Order on the Reconstruction, Bankruptcy, Compulsory Winding Up or Liquidation of Insurance Undertakings

Order on the Reconstruction, Bankruptcy, Compulsory Winding Up or Liquidation of Insurance Undertakings 1)

Pursuant to Section 218 of Act No. 718 of 13 June 2023 on insurance business, and pursuant to the authorization in Section 1, No. 1, of Order No. 44 of 19 January 2015 on the delegation of powers to the Danish Financial Supervisory Authority, the following is prescribed:

Chapter 1 General Provisions Scope and Definitions

Section 1. This Order applies to insurance undertakings.

Subsection 2. The Order does not apply to reinsurance business.

Section 2. In this Order, the following definitions apply:

1. Liquidation: A collective proceeding which results in the realisation of the assets of an insurance undertaking and, where appropriate, the distribution of the proceeds among creditors, shareholders or members, and which necessarily involves some form of intervention by the competent authorities, including the conclusion of the collective proceeding by a compulsory composition or another similar measure, whether based on insolvency or not, and whether voluntary or compulsory.

2. Liquidator: A person or body appointed to administer the liquidation of an insurance undertaking.

3. Restructuring measures: Measures which involve intervention by the competent authorities with the aim of preserving or restoring the financial situation of an insurance undertaking, and which affect the existing rights of parties other than the insurance undertaking itself, including, but not limited to, measures which involve the possibility of a moratorium on payments, a stay of enforcement measures or a reduction of claims.

4. Administrator: Any person or body appointed to administer restructuring measures.

5. Insurance claim: An amount owed by an insurance undertaking to the insured, policyholders, beneficiaries or any other person who may bring a claim directly against the insurance undertaking, arising from an insurance contract or a transaction related to direct insurance business, including an amount set aside for these persons where the amount owed cannot be determined due to unknown factors.

Subsection 2. The amount owed by an insurance undertaking as a result of the insurance contract or transaction not having been entered into or having been annulled before the commencement of liquidation is also considered an insurance claim, cf. subsection 1, No. 5.

Subsection 3. For branches of insurance undertakings located in a country outside the European Union, the home state is understood to be the Member State within the Union where the branch has obtained permission in accordance with orders on branches of third-country insurance undertakings.

Chapter 2 Choice of Law

Section 3. The reconstruction, bankruptcy, compulsory winding up or liquidation of an insurance undertaking shall be carried out in accordance with the legislation of the country within the European Union or the country with which the Union has concluded an agreement in the financial field, where the insurance undertaking has its registered office, unless otherwise provided in Chapter 4.

Section 4. An application for reconstruction or bankruptcy and a request for the compulsory winding up of an insurance undertaking shall be submitted to a district court in Denmark in accordance with the Bankruptcy Act.

Section 5. Decisions on restructuring measures against or liquidation of insurance undertakings from countries within the European Union or countries with which the Union has concluded an agreement in the financial field shall have binding effect and may be enforced in Denmark, provided that they have such effects in the country where the decision was made.

Subsection 2. The administrator or liquidator is authorised to exercise the same powers as are conferred upon them by the legislation of the country within the European Union or the country with which the Union has concluded an agreement in the financial field, where they are appointed, subject to subsection 3. The exercise of these powers shall be carried out in compliance with Danish legislation.

Subsection 3. The powers of the administrator or liquidator do not include the use of coercive measures, for example, the imposition of information obligations or access to require the inspection of business premises etc., nor the right to resolve arbitration questions or settle disputes.

Chapter 3 Publication

Section 6. Upon the commencement of reconstruction proceedings, the pronouncement of a bankruptcy decree or a decision on compulsory winding up, the district court shall ensure that the decision is published as soon as possible by an extract of the decision in the Official Journal of the European Union. In the case of a decision on liquidation, the liquidator shall ensure that an extract of the decision is published.

Subsection 2. The extract of the decision shall contain at least the following information:

1. The legal basis for the decision.
2. The authority that made the decision.
3. The name and address of the reconstructors, trustees or liquidators.

Subsection 3. The publication shall be in Danish.

Subsection 4. The reconstruction, bankruptcy, compulsory winding up or liquidation shall take effect regardless of whether publication takes place.

Subsection 5. Subsections 1-4 shall not apply when only the rights of the insurance undertaking's shareholders, members or employees are affected, unless otherwise provided in the applicable legislation.

Chapter 4 Reconstructors, Trustees and Liquidators

Section 7. The appointment of reconstructors, the designation of trustees or the designation of liquidators shall be documented by a certified copy of the decision by which the reconstructors, trustees or liquidators are appointed, or by any other certificate issued by the district court.

Subsection 2. The country within the European Union or the country with which the Union has concluded an agreement in the financial field where the reconstructors, trustees or liquidators wish to act may require a translation of the copy into the official language or one of the official languages of that country.

Subsection 3. The reconstructors, trustees or liquidators are authorised to exercise the same powers as are conferred upon them in Denmark, in countries within the European Union or countries with which the Union has concluded an agreement in the financial field, subject to subsection 3. The exercise of these powers shall be carried out in compliance with the legislation of the countries in whose territory the powers are to be exercised.

Subsection 4. The powers of the reconstructors, trustees or liquidators do not include the use of coercive measures nor the right to resolve arbitration questions or settle disputes.

Chapter 5 Registration in the Land Register

Section 8. The reconstructors, trustees or liquidators shall ensure that a reconstruction, bankruptcy, compulsory winding up or liquidation is registered in the land register, the commercial register and any other relevant public register maintained in other countries within the European Union and countries with which the Union has concluded an agreement in the financial field.

Chapter 6 Notification and Registration of Claims Notification of Supervisory Authorities

Section 9. Upon the commencement of reconstruction proceedings, the pronouncement of a bankruptcy decree or a decision on the compulsory winding up of an insurance undertaking, and where the undertaking has branches in other countries within the European Union or countries with which the Union has concluded an agreement in the financial field, the district court shall immediately notify the Danish Financial Supervisory Authority.

Subsection 2. The Danish Financial Supervisory Authority shall notify the supervisory authorities in the countries within the European Union or the countries with which the Union has concluded an agreement in the financial field where the insurance undertaking has branches, of any notification from the district court, cf. subsection 1, as well as of the possible concrete consequences thereof. The Danish Financial Supervisory Authority shall also notify the supervisory authorities of any decision on liquidation and of the possible consequences thereof. Notification of Known Creditors

Section 10. When a reconstruction, bankruptcy, compulsory winding up or liquidation has been commenced, the reconstructors, trustees or liquidators shall immediately and individually notify in writing the known creditors who have their habitual residence, domicile or registered office in another country within the European Union or in a country with which the Union has concluded an agreement in the financial field.

Subsection 2. The notification pursuant to subsection 1 shall in particular contain information on the following:

1. Time limits.
2. Sanctions if the time limits are not observed.
3. Where claims must be registered.
4. Whether creditors with privileged claims, separate standing or other preferential rights must register their claims.
5. In the case of insurance claims, the general consequences for the insurance contracts, including in particular on which date these cease to have effect, and the rights and obligations of the insured under the insurance contract.

Subsection 3. The notification pursuant to subsection 1 shall be in Danish. However, if a known creditor has an insurance claim, the notification shall be given in the official language or one of the official languages of the Member State where the creditor has their habitual residence, domicile or registered office.

Subsection 4. In the notification, a form with the following heading in all official languages of the European Union shall be used: "Call for registration of claims. Specified time limits must be observed."

Section 11. In the event of compulsory winding up or liquidation, the liquidator shall regularly and in an appropriate manner notify creditors of the progress of the liquidation.

Subsection 2. The supervisory authorities in countries within the European Union or in countries with which the Union has concluded an agreement in the financial field may request the liquidator to be notified in accordance with subsection 1. Registration of Claims

Section 12. Creditors who have their habitual residence, domicile or registered office in another country within the European Union or in a country with which the Union has concluded an agreement in the financial field have the right to register their claims.

Subsection 2. Claims from creditors mentioned in subsection 1 shall be treated in the same way and with the same rank as corresponding claims that can be registered by creditors who have their habitual residence, domicile or registered office in Denmark.

Subsection 3. The creditor shall send a copy of any documentation for the claim and state:

1. The nature and amount of the claim.
2. When the claim arose.
3. Whether the creditor claims that it is a privileged claim, separate standing or other preferential right.
4. Which assets any security covers.

Subsection 4. Registration of claims pursuant to subsection 1 may take place in the official language or one of the official languages of the country where the creditor has their habitual residence, domicile or registered office. However, the registration must be headed "Registration of claim" in Danish.

Chapter 7 Effects of the Reconstruction, Bankruptcy, Compulsory Winding Up or Liquidation of an Insurance Undertaking Certain Contracts and Rights

Section 13. The effects of the reconstruction, bankruptcy, compulsory winding up or liquidation of an insurance undertaking shall be governed by the following legislation:

1. Employment contracts and employment relationships shall be governed by the legislation of the country within the European Union or the country with which the Union has concluded an agreement in the financial field, which applies to the employment contract or employment relationship.
2. Contracts granting rights to use or purchase immovable property shall be governed by the legislation of the country within the European Union or the country with which the Union has concluded an agreement in the financial field, where the immovable property is located.
3. Rights over immovable property, ships or aircraft, which are required to be registered in a public register, shall be governed by the legislation of the country within the European Union or the country with which the Union has concluded an agreement in the financial field, where the register is maintained. Third-Party Proprietary Rights

Section 14. The reconstruction, bankruptcy, compulsory winding up or liquidation of an insurance undertaking shall not affect the rights of a creditor or a third party over tangible or intangible assets, including movable property or immovable property, belonging to the insurance undertaking, which at the time of the commencement of the reconstruction, bankruptcy, compulsory winding up or liquidation are located or registered in a public register in another Member State and can be asserted against third parties.

Subsection 2. Third-party rights pursuant to subsection 1 include at least:

1. The right to realise the asset or have it realised and to be satisfied from the proceeds or income thereof, in particular by pledge, including pledge in immovable property.
2. The exclusive right to collect a claim, in particular a right secured by pledge in the claim or by transfer for security.
3. The right to demand the return of the asset or to claim compensation from anyone who possesses or uses it against the will of the right holder.
4. The right to collect the yield of an asset. Retention of Title

Section 15. The reconstruction, bankruptcy, compulsory winding up or liquidation of an insurance undertaking shall not affect the seller's rights under a retention of title clause, when the asset subject to the retention of title is located at the time of the commencement of the reconstruction, bankruptcy, compulsory winding up or liquidation in another country within the European Union or in a country with which the Union has concluded an agreement in the financial field, than the country where the reconstruction, bankruptcy, compulsory winding up or liquidation is commenced.

Subsection 2. The reconstruction, bankruptcy, compulsory winding up or liquidation of an insurance undertaking does not entitle to the termination or annulment of the sale of an asset that has been delivered, and does not prevent the buyer from acquiring ownership of the asset, when this asset at the time of the commencement of the reconstruction, bankruptcy, compulsory winding up or liquidation is located in another country within the European Union or in a country with which the Union has concluded an agreement in the financial field, than the country where the reconstruction, bankruptcy, compulsory winding up or liquidation is commenced. Set-off

Section 16. The reconstruction, bankruptcy, compulsory winding up or liquidation of an insurance undertaking shall not affect a creditor's right to set off their claim against the insurance undertaking's claim, when the legislation applicable to the undertaking's claim allows such set-off. Regulated Markets

Section 17. Notwithstanding Section 14, the effects of a reconstruction, bankruptcy, compulsory winding up or liquidation on the rights and obligations respectively belonging to and incumbent upon participants in a regulated market shall be governed exclusively by the legislation of the country within the European Union or the country with which the Union has concluded an agreement in the financial field, whose legislation applies to the market in question. Acts Prejudicial to Creditors

Section 18. Notwithstanding Sections 14-17, an action may be brought for the nullity, avoidance or challenge of legal acts which are prejudicial to all creditors.

Section 19. The nullity, avoidance or challenge of legal acts which are prejudicial to all creditors shall not be governed by Danish law, when the person who benefited from the legal act can prove:

1. That the legal act is covered by the legislation of another country within the European Union or in a country with which the Union has concluded an agreement in the financial field, and
2. That this legislation in no way allows for the challenge of the legal act in the case in question. Protection of Purchasing Third Parties

Section 20. When an insurance undertaking disposes of certain assets after the commencement of reconstruction proceedings, the pronouncement of a bankruptcy decree or a decision on compulsory winding up or liquidation, the following legislation shall apply:

1. In the case of immovable property: the legislation of the country within the European Union or the country with which the Union has concluded an agreement in the financial field, where the immovable property is located.
2. In the case of ships or aircraft, which are required to be registered in a public register: the legislation of the country within the European Union or the country with which the Union has concluded an agreement in the financial field, where the register is maintained.
3. In the case of securities or other documents, the existence or transfer of which presupposes registration in a register or on an account regulated by law, or which are held in a securities depository: the legislation of the country within the European Union or the country with which the Union has concluded an agreement in the financial field, where the register, account or securities depository is maintained or administered. Pending Litigation

Section 21. The effects of reconstruction, bankruptcy, compulsory winding up or liquidation on pending litigation concerning an asset or a right forming part of the bankruptcy estate shall be governed by the legislation of the country within the European Union or the country with which the Union has concluded an agreement in the financial field, where the litigation is pending.

Chapter 8 Branches of Third-Country Insurance Undertakings

Section 22. Branches of insurance undertakings located in a country outside the European Union shall be treated individually in the application of this Order, regardless of whether the insurance undertaking has branches in several countries within the European Union.

Chapter 9 Entry into Force

Section 23. This Order shall enter into force on 1 January 2025.

Subsection 2. Order No. 1272 of 27 November 2017 on the reconstruction, bankruptcy, compulsory winding up or liquidation of insurance undertakings is repealed.

The Danish Financial Supervisory Authority, 5 December 2024 Louise Mogensen / Line Bergmann

1. The Order contains provisions implementing parts of Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II), OJ 2009, No. L 335, p. 1, and Directive 2014/51/EU of the European Parliament and of the Council of 16 April 2014 amending Directives 2003/71/EC and 2009/138/EC and Regulations (EC) No 1060/2009, (EU) No 1094/2010 and (EU) No 1095/2010 as regards the powers conferred on the European Supervisory Authority (European Insurance and Occupational Pensions Authority) and the European Supervisory Authority (European Securities and Markets Authority), OJ 2014, No. L 153, p. 1.

Danish Law Journal A 2024 Published on 11 December 2024 5 December 2024. No. 1481. Ministry of Business Affairs, Danish Financial Supervisory Authority, file no. 24-019436 CQ003077