Recovery of payments made before insolvency: what to do in the first ten days depends on three immediate steps: preserve every record connected to the transaction, stop any further payments to the same counterparty, and obtain an assessment of exposure before responding to the trustee. Delay narrows the options available and often converts a defensible position into a settlement on the trustee's terms.
Who this concerns
This concerns a company, or the individuals running it, that received a payment, a security interest, an asset transfer, or a set-off benefit from a counterparty that later entered bankruptcy or restructuring in Sweden. It also concerns boards of companies that made such payments before their own insolvency and now face a bankruptcy trustee (konkursförvaltare) reviewing the estate's transactions.
The trigger is almost always a letter: a formal notice from the trustee stating that a specific payment, or a specific security granted before the filing, is being challenged as recoverable (återvinning) into the bankruptcy estate. That letter has a response deadline. What happens in the days before a formal reply is drafted determines how much room there is to negotiate.
The same question arises for suppliers who accepted early settlement of overdue invoices shortly before a customer's collapse, for lenders who took new collateral in the run-up to a filing, and for group companies that received intercompany transfers before a subsidiary's insolvency. Each of these fact patterns is treated slightly differently, but the first-ten-days response is structurally the same.
What the law says
Swedish insolvency legislation gives the trustee a specific power to unwind transactions that took place before the bankruptcy, where those transactions favoured one creditor over others or moved value out of reach of the general creditor body. This mechanism, återvinning, sits alongside the ordinary rules on debt collection and is applied by the trustee as part of administering the estate, subject to review by the court if the counterparty contests the claim.
Under Swedish law as it currently stands, the trustee's ability to claw back a transaction turns on a combination of factors: how close in time the transaction sat to the bankruptcy filing, whether the counterparty was an ordinary supplier or a party with a closer relationship to the debtor, and whether the transaction departed from how the parties had previously dealt with each other. A payment that simply settled an overdue invoice on ordinary terms is treated differently from a payment that jumped the queue, discharged an unsecured debt with new security, or moved an asset for materially less than its value.
The trustee does not need to prove intent to defraud in every case. Certain categories of transaction are recoverable on largely objective grounds; others require the trustee to show that the counterparty knew, or should have known, of the debtor's financial difficulty at the time. Which category applies is precisely the question that a first assessment needs to answer, because it changes both the strength of a defence and the value of settling early.
How it works in practice
The mechanics below describe how a recovery claim typically develops from the point a company becomes aware of it, and what changes the outcome.
The trigger event
Awareness usually starts with a letter from the trustee, sometimes preceded by an informal enquiry asking for documentation on a named transaction. Occasionally the first sign is a claim filed directly in court rather than a demand letter, which shortens the practical window to respond and raises the stakes of getting the first reply wrong.
The first ten days, task by task
The initial period should be used to lock down three things: the paper trail for the challenged transaction, the company's exposure if the claim succeeds, and a decision on tone for the first response. Concretely, this means pulling the invoice, the payment instruction, any correspondence around the timing of payment, and anything showing why payment happened when it did. It means calculating what a full recovery would cost the company if ordered, not what the trustee is asking for, because the two figures are frequently different once interest and costs are added. And it means deciding, before any letter goes out, whether the strategy is to contest the characterisation of the transaction or to open a settlement conversation on the estate's likely litigation costs.
Building the factual record
The strongest defences rest on showing that the transaction was ordinary: consistent with prior dealings, at market terms, and not obviously timed to beat a filing. Internal emails, historical payment patterns with the same counterparty, and any contemporaneous business rationale for the transaction all matter more at this stage than legal argument, because the trustee's initial view is usually formed on the documents available, not on a full evidentiary hearing.
Assessing the counterparty relationship
Whether the recipient of the payment was an arm's-length trade counterparty, a related party, or connected to the debtor's management changes the analysis substantially. Closer relationships shift the burden toward the recipient to show the transaction was unremarkable; arm's-length trade payments are harder for a trustee to unwind unless the timing or terms were clearly abnormal.
Set-off and security separately
A set-off exercised shortly before bankruptcy, or a security interest granted to secure an existing debt rather than new value, raises distinct questions from a straightforward cash payment. Both are frequently targeted because they visibly favour one creditor, and both require a separate factual review from an ordinary invoice payment.
The foreign element
Where the counterparty, the payment instruction, or the underlying contract sits outside Sweden, the analysis does not change in substance but the practical handling does. Evidence may need to be gathered from a foreign counterparty who has no obligation to cooperate voluntarily, correspondence may exist in another language and need certified translation for use before a Swedish court, and any parallel proceeding recognising or enforcing a related foreign judgment adds a layer of coordination that a purely domestic dispute does not have. None of this changes whether the transaction is recoverable; it changes how quickly the file can be built and how much the response costs to prepare.
Negotiating before litigation
Trustees generally have an interest in resolving straightforward recovery claims without litigation, because litigation costs come out of the estate and reduce what remains for distribution to creditors. A well-documented, early response that narrows the disputed amount or the disputed characterisation often produces a settlement at a fraction of the amount originally claimed. A response built on assertion rather than documents rarely does.
What to check
- The exact date the payment, security grant, or set-off took effect, measured against the bankruptcy filing date, not the date the invoice was raised.
- Whether the transaction matches the pattern of prior dealings with the same counterparty, or departs from it.
- Whether any security was given for a pre-existing debt rather than in connection with new value.
- Whether the counterparty had, or should reasonably have had, knowledge of the debtor's financial difficulty at the time.
- Whether a foreign element requires translated documentation or coordination with a parallel proceeding.
- The full cost of losing the claim, including interest, rather than only the amount stated in the trustee's letter.
The numbers
There is no single figure that applies across recovery claims: how far back a transaction can be reached, and how strong the trustee's case is, depends on the category the transaction falls into and the relationship between the parties, not on a fixed universal period. What can be said with confidence is that the closer a transaction sits to the filing date, and the closer the recipient's relationship to the debtor, the more the burden shifts toward the recipient to justify the transaction.
Cost follows the same pattern rather than a fixed scale. A dispute over a single, well-documented, arm's-length payment resolves faster and more cheaply than a dispute involving multiple transactions, a foreign counterparty, or a related-party security interest where the trustee's position is stronger from the outset. Costs increase with the volume of documents to review, the number of transactions in scope, and whether the matter proceeds to a formal court claim rather than settling on the strength of the initial response.
Where it usually goes wrong
The most common error is silence: treating the trustee's letter as something to be dealt with later, or assuming the claim will be dropped if ignored. It is not dropped; the trustee's time limits to bring a formal claim run independently of how the counterparty responds, and a late or absent reply removes the negotiating position built on an early, documented response.
A second recurring error is responding with argument instead of documents. Trustees weigh evidence, not assertions of good faith. A response that says the payment was ordinary, without the invoices and correspondence that show it was ordinary, carries little weight.
The analysis also breaks down where the company assumes its own good intentions settle the question. Whether a transaction is recoverable often turns on objective factors, timing and relationship to the debtor, that do not depend on whether the recipient believed the debtor was solvent. A recipient acting entirely in good faith can still be ordered to return a payment if the transaction falls into an objectively recoverable category.
Finally, the analysis does not extend to every payment received from a company that later fails. Ordinary trade payments made well before any sign of difficulty, on standard terms, to an unrelated counterparty, sit outside the core target of recovery claims. Not every letter from a trustee reflects a strong claim, and treating every enquiry as an automatic liability leads to settlements that were never necessary.
Does foreign judgment enforcement affect exposure in a recovery claim?
Not directly. A recovery claim is assessed under Swedish insolvency rules regardless of whether a related dispute involves a foreign judgment. Where enforcement of a foreign judgment against the same counterparty is already underway, the two processes need to be coordinated procedurally rather than merged, and the mechanics of cross-border enforcement are addressed separately in the context of a board's exposure to enforcement of a foreign judgment.
Does an earn-out dispute change how a pre-insolvency payment is treated?
An earn-out payment made shortly before a seller's insolvency can itself become the subject of a recovery claim if it departed from the agreed schedule or terms. Where the underlying earn-out dispute is still live, the recovery analysis and the earn-out dispute need to be assessed together rather than treated as unrelated, a point covered in more depth in the review of earn-out disputes and board exposure after closing.
Is a retention of title claim treated the same as a cash payment for recovery purposes?
No. A retention of title arrangement gives the supplier a proprietary claim to specific goods rather than an unsecured claim for money, and that distinction changes both whether recovery applies and how the trustee approaches the claim. The separate treatment of these claims is set out in the review of retention of title and supplier claims exposure.
Sofia Almqvist leads insolvency and restructuring matters at Lodline. Her approach starts from the documents: a recovery position is only as strong as the record built in the first days after the trustee's letter arrives.
What to do next
Everything above can be done internally: pulling the file, mapping the transaction against the checklist, and drafting a first response. Where this stops working is where the transaction is close to the filing date, involves a related party, a security interest, or a foreign counterparty, and the amount at stake makes a wrong first move expensive to reverse. That is the point to have the position assessed before the reply goes out, not after the trustee has already formed a view.
For the related question of supplier claims where goods rather than cash were involved, see the separate review of retention of title claims in insolvency. To have the specific transaction and trustee correspondence reviewed before a deadline expires, start with an assessment.
Read more on the practice hub for insolvency and restructuring matters.