

After the bankruptcy proceedings, private individuals can apply for debt relief (gældssanering), which under certain conditions can free them from residual debt and give a fresh start.

Alternatives to bankruptcy

Bankruptcy is not always the best solution, for either the debtor or the creditors. Consider the alternatives:

Reconstruction: a formalised process where the business, under the probate court's supervision, tries to reconstruct its finances, for example by a compulsory composition (a write-down of debt) or a transfer of the business as a going concern. Requires a likelihood of a viable business.

Voluntary composition: the debtor negotiates directly with creditors on a write-down of debt without the court's involvement. Requires the agreement of the creditors covered.

Liquidation: a solvent business that wants to cease can choose liquidation rather than bankruptcy. The assets are realised, the creditors are paid, and the remainder is distributed to the owners.

A payment agreement: a direct agreement with the largest creditors on an instalment plan can prevent a bankruptcy situation.

Bankruptcy petition and debt collection

A bankruptcy petition is a serious step and should not be used as a pure debt-collection tool. In practice, the threat of a bankruptcy petition can, however, get a debtor to pay. It is nonetheless important to:

1. Send reminders and, where relevant, a debt-collection notice before the petition
2. Ensure the claim is documented and undisputed
3. Assess whether the debtor is actually insolvent, otherwise the petition has no effect

If a groundless bankruptcy petition is filed, the petitioner can be held liable for the costs the debtor incurs as a result of the petition.

Before you file a bankruptcy petition

A bankruptcy petition must meet the probate court's formal requirements and contain the necessary information and documentation. Before you file a bankruptcy petition, make sure you have carefully assessed all the alternatives, and consider consulting a lawyer experienced in insolvency law, especially in complex situations.

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The content of this article is for guidance only and does not constitute legal advice. Contact a lawyer if you are in doubt about your specific situation.