1.1 Amicable Phase

1.1.1 General

Accounts Receivable Denmark provides a professional debt recovery process to our clients while focusing on the relationship between the creditor and debtor. Our goal is for our in-house professionals to achieve an amicable resolution of all claims, and we will contact debtors both via telephone and via correspondence to their physical address when working to accomplish that resolution. All of our services are based in-house, affording great control and quality over the process.

If a dispute arises between the creditor and the debtor, it is the policy of Accounts Receivable Denmark to pursue a resolution by examining any signed contracts, delivery orders, confirmations, outstanding invoices, and other documents, to promote a swift and favorable outcome. Any investigations done to further this process are conducted with the help and approval of our own in-house legal team.

1.1.2 Local agent

For visiting debtors in Denmark, Accounts Receivable Denmark does offer field agent visits. Our goal when pursuing these in-person visits is to understand the debtor’s financial situation and judge how to best proceed with the case against them. Our field agents will also work to collect any debts owned to our clients, or negotiate a settlement of those debts. They will also seek an acknowledgment of the debt in order to ensure a successful legal proceeding, should one arise. Information about the debtor’s business or home addresses will also be obtained in many cases.

After a visit has been conducted, the client will get a full report about the information that was discerned by our field agent. The next steps in the process will then be recommended to the client based on the acquired information. This service costs between 850.00 DKK and 1,250.00 DKK.

1.1.3 Interests

Interest is always added to the outstanding balance owed by a debtor when pursuing collection. This interest rate is governed by Denmark’s Act of Consolidated Law on Interest on Overdue Payment 743, passed in 2002. That law stipulates the following policies:

- Debt must be charged at a rate agreed to by the creditor and debtor in any original contract or terms and conditions documentation

- Debt can alternatively be calculated by using a flat formula when no agreement exists between the creditor and debtor regarding the interest rate to be paid. In this case, the rate is based on the reference rate set by the National Bank of Denmark. That rate is altered twice per year, and our agents will use the most recent rate. An additional 7 percent interest rate is than added to the bank’s preference rate in these cases.

Danish debtors are used to paying interest on debt, and this is typically non-negotiable.

1.1.4 Debt collection costs

As regulated by the Act of Consolidated Law Extrajudicial Collection Costs 601, Accounts Receivable Denmark does have the ability and the right to charge collection cots to the debtor. These costs are added to the balance of the outstanding debt, and Danish debtors are used to paying these costs when they settle or reduce a debt. This is typically not an area of negotiation during the amicable phase.

All recovered costs will be passed on by Accounts Receivable Denmark to our clients as a reduction in their fee for pursuing the collection in the first place.

1.1.5 Prescription

The state of limitations in Denmark lasts three years from the original due date of the outstanding invoice or account statement. For transport claims, that period is quite a bit shorter and lasts just one year from the date of the delivery. This follows regulations set forth in the CMR Convention of Geneva.

The statute of limitations can be suspended or restarted based on Danish regulations in one of several cases:

- If negotiations between the debtor and the creditor are in progress and one party refuses to continue the negotiation process

- If a right to refuse performance occurs

- If the debtor acknowledges the debt via a partial payment, interest payment, or the offering of securitization against the debt

- If a legal proceeding is pursued by either party

1.1.6 Accepted and most common payment methods

Most debtors in Denmark prefer to satisfy their obligation by using a bank transfer, though a limited number of debtors do still prefer to write paper cheques. Accounts Receivable Denmark currently does not offer the direct booking of payments via debtors’ bank accounts unless it is done by one of our local lawyers in the country.

1.1.7 Types of companies

Several types of companies exist in Denmark, each with different liabilities and regulations. They include:

Enkeltmandsvirksomhed (sole proprietorship):

The business owner has unlimited liability and can cover debts with private funds. The debtor’s full name must be known in order to pursue any outstanding balances.

Interessentselskab I/S (General partnership):

Partners have unlimited liability, and there is no minimum capital requirement.

Kommanditselskab K/S (General partnership):

Partners have unlimited liability, and no minimum capital requirement.

Anpartselskab ApS (Private limited company):

Liability is limited to company capital, which must be at least 80,000.00 DKK divided into company shares.

Aktieselskab A/S (Joint-stock company):

Liability is limited to company capital, which must be at least 550,000.00 DKK divided into shares.

1.1.8 Sources of information

Credit reporting agencies are used by our professionals in Denmark when researching a debtor’s financial situation and other assets that can help enforce a debt or execute a judgment. This credit reporting procedure is combined with our own telephone contacts in order to ensure that we have access to the most accurate picture of the debtor’s financial situation. Once we have received all of the information needed, Accounts Receivable Denmark will make a recommendation on how to proceed with further collection actions against the debtor.

In some cases, information can be obtained from public registers when seeking to learn about a debtor’s financial position or assets. This can only be done when the debtor is a trader who has registered with the Municipal Trade Office. Obtaining information from this office will also cause a fee to be charged to the client.

In Denmark, all residents are required to register with the country’s Registration of Address office in the town where they have a residence or business. This allows Accounts Receivable Denmark to trace the debtor and make sure that communication can be maintained even if the debtor moves between towns without supplying their new address to our professionals. In some cases, debtors do not adhere to this requirement and thus cannot be traced. A fee will be incurred by our clients will accessing this information, as the Registration of Address office does require a small fee to access the latest whereabouts of any individual. This fee will be valid even if no information can actually be found about the debtor’s location.

1.2 Retention of Title

Retention of Title is hardly ever used in Denmark, even if it has been previously agreed to be the creditor and the debtor. This is largely because Retention of Title is hard to enforce in Denmark, and therefore not considered a viable option when recovering a debt.

Any goods subject to ROT must be detailed very specifically by the creditor. Merely counting and claiming the inventory will not be sufficient in most cases.

1.3 Acknowledgement of the debt (frivilligt forlig / skyldnererklæring)

In many cases, a debtor simply will not be able to provide quick and full satisfaction of the balance they owe. If this is the case, it will be the policy of Accounts Receivable Denmark to request securitization of the debt in favor of our client. This is typically done amicably, and is actually a very affordable way to ensure the debtor makes payment in good faith. A written payment arrangement is drafted and is delivered alongside a special judicial document that allows a bailiff to execute the debtor’s obligation in the event that the agreement is not followed. While it is our preference to find an amicable solution, we will immediately pursue legal action if a debtor does not follow the agreement reached during securitization. Arrangements of up to ten months are typically drafted, though it is our preference to reach a much shorter agreement for our clients.

1.4 Legal Procedures

1.4.1 General

The Administration of Justice Act governs the Danish Court system, which is split into three tiers. The country has 82 local courts, two district courts, and a single supreme court. Legal procedures through these courts will only occur after a ten-day notice has been issued to the debtor notifying them that legal action may be pursued. That document must include some required information:

- A ten-day notice
- The name of the creditor
- The full amount of the debt owed
- A notice that failure to pay will result in legal costs and other fees
- A notice that failure to pay will lead to legal proceedings against the debtor

1.4.2 Legal System

Debts less than 100,000.00 DKK are pursued through the Bailiff’s Court. If the debtor does not dispute the debt, a payment order will be issued. This is essentially a judgment, and represent the most affordable legal proceeding that can be taken, at between 700.00 DKK and 1,350.00 DKK. The procedure is also quick, taking between six and twelve months to complete.

Debts larger than 100,000.00 DKK will require a lawyer to file a claim with the court against the debtor. The creditor must obtain a judgment before legal action can proceed further. Judgments in this type of case typically cost 1,350.00 DKK plus 0.5 percent of the amount of the debt over 100,00.00 DKK. Lawyers’ fees will also be incurred, and the proceeding will take a maximum of 12 months. After the judgment has been issued, any failure of the debtor to adhere to the judgment will send the case into the execution phase.

1.4.3 Required documents

Legal proceedings in Denmark require rather extensive documentation in order to stand the best chance of a favorable outcome for the client. This documentation includes:

- Copies of the contract
- Copies of any invoices, outstanding or otherwise
- Copies of account statements, including payments or credits toward the debt’s balance

If the case proceeds to a standard lawsuit, or if the debtor files a dispute against the creditor, Accounts Receivable Denmark will require the following documents in order to proceed toward a favorable outcome:

- Copies of the complete contractual agreement
- Copies of delivery notices, orders, and order confirmations
- Documentation of the business relationship between the parties
- Notes pertaining to oral agreements and conversations
- Witnesses or experts necessary to prove the debt’s validity

1.4.4 Lawsuit

A lawsuit is begun immediately after amicable collection procedures have failed to produce the desired results for the client. Additionally, a lawsuit can begin immediately after a debtor has filed a dispute against the creditor. This involves a written pre-procedure, where both sides will exchange documents and research with the court via postal mail. No physical presence is required at the court during this time. When the judge is fully satisfied with the information that has been exchanged and provided, a hearing will be scheduled. Both the creditor and the debtor must attend that hearing. At the hearing’s conclusion, the judge will issue a date on which the judgment will be issued. Both parties will be informed of the judgment and the case’s outcome via writing by the court where the hearing took place.

1.4.5 Appeal

It is possible to appeal a judgment in Denmark. Doing so will send the case to the court of second instance — typically a district court or a high court. In case of a second appeal, the case will go to the court of third instance. There, the case will only be evaluated based on whether or not the country’s laws and regulations were properly followed.

1.4.6 Costs

The civil law procedure in Denmark determines costs based on regulations established by the Ministry of Justice. All costs charged will depend on the amount of the debt being pursued. Different fees may also apply during the lawsuit, including document fees, making a final cost hard to fully estimate. Costs for witness or experts will further increase these costs. An estimation will be done only on a case-by-case basis.

1.4.7 Expected timeframe

Lawsuits can take up to 12 months in most cases, and even longer in cases that are exceedingly complex.

1.5 Enforcement

1.5.1 Enforcement in debt

Enforcement proceedings are overseen by the Bailiff’s Court, and only take place after a judgment or acknowledgement has been issued to the debtor. The debtor’s assets will be examined in order to determine whether or not those assets will be able to fully satisfy the debt in favor of the creditor. If so, they can be taken as security for the debt and sold by the creditor as permitted by Danish regulations. Debtors will often refuse to attend these hearings in an effort to delay the seizing of any assets. If this occurs, Accounts Receivable Denmark will need to prolong execution until police have been able to locate the debtor and force them to appear at the hearing.

Enforcement costs vary based on the size of the outstanding debt. A 300.00 DKK fee is charged for the proceeding, plus a 0.5 percent fee based on the amount owed above 3,000.00 DKK.

1.5.2 Expected timeframe

Enforcement typically takes between six and twelve months to complete.

1.6 Insolvency Proceedings

1.6.1 General

The goal of insolvency in Denmark is to pay out all creditors with an equal dividend based on the value of a debtor company’s liquidated assets. For private debtors, enforceable income is collected to pursue the same goal. Four procedures currently exist:

- Restructuring for private debtors
- Bankruptcy
- Dissolution
- Reconstruction for commercial debtors

1.6.2 Proceedings

The court will appoint a liquidator if the insolvency case is allowed to proceed. This liquidator will investigate the debtor’s assets and determine whether or not they can cover a sizable dividend that will be paid to creditors. If the costs and debts can be sufficiently covered, then the proceedings begin in earnest and the court will appoint a second liquidator. If any other procedure is followed, the court will reject the insolvency petition due to a lack of assets.

After insolvency has been permitted to proceed, creditors can file a claim with the court for a portion of the issued dividend. Those claims will be approved or denied by the appointed liquidator. In cases where Retention of Title is involved, the appointed liquidator will gather the information necessary to determine whether the creditor can recover those goods.

At the conclusion of the insolvency proceeding, creditors with an accepted claim will receive a dividend in cases where assets are sufficient enough to provide one. Many cases in Denmark do, however, end with no dividend being paid.

1.6.3 Required documents

To lodge a claim during insolvency, we will require the following documentation:

- Copies of any outstanding invoices

1.6.4 Expected timeframe and outcome

Insolvency cases in Denmark are relatively quick, lasting between one and three years in all but the most complex cases.

1.7 Arbitration and Mediation

Arbitration and mediation are both used in Denmark during disputes lodged against a creditor or debtor. Arbitration is regulated by guidelines in the UNCITRAL Model Law. If parties do agree to settle a case based on arbitration rules, such an agreement is presided over by the Institute of Arbitration. Mediation can also be used, as allowed by guidelines in the country’s Mediation of Arbitration regulations. After hearing both parties’ cases, the appointed mediator will make a judgment that both parties must agree to. That judgment is then immediately enforceable.

To get started today, call us at321-710-3530 to speak with an associate
Send Page To Friend/Bookmark