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2019•Edward Elgar Publishing eBooksRequires access

NATIONAL REPORT FOR DENMARK

Line Herman Langkjær

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Abstract

Contracts are potentially the most valuable assets in a business. Not only can a contract potentially represent a direct monetary value, but it can also be of such importance to the debtor’s ongoing business that termination of the contract will lead to a decrease of the value of the business as such. To ensure the value in times of insolvency, a fairly complex legal framework regarding the treatment of contracts is set up in the Danish Bankruptcy Act. This chapter observes that the treatment of executory contracts in Danish insolvency law is based on a balance between the interest of the collective creditor interest and the interest of the counter party. Recent reforms appear to favour the interest of the estate by granting rights for the estate that the debtor did not have beforehand to maximize the recovery rate for the creditors and to make a rescue of a viable business possible.

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What this paper is about

Contracts are potentially the most valuable assets in a business. Not only can a contract potentially represent a direct monetary value, but it can also be of such importance to the debtor’s ongoing business that termination of the contract will lead to a decrease of the value of the business as such. To ensure the value in times of insolvency, a fairly complex legal framework regarding the treatment of contracts is set up in the Danish Bankruptcy Act. This chapter observes that the treatment of executory contracts in Danish insolvency law is based on a balance between the interest of the collective creditor interest and the interest of the counter party. Recent reforms appear to favour the interest of the estate by granting rights for the estate that the debtor did not have beforehand to maximize the recovery rate for the creditors and to make a rescue of a viable business possible.

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Available abstract

Contracts are potentially the most valuable assets in a business. Not only can a contract potentially represent a direct monetary value, but it can also be of such importance to the debtor’s ongoing business that termination of the contract will lead to a decrease of the value of the business as such. To ensure the value in times of insolvency, a fairly complex legal framework regarding the treatment of contracts is set up in the Danish Bankruptcy Act. This chapter observes that the treatment of executory contracts in Danish insolvency law is based on a balance between the interest of the collective creditor interest and the interest of the counter party. Recent reforms appear to favour the interest of the estate by granting rights for the estate that the debtor did not have beforehand to maximize the recovery rate for the creditors and to make a rescue of a viable business possible.

Key concepts: Creditor, Debtor, Insolvency, Bankruptcy, Business, Estate, Value (mathematics), Finance

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