Company Bankruptcy in Norway: How to Close a Business in Norway and Start Anew?

In cooperation with experts from Advokatfirma Nierzwicki & Bluszko AS, we analyze what pitfalls await entrepreneurs facing insolvency and how to protect your private assets from company debts.

In Norway, there are two ways to declare bankruptcy: oppbudsbegjæring (voluntary petition by the board) and konkursbegjæring (petition by creditors). The difference between them is not just a formality; it’s a matter of legal safety. A key mistake made by many owners of Norwegian limited companies (AS) is delaying the decision to close the business until creditors—such as Skatteetaten or employees—take the initiative.

Financial aspect: When the board files the petition, the company avoids a court fee of about NOK 56,000. For a company without liquidity, this is a huge difference.

Presumption of diligence: Filing for bankruptcy independently at the moment of insolvency signals to the court and trustee that the board is in control and acting ethically, protecting the interests of contractors.

Filing a petition by the board (oppbudsbegjæring) is strategically much more advantageous than bankruptcy forced by external entities (konkursbegjæring). Why?

Costs: If the board files the petition, the company is exempt from the high court fee (currently about NOK 56,000).

Control over the process: Filing for bankruptcy independently helps avoid accusations of acting to the detriment of creditors and continuing operations "at their expense."

Employee safety: Swift bankruptcy triggers the Guarantee Fund (NAV Lønnsgaranti), allowing employees to recover unpaid wages.

Many entrepreneurs mistakenly assume that the legal form of a limited company (Aksjeselskap) fully protects their private finances. However, the Norwegian Companies Act (Aksjeloven § 17) provides exceptions. The board may be personally liable for company debts if:

• The business was continued despite obvious insolvency (so-called "trading at the creditors' expense").

• New obligations were incurred, knowing the company would not be able to pay them.

• Unjustified withdrawals from the company or preferential repayment of selected creditors at the expense of others were made.

“The market has rediscovered the regulations regarding the personal liability of board members. If a company takes on new obligations knowing it cannot cover them, its management is walking on very thin ice,” warn lawyers from Nierzwicki & Bluszko.

Declaring bankruptcy with class and in accordance with the law is an art that requires answering several key questions even before going to court:

• Which creditors should be paid first to avoid criminal charges?

• How to recover loans that the owner privately paid into the company?

• When is the best time to set up a new entity so that it is not considered a "shell company"?

• How to avoid a ban on conducting business (konkurskarantene)?

The court-appointed trustee (Bostyrer) will scrutinize the company's history. Key red flags include:

• Debt prioritization: Were family/private loans paid off before bankruptcy, leaving Skatteetaten with nothing? This is a direct path to accusations of harming creditors.

• Payroll tax (Skattetrekk): This is "sacred" in the Norwegian system. Failure to pay withheld payroll taxes is the most common reason for criminal proceedings in bankruptcies.

• High-risk agreements: Donations to relatives or sudden sales of company assets at undervalued prices just before bankruptcy will almost certainly be reversed by the trustee (omstøtelse).

The Norwegian market offers the possibility of purchasing "shelf companies" (hylleselskap), allowing you to start within 24 hours. However, attorney Tomasz Nierzwicki warns against transferring assets to a new entity too hastily.

The safest route is to acquire machines, tools, or take over employees from the old company with the trustee’s consent. This guarantees that the new company will not be burdened with the predecessor’s debts through legal succession.

Paradoxically, bankruptcy can be a lifeline for employees. As long as the company is "drifting" without money, employees are left in limbo. Officially declaring bankruptcy opens the way to the NAV Guarantee Fund, which covers unpaid wages and holiday pay (feriepenger). A responsible employer, seeing no chance of rescue, files for bankruptcy precisely so that their team is not left with nothing.

Remember, the goal of a wise bankruptcy is to protect your reputation and lay the foundation for a new, secure business. Instead of "drowning your sorrows" and avoiding calls from debt collectors, it’s worth conducting a thorough legal analysis of assets and liabilities.

Consult your situation with professionals. The article’s partner, Advokatfirma Nierzwicki & Bluszko AS, specializes in Norwegian labor law, company law, and bankruptcy law, helping entrepreneurs safely navigate the toughest moments in business.