DENMARK Law and Practice Contributed by: Henrik Sjørslev, Peter H. Knudsen, Henrik Lund-Koefoed and Levent Kitir, DLA Piper Denmark
cy rank prior/over all the foregoing; other than that, the waterfall scheme is the same. New money added during a formal restructuring pro - cess is considered debt incurred with the consent of the administrator and therefore ranks very highly in the order of priority of claims. Likewise, new money add - ed during a bankruptcy is considered debt incurred during the bankruptcy and therefore ranks even higher in the order of priority of claims. Please also see 2.3 Secured Creditors . 2.2 Priority Claims in Restructuring and Insolvency Proceedings Regarding whether there are any priority claims in restructuring and insolvency proceedings and their relation to secured creditor claims, please see 2.1 Types of Creditors . 2.3 Secured Creditors A mortgage over real estate must be registered with the land register. A pledge over non-negotiable and unlisted shares must be registered with the company in the register of shareholders. A mortgage over nego - tiable unlisted shares, or over listed shares, must be registered with the financial institution that keeps the company’s register of shareholders. A mortgage over movable property (aside from aircraft and ships) must be registered with the land register. Historically, Danish law has not allowed for the crea - tion of floating charges; therefore, mortgage rights had to attach to specific identifiable assets. One of the few exceptions to this rule is floating charges over a business’s outstanding debtors, inventory, operating equipment, livestock, intellectual property and certain vehicles ( virksomhedspant ). Such a floating charge must also be registered with the land register. Danish law distinguishes between two types of secu - rities: pledges and mortgages. A security right con - sisting of a floating charge covering receivables is considered a pledge even though a floating charge covering, for instance, inventory and operating equip - ment is considered a mortgage.
A creditor secured by way of a pledge is free to enforce their pledge irrespective of either a bankruptcy or a restructuring. A creditor secured by way of a mortgage is, in the event of an in-court restructuring of a debtor, not allowed to enforce their security right over the assets, provided a debtor services the secured debt. If the debt is only partially secured (ie, the asset does not provide full security for the secured claim), a debtor is only required to service the secured proportion of the debt. Only in the event of a debtor failing to service the secured (part of the) debt may a creditor enforce the mortgage. In the event of a debtor’s bankruptcy, the trustee is afforded a period of six months to liquidate the assets of the estate, including mortgaged assets. Once the six-month period elapses, any mortgagee may request the trustee put the mortgaged asset up for public auction, and the trustee is required to com - ply with such a request immediately. A fully secured creditor is not eligible to participate in any voting at creditor meetings and is therefore not able to disrupt the process. A partially secured credi - tor may exercise voting rights proportionate to the unsecured portion of their claim. However, subject to the condition that the debtor in restructuring proceed - ings has requested voting classes, secured creditors are eligible to vote in their own voting class. A trustee must adjudicate the creditor’s security and verify the merits of a claim, but other than that no special procedural rules apply to secured creditors. 2.4 Unsecured Creditors Creditors may, in general, perform set-off if both the main claim and the counterclaim are created either prior to or after the reference date and/or the open - ing of insolvency proceedings. However, in in-court restructuring proceedings, some restrictions on the right to set-off do exist. Creditors may also retain ownership for goods until payment is made, in compliance with the rules of the Danish Credit Agreements Act. For certain types of assets, retention of ownership is subject to specific perfection duties to become valid in case of insol -
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