NORWAY Law and Practice Contributed by: Ida Marie Windrup, Daniel Jovanovic, Markus Nilssen and Steffen Rogstad, BAHR
7.5 Risk Areas for Lenders Key Risks Enforcement restrictions
• security for existing debt or security which was not perfected without undue delay after the debt was incurred. Private credit lenders should ensure that secu - rity packages are properly documented, perfected promptly, and supported by adequate consideration to minimise avoidance risk. 7.7 Set-Off Rights Set-off rights are recognised and protected in Nor - wegian insolvency proceedings, provided the require - ments for set-off under Norwegian law are met. This typically requires that both claims are due and paya - ble, arise between the same parties, and existed prior to the opening of insolvency proceedings. 7.8 Out-of-Court v In-Court Enforcement A typical private credit out-of-court restructuring in Norway involves direct negotiations between the bor - rower and its creditors to amend loan terms, including covenant waivers, payment holidays, additional equity injections, or operational covenants designed to sta - bilise the business. Given the concentrated nature of private credit financing – often a single lender or small club – these negotiations can proceed relatively quickly and confidentially. Co-operation from equity holders is typically essen - tial, particularly where the restructuring contemplates additional equity investment, management changes, or operational restrictions that affect shareholder rights. In many cases, sponsors or existing share - holders are required to inject fresh equity, subordinate shareholder loans, or forfeit certain governance rights as a condition of lender consent. In-court processes provide several advantages that are unavailable in out-of-court restructurings: • the ability to bind dissenting (unsecured or under - secured) creditors through forced accords; • protection from individual creditor enforcement through the statutory moratorium; • court supervision and oversight, which can enhance credibility and transparency; and • the potential to acquire assets free and clear of certain claims through court-supervised sales.
In the first six months after debt negotiations are opened, enforcement cannot be carried out without the consent of the debt committee. This creates a risk that secured creditors, in the absence of secu - rity qualifying as financial collateral, will face delays in realising their collateral even when security is properly perfected. Security complications After debt negotiations are opened, assets previously acquired by the debtor are not covered by security rights established before the opening unless the debt committee consents. This can be particularly prob - lematic for lenders with floating charges or all-asset security packages that contemplate after-acquired property. Forced restructuring See 7.9 Dissenting Lenders and Non-Consensual Reconstructurings . Transaction claw-back If the debtor’s dispositions are subject to claw-back under the Debt Recovery Act ( dekningsloven ), the avoidance claim can be made by the debt committee. This creates claw-back risk for recent security grants, guarantees or payments made during the hardening period prior to insolvency. 7.6 Transactions Voidable Upon Insolvency Under Norwegian law, voidable transactions typically include: • security grants or guarantees provided without adequate consideration during the hardening period (generally three months to five years prior to insolvency, depending on the circumstances); • payments made to creditors that prefer one credi - tor over others during the suspect period; • under-value transactions where the debtor dis - posed of assets for less than fair market value; • transactions entered into with the intent to defraud creditors or while the debtor was insolvent and the counterparty knew or should have known of the insolvency; and
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