Liability for creditor-related offences: what to do in the first ten days starts with fixing, in writing, what happened, who ordered it, and when the board knew the company could not pay. Under Swedish law, acts against creditors attach to conduct after insolvency became apparent, so the task is separating what is done from what can still be steered.
Who this concerns
This question comes up for board members and managing directors of Swedish limited companies once a creditor, a liquidator, or the company's own accountant raises the possibility that payments, transfers, or omissions in the run-up to insolvency treated one creditor better than the others, or hid the company's real position. It sits within the broader question of personal liability for Swedish directors, though what follows deals only with the criminal, creditor-facing edge of that exposure. It applies whether the company has already filed for bankruptcy, is in the process of doing so, or is still trading while the board weighs whether it can.
It also reaches people who were never formally appointed but who, in practice, ran the company's finances, gave instructions to the bookkeeper, or decided which invoices got paid this week. Swedish criminal liability for offences against creditors, known in Swedish law as borgenärsbrott, does not stop at the boundary of the board minutes: it follows the person who made the decision, whatever their formal title.
The trigger is rarely a single dramatic act. More often it is a sequence, a supplier paid in full while wages and tax were deferred, a vehicle transferred to a director's private company, an invoice run stopped the week before a bankruptcy petition, that only looks coordinated once someone lays out the dates side by side. The first ten days matter because that is roughly the window in which the sequence is still fresh enough to reconstruct accurately, and before anyone else's version of events becomes the only one on record.
What the law says
Under Swedish law as it currently stands, criminal liability for acts against creditors sits alongside, but separate from, the civil liability that attaches to directors who keep trading after the company's equity is impaired. The two tracks are frequently confused and frequently run in parallel: a bankruptcy trustee's report that flags a payment as improper favouring of one creditor over others can trigger both a claim for repayment into the estate and a referral for a criminal assessment of the same act.
The conduct that attracts liability generally falls into a small number of categories: favouring one creditor at the expense of others once the company's position was known to be unsustainable, moving or disposing of assets in a way that puts them beyond the reach of the general body of creditors, continuing to incur obligations the company had no realistic prospect of meeting, and failing to keep, or deliberately obscuring, the accounting records a trustee or investigator would need to reconstruct what happened. Gross negligence in that last category, rather than deliberate concealment, is enough to expose the person responsible for the books.
None of these categories require a formal bankruptcy to have been declared. The relevant moment is when the company's inability to meet its obligations became apparent to the person acting, not the date a court later confirms it. That is why the first ten days matter more than the date of the bankruptcy filing itself: they are usually the period in which that awareness, or the absence of it, gets fixed in writing for the first time.
How it works in practice
Day one: freeze the factual position
Before anything else, write down, dated and signed, what is known at this moment: the last set of management accounts, the current cash position, which creditors have been paid recently and which have not, and what security, if any, has been given in the run-up. Under Swedish law as it currently stands, a creditor-related offence turns on whether the company favoured one creditor over others, or kept trading, at a point when the board knew or should have known the company could not meet its obligations. The contemporaneous record made now is what later shows what the board actually knew, as opposed to what a trustee reconstructs after the event.
Separate the company's position from the individual's
The company and the director can have different, and sometimes opposing, interests from the first day. A payment that protects the company may expose the director personally, and advice given to one is not automatically advice to the other. Identifying early who speaks for whom is what keeps a single matter from becoming two conflicting defences.
Stop making selective payments until the position is clear
Continuing to pay some creditors and not others, once insolvency is in view, is the conduct most likely to be characterised later as favouring a creditor. The safer course is to pause discretionary payments and take a view on the company's actual position before deciding what can lawfully be paid.
Preserve the documents, do not tidy them
Management accounts, board minutes, bank statements and correspondence with creditors are the evidence on both sides. Altering, back-dating or cleaning up any of them converts a defensible position into a separate and more serious problem. Preservation, not presentation, is the task in the first ten days.
Where the counterparty or group sits outside Sweden
Where a paid creditor, the parent company or the assets involved sit outside Sweden, two things change: the documents evidencing the payments may need certification before a Swedish court will rely on them, and a payment routed through a foreign group entity tends to draw more scrutiny, not less. The underlying test is the same, but the evidence is harder to assemble after the fact.
What to check in the first ten days
- Whether any creditor has been paid, or given security, out of the ordinary course in the recent past
- Whether the board has a dated record of when it first knew the company could not meet its obligations
- Whether the company and any individual director need separate advice from the outset
- Whether discretionary payments have been paused pending a view on the company's position
- Whether the management accounts relied on are the latest available, and whether they are complete
- Whether any document has been altered since the position deteriorated, and if so which
Where it usually goes wrong
The clearest error is reading the risk as beginning on the date of the bankruptcy filing. It does not: it begins when the facts first made the company's inability to pay clear, usually weeks or months earlier, and the first ten days after that awareness are what matter. The second error is continuing selective payments in the belief that keeping the company running is always defensible; past the point of known insolvency, it can be the opposite. The third is treating the company's and the director's interests as one, so that a conflict is discovered only once a defence has been built on the wrong footing. None of these is resolved by acting faster; each is resolved by fixing the factual position in writing and taking a view before the next payment is made.
Is a payment to a creditor always a problem once the company is in difficulty?
No. A payment made in the ordinary course, for value, before the company's inability to pay was clear, is not by itself an offence. What draws scrutiny is a payment that favours one creditor over others at a point when the board knew the company could not meet all of them, or security given for an existing debt in that same window.
Does the annual discharge from liability protect the board here?
Not against a creditor-related offence. The discharge, ansvarsfrihet, voted at the general meeting covers matters the meeting was informed of and does not bind a later trustee or a prosecutor, so it is not an answer to conduct that was never put before the meeting.
What to do next
The work described here, freezing the factual position, pausing discretionary payments and preserving the documents, is what a board can do internally in the first ten days. It stops being an internal exercise the moment a trustee signals a claim or the economic crime authority makes contact, because from that point every payment and every document is read against what the board knew at the time. Book a preliminary assessment to have the position reviewed before that line is crossed. Related exposure is covered in dealing with the economic crime authority.