The Norwegian government proposes to continue the law that will help companies threatened with bankruptcy
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In the wake of the koruna pandemic, the government proposed changing the rules for debt negotiation to help viable businesses suffering from severe income shortages. The government is currently submitting a consultation proposal on the continuation of the temporary law on reconstruction until January 1, 2023. At the same time, work is underway on proposals for permanent regulations.
– Even though we have started reopening after the corona pandemic, we know that many companies are still struggling. That's why we will continue with recovery legislation that can help companies at risk of bankruptcy. The Recovery Act is not directly related to the infection situation, but to the long-term economic effects of the pandemic, says Minister of Justice and Crisis Management Monica Mæland.
The government wants companies to have access to good tools to avoid bankruptcy even after a pandemic
According to Brønnøysundregistrene
Between the entry into force of the law on May 11, 2020 and the beginning of June 2021, 23 reconstruction negotiations were launched. The purpose of the consultation is to ensure that the tools introduced with the temporary right are available until a permanent legal framework for reconstruction is in place.
- The government wants companies to have access to good tools to avoid bankruptcy even after a pandemic. The Ministry of Justice and Emergency Preparedness has therefore started work on permanent reconstruction legislation, says Justice and Crisis Management Minister Monica Mæland.
The Act allows for a temporary exemption from the public preferential right to claims for tax and value added tax
The Recovery Act involves changes in several aspects from the previous debt negotiation legislation in the Bankruptcy Act. Including reorganization negotiations can start at an earlier stage, a reorganization plan is easier to adopt, and a debt-to-equity swap can be performed as part of the reorganization. In addition, the Act allows for a temporary exemption from the public preferential right to claims for tax and value added tax, and provides for the possibility of securing loans for financing under construction with priority over all other mortgages. The protection of the debtor against the opening of bankruptcy and the introduction of compulsory insurance in restructuring negotiations has also been strengthened.
The Norwegian government will help companies
The Consultation Note also proposes that the provisions on simplified reorganization negotiations for small businesses and the provisions on temporary exemptions from the rebuild priority rules, which introduce temporary exemptions from public preferential right to tax and VAT claims etc., should be continued until 1 January 2023. .
