What happens in Sweden when a company goes bankrupt?

Company files for bankruptcy 

In Sweden, the bankruptcy process begins when either the company itself or one of its creditors applies to the local court where the company is based for it to be declared bankrupt.

In the case of Northvolt, the company applied to the Stockholm district court even for subsidiaries based in Skellefteå and Västerås.  

It is the court that makes the final decision. It does this by checking that the company is, indeed, insolvent (på obestånd) i.e., that it is incapable of paying its debts and is not set to receive any new payments in the near future that might enable it to do so.

If the company itself applies for bankruptcy, the court usually makes its decision that same day. If one of its creditors has made the application, the court will call a hearing within two weeks. How long or drawn out the process will then be depends on the complexity of the case. 

A trustee is appointed

Once the company has been declared bankrupt, the court will appoint a bankruptcy trustee (konkursförvaltare) who is responsible for managing the assets of the bankrupt estate, getting as much value as possible from the assets, and then deciding on how much each creditor should be paid. 

The trustee is usually an experienced lawyer. While the company applying for bankruptcy can recommend a preferred trustee, the court is not obliged to follow their recommendation. 

The trustee takes over management of the assets 

Once the court has declared the company bankrupt, all assets are passed to the trustee. A representative of the company declared bankrupt must remain in the country while the process is ongoing. 

The trustee decides whether to keep the company or its subsidiaries operating

The trustee must then decide whether to keep the company operating while the bankruptcy process runs on or whether to stop all activity. They must try to find buyers for the assets and decide whether to sell subsidiaries as running concerns, or whether to close them down and sell off their assets piecemeal. 

At this stage, anyone employed by the company should contact the trustee to find out if they should keep working.

The Unionen union advises employees of companies declared bankrupt to assume they should continue to work unless contacted by the trustee and told otherwise. It also advises workers to collect all wage slips and keep records of missed salary payments to make sure they get paid as much as possible. 

The estate inventory session

Within two months of the declaration, the trustee will convene an estate inventory session where all of the company’s assets and liabilities are listed and discussed. This is also sometimes called an “oath-giving meeting” or edgångssammanträde, as the debtor is historically obliged to take an oath, certifying that all assets have been listed. 

The inventory is then passed to the district court. If the company still has assets, the trustee will then publish a distribution proposal (utdelningsförslag), suggesting how the assets should be divided between the various creditors. 

This is unlikely to be the last word, however, as each creditor will have legal teams arguing for higher payments for their clients.

They will present their arguments at a conciliation session, or förlikningssammanträde, held at the District Court. The court will then rule on how much each creditor should be paid.

Once this is done, the bankruptcy is concluded and the company ceases to exist as a legal entity. 

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The government wage guarantee 

Employees of companies made bankrupt often end up as creditors, as they will not have been paid for the last month they worked at the company. This amount is covered in Sweden by the State Salary Guarantee (statlig lönegaranti), which covers unpaid wages and severance payments up to a maximum of 235,200 kronor (in 2025). 

It is up to the bankruptcy trustee to decide how much compensation each employee is owed and the money is paid out by the Swedish Tax Agency within 5 to 10 working days of the trustee’s decision. 

Register with Swedish Public Employment Service 

Once an employee of a bankrupt company has been made redundant it is essential that they register with the Swedish Public Employment Service, as this is required to become eligible for unemployment benefit, and to receive help finding a new job and retraining.  

To do this, employees need to provide an arbetsgivarintyg, or “employer document”, which is typically issued by the bankruptcy trustee. 

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Apply for A-kassa employment benefit and income guarantee 

Employees laid off should also apply to their A-kassa unemployment insurance company so they receive payouts as quickly as possible. This will also require them to present an arbetsgivarintyg.

Some employees will also have an “income insurance”, or inkomstförsäkring, through their union or employer, which will cover some or all of the gap between the monthly payment they are eligible for through their A-kassa and the salary they received. 

Retraining

After a big bankruptcy, there is help available to assist those laid off in getting new jobs. Trygghetsrådet gives career advice, advice on retraining or starting a business to white-collar workers (TRR or TRS are two examples, your workplace might have an agreement with a different group), and Trygghetsstiftelsen, or TSN, gives career advice and advice on retraining to blue-collar workers.

They also offer financial support called omställningsstöd, or “transition support”, of up to 80 percent of the unemployed person’s former salary, with a maximum level of 362,700 kronor a year in 2025.