NORWAY Law and Practice Contributed by: Ida Marie Windrup, Kristine Hjertenæs, Markus Nilssen and Daniel Jovanovic, BAHR
6. Guarantees 6.1 Types of Guarantees
Nonetheless, under Norwegian bankruptcy law, transactions made by the company and which are deemed “extraordinary” in the circumstances before bankruptcy, or which give rise to a fraud- ulent preference of certain creditors, can sub- sequently be set aside by the courts following a request from the bankruptcy estate manager, and such extraordinary payments can include: payments made by other means than money (transfer of assets); payment made prior to the original maturity date; and payments that have substantially weakened the debtor’s financial position (at the expense of other creditors). 7.2 Claw-Back Risk General Under Norwegian insolvency law, there are certain overriding claw-back provisions which may, for certain transactions entered into shortly before opening of insolvency proceedings, being considered objectively unfair to other creditors of the insolvent party or also in other circum- stances, be invoked by the administrator of the insolvency estate and reversed/avoided provid- ed that the debtor was in a distressed financial situation at the time, or if deemed necessary to prevent the creditors from being deprived of assets. In general, claw-back rules can be used by a bankruptcy estate to reverse transactions com- pleted within a certain time period before the day that the debtor (or its creditors) files petition for bankruptcy ( fristdagen / the “Bankruptcy Date” ), provided that the petition is affirmed by the court and bankruptcy proceedings are commenced. The time periods during which a transaction may be subject to claw-back vary (eg, if the parties are closely related, the period is extended). Further, a violation of the restrictions on financial assistance or acquisitions can result in guaran-
Acquisition financing transactions will typically be structured without guarantees above bidco, except for a charge over the shares in bidco. One development to note, is that a new Financial Agreements Act went into effect on 1 January 2023, under which it is for instance no longer mandatory to include the maximum liability applicable to Norwegian guarantors. Although the general view in Norway has been that this was not mandatory when it came to foreign law documents, it was still preferred by many (including leading banks) to include this together with customary limitation language applicable to Norwegian guarantors even in foreign law loan agreements. With this change in law, the market practice has changed so that it is not included in foreign law documents, while still being pre- ferred in Norwegian law documents. 6.2 Restrictions Please see 5.5 Financial Assistance . 6.3 Requirement for Guarantee Fees Pursuant to the Norwegian Companies Act, transaction and financial assistance made with- in the group shall also be on ordinary business terms, thus implying that guarantee fees shall be charged as if the parties were third parties. 7. Lender Liability 7.1 Equitable Subordination Rules Under Norwegian law, there is no concept of equitable subordination, nor does it embrace a related legal doctrine that would allow a bank- ruptcy court to rearrange precedence of claims during a court-led restructuring of a company.
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