On 11 August 2016, the Maritime and Commercial High Court imposed a bankruptcy restriction order on a "liquidation director" of three companies for a total of nine years. The ruling is fundamental as no person has ever been subject to a bankruptcy restriction order of this length.

For many years, the alleged "liquidation director" carried on a business of closing down distressed companies. Over the years, he had closed down 300 businesses.

The trustee of three bankruptcy estates issued a bankruptcy restriction order after the prior liquidation of three companies which the "liquidation director" had liquidated.


The trustee recommended that based on the "liquidation director's behaviour and the circumstances, it was fair to impose a bankruptcy restriction order on the "liquidation director". In this connection, it was considered an aggravating circumstance that the liquidator's business model had lead to a systematic and grossly negligent management consistently violating legislation with the consequence that the creditors had incurred loss and the liquidator had gained a profit as the liquidator's standard fee, according to the information received, amounted to approx. DKK 40,000 plus VAT per distressed company.

The rules of the Bookkeeping Act, the Financial Statements Act, the Companies Act and tax legislation had systematically been violated by the three companies, while the liquidator was responsible. After the bankruptcy, not bookkeeping material was available, which, to a significant extent, limited the trustee's possibility of an effective bankruptcy administration. The trustee's investigations were very much impossible due to the liquidator's conduct.


The court found that it was an aggravating circumstance that the liquidator worked and marketed himself as a professional player. The "liquidation director" knew that the three companies of which he was the liquidator were undoubtedly insolvent, and he also knew than he consistently violated his responsibilities on behalf of the companies the operation of which he had only continued for private gain and without any legitimate commercial grounds. On the basis of the above, the court concluded that his management as a liquidator was grossly negligent in all three companies.

The court fixed the restriction period to three years for each company as there were no grounds for departing from the basis, cf. section 158 (1) of the Bankruptcy Act, and an accumulated bankruptcy restriction period of nine years.

A fundamental ruling

The ruling is notable because the rules were introduced to avoid fraudulent bankruptcies and speculation for personal gain. The purpose of the rules was first of all to act as protection against the conduct demonstrated by the "liquidation director"/liquidator in the above.

The ruling establishes that in sufficiently gross situations, a bankruptcy restriction order will be accumulated. An upper limit exists of an accumulated duration of a total of ten years. The limit is not definitive, and there are therefore no impediments to imposing a bankruptcy restriction order again, with a duration of maximum 10 years.

If the "liquidation director" acts contrary to the bankruptcy restriction order, he will be subject to personal and unlimited liability for the part of the debtor company's debt not covered by the assets available for distribution of the limited liability companies in which he had been part of the management during the bankruptcy restriction period. However, the question remains whether the "liquidation director" will close down his business or simply adjust his business to the situation through shadow companies or any other circumvention. Will the bankruptcy restriction order prevent him from conducting his business? Do the rules even work as intended?


Nicolai Dyhr