sou 1999 1 - Regeringen

SOU 1999:1 Summary 29
Summary
Current rules
The current Swedish right of priority legislation is set forth in the Right of
Priority Act (SFS 1970:979).
The rules become applicable after property that belongs to a party other
than the bankrupt debtor (in U.K. the debtor in insolvent liquidation) is
excluded from the estate. This means that property belonging to, for example,
consignors, sellers under sales pursuant to retention of title clauses, and
lessors, is not included in the estate. With respect to retention of title
clauses, however, it should be noted that under Swedish law retention of
title clauses are invalid against the buyer’s creditors if the buyer had obtained
permission to resell, process, or use the property prior to making
payment to the seller. Nor is property that a person has purchased from the
future debtor in bankruptcy included in the estate. With regard to chattels,
there is, however, an important additional condition. In order to be protected
against the seller’s creditors, the buyer must have taken the purchased
chattels into his possession, or have registered his acquisition with the court,
prior to the granting of the bankruptcy petition.
Under Swedish law, creditors possessing security interests in personal or
real property are creditors in the bankruptcy. They possess the superior
right to payment from the security interest (section 4 of the Right of Priority
Act). Property subject to security interests cannot be encumbered with expenses
of the bankruptcy other than such as are related to the custody or
sale of the property (Chapter 14, section 18 of the Bankruptcy Act,
1987:672). Creditors with possessory liens, e.g. as a result of a contract for
repair, are equated with security interest holders.
Before the other creditors can obtain dividends, the estate’s expenses and
liabilities must be paid from those assets in the bankruptcy which are not
encumbered with security interests (Chapter 11, section 1, and Chapter 14,
section 18 of the Bankruptcy Act). Subject to certain simplifications, the
following then applies with respect to the right of priority.