Set-off against an insolvent counterparty: what to do in the first ten days comes down to three moves, made in this order: stop any further performance that would create new exposure, sort out which of your claims are genuinely mutual and already existed before the bankruptcy decision, and put the set-off in writing to the receiver before the estate's assets are distributed. Wait longer and a set-off claim quietly turns into an unsecured dividend claim worth a fraction of its face value.
Who this concerns
This applies to any commercial counterparty of a company that has filed for bankruptcy or been placed into konkurs by court order in Sweden: suppliers sitting on unpaid invoices while also owing money on a separate contract, lenders with both a receivable and a deposit or cash collateral, landlords holding a tenant's rent deposit against unpaid rent, and group treasury functions running intercompany current accounts with a subsidiary that has just gone under. It also concerns boards on the other side of the relationship, whose own company is the insolvent one and who need to know what a counterparty is entitled to withhold.
The trigger is almost always the same: a bankruptcy notice, a public record entry, or a call from the appointed receiver (konkursförvaltare) asking for confirmation of outstanding balances. From that moment a clock starts, not because a statute fixes ten days exactly, but because every day of delay narrows the practical room to argue that a claim was mutual, pre-existing and asserted in good time.
Where the counterparty is part of a foreign group, or the underlying contract is governed by a law other than Swedish law, the analysis does not change in substance but it gets a second layer. A claim booked against a foreign parent or sister company rarely qualifies for set-off against the Swedish debtor's estate, because the parties are not the same legal person and mutuality fails on that ground alone. Currency mismatches between the claim and the counterclaim, choice-of-law clauses pointing away from Sweden, and security interests governed by a different legal system all need to be checked before the set-off notice goes out, not after the receiver has already rejected it.
What the law says
Under Swedish law as it currently stands, set-off against a bankrupt estate is permitted only where the claim and the counterclaim are mutual between the same two parties, where the claim asserted for set-off existed before the bankruptcy decision was made, and where the arrangement was not engineered shortly before the bankruptcy specifically to manufacture an advantage that would not otherwise have existed. A claim acquired at a discount from a third party in the run-up to a counterparty's insolvency, purely to create a set-off position, sits squarely in the territory that a receiver will challenge and that a court will scrutinise for the purpose behind the transaction rather than its form.
This is also the area where avoidance actions (återvinning) most commonly surface. A set-off asserted on the day the petition is filed looks very different from one that existed on the books six months earlier as an ordinary running account. The receiver's job includes testing exactly that distinction, and the burden of showing that the claim was genuine and pre-existing sits with the party asserting set-off, not with the estate.
No fixed statutory period defining "the first ten days" exists as a bright line; the phrase describes the practical window in which the facts are still fresh, the paper trail is still intact, and the receiver has not yet formed a settled view of the estate's position. Acting inside that window is what preserves the argument. Acting after it does not automatically destroy the claim, but it removes the benefit of the doubt.
How it works in practice
Freeze performance before you extend more credit
The first practical step has nothing to do with drafting a notice. It is stopping any delivery, payment or service that would create a new debt owed to the insolvent counterparty after you already know it is insolvent. Continuing to perform on the assumption that "it will net out anyway" is the single most common way a good set-off position turns into a bad one, because new claims created after knowledge of insolvency rarely qualify for the same treatment as claims that predate it.
Map every claim in both directions
List what the counterparty owes you and what you owe the counterparty, contract by contract, invoice by invoice, including anything booked as a deposit, retention, security or advance. Claims buried in different subsidiaries of your own group, or routed through a factoring arrangement, often do not belong to the same legal person as the one asserting set-off, and that breaks mutuality even though the commercial relationship looks like one continuous account.
Test whether the claim was genuinely pre-existing
For each pairing, establish the date the claim arose, not the date it was invoiced or booked. A claim that crystallised only after the bankruptcy petition was filed, such as a penalty triggered by the counterparty's own default, sits on weaker ground than a claim that existed as an ordinary trade debt months before insolvency became visible.
Watch the timing against the petition date
The closer a set-off arrangement sits to the petition date, the more it invites scrutiny, particularly if the arrangement was restructured, accelerated or newly documented shortly before the filing. A long-standing running account is treated very differently from a position assembled in the weeks before the counterparty's collapse became public.
Check currency and maturity before relying on the figures
A claim in one currency and a counterclaim in another can still be set off, but the conversion date and rate matter and should be fixed and documented rather than left to be argued later. The same applies to maturity: a claim that is not yet due can complicate, though not necessarily defeat, the position.
Put the set-off in writing to the receiver
A set-off that exists only as an internal accounting entry carries little weight against an estate. Notify the receiver in writing, identify the specific claims by contract and invoice reference, state the legal basis for treating them as mutual and pre-existing, and keep a record of when the notice was sent and received. Oral confirmation from a former contact at the counterparty is not a substitute once that person no longer has authority to bind the estate.
Do not treat a contractual netting clause as self-executing
A netting or set-off clause in the underlying contract is useful evidence of intent, but it does not override the mutuality and pre-existence requirements that apply once the counterparty is in bankruptcy. The clause supports the argument; it does not replace it.
Separate group company claims from the parent's claims
If your counterparty is one entity in a group and your claim sits against a different entity in the same group, set-off against the bankrupt entity's estate generally fails, regardless of how the commercial relationship was structured or invoiced. This is one of the most frequent points of disappointment in practice, precisely because the group traded as if it were one counterparty when it was not.
What to check before the notice goes out
- The exact legal entity behind each claim and counterclaim, not the trading name used in correspondence
- The date each claim arose, supported by contract, invoice or delivery documentation
- Whether any claim was acquired from a third party rather than arising directly from your own dealings with the counterparty
- Whether any restructuring of the claims occurred in the period immediately before the petition
- The currency, exchange rate basis and maturity of each claim
- Whether security, deposits or retentions are involved and how they interact with the claims being set off
- Whether the counterparty and the entity you are actually claiming against are the same legal person
- Whether the underlying contract points to a foreign governing law or forum that could affect how the claim itself is characterised
Frequently asked questions
Can we keep invoicing the counterparty after the bankruptcy order is issued?
Performing and invoicing after you know the counterparty is bankrupt creates a new claim that generally will not qualify for set-off in the same way as a pre-existing one, and it also risks becoming an unsecured claim against an estate with limited funds. Stop extending credit as soon as the bankruptcy is confirmed, and treat any further dealings as a separate commercial decision, not an extension of the old account.
Does a netting or set-off clause in the contract survive the counterparty's bankruptcy?
The clause is not disregarded, but it does not by itself satisfy the mutuality and pre-existence tests that apply once the counterparty is bankrupt. It is useful supporting evidence of the parties' intentions and should be referenced in the notice to the receiver, but the underlying claims still need to stand on their own as genuine and pre-existing.
What happens if the receiver disputes the set-off notice?
A disputed notice does not resolve itself; it typically needs to be tested through the estate's claims process or, if necessary, before a court. The practical position at that point depends heavily on the documentation gathered in the first days after the bankruptcy became known, which is why the notice should be built on dated, verifiable records rather than a general assertion that the parties "always net things out."
The numbers
No fixed statutory countdown of exactly ten days appears in the sources reviewed for this note, and any figure of that kind should be treated as a working rule of thumb rather than a deadline set in law. What does carry legal weight are three dates that should be pinned down for every claim: the date the claim itself arose, the date the bankruptcy petition was filed, and the date the receiver issued any call for claims or account confirmations. The gap between the first two dates is what a receiver or a court will look at when deciding whether a set-off reflects an ordinary pre-existing position or an arrangement assembled once insolvency was already visible. Costs on this kind of work are driven less by the number of documents involved and more by how cleanly the claim dates can be evidenced; a running account with contemporaneous invoices and statements costs far less to defend than one reconstructed from memory after the fact.
Where it usually goes wrong
The most frequent failure is assuming that trading with "the group" is the same as trading with the specific legal entity that has gone bankrupt. Claims against a sister company or a parent do not offset a debt owed to the bankrupt subsidiary, no matter how the commercial relationship was described internally.
The second is relying on a contractual netting clause as though it were self-executing. The clause supports the argument for set-off; it does not remove the need to show that the underlying claims were mutual and existed before the bankruptcy.
The third is timing. Restructuring, consolidating or accelerating claims in the weeks before a counterparty's collapse, even where the underlying debts were genuine, invites the receiver to treat the arrangement as an attempt to manufacture an advantage rather than a pre-existing position, and that argument becomes harder to answer the closer the arrangement sits to the petition date.
The fourth is silence. A set-off that is never formally notified to the receiver in writing, and instead sits as an internal accounting entry, carries little weight once the estate's claims process is under way. By the time the point is raised, the estate may already have proceeded on the basis that no set-off was asserted.
Finally, where a foreign element is present, whether a foreign parent, a foreign-law contract, or assets located outside Sweden, the domestic mutuality and pre-existence tests still apply to the Swedish bankruptcy, but a party relying solely on assumptions from its own jurisdiction's insolvency rules will misjudge how the claim is likely to be treated here.
What to do next
The steps above cover what can be assessed and documented without outside help: identifying the correct legal entities, dating the claims, and preparing a written notice to the receiver. What self-assessment cannot safely cover is the point where a claim's timing sits close enough to the petition date that an avoidance challenge becomes a live risk, or where group structures and foreign-law contracts complicate the mutuality analysis. That is where the position needs to be reviewed against the actual documentation before the notice goes out, not after the receiver has already responded.
For background on how boards and creditors are treated when assets move in the period before a bankruptcy filing, see the related review of asset stripping before a bankruptcy filing, which covers the same look-back period from the other side of the transaction. For a broader view of the practice area, the insolvency and restructuring hub sets out how this situation connects to related questions on claims, security and director exposure.
Where the claim value or the timing makes the outcome genuinely uncertain, an assessment of the specific documents and dates is the next practical step. Get in touch to have the claim history reviewed before the notice to the receiver is finalised.