Sweden: A Restructuring/Insolvency Overview

Introduction

Sweden’s restructuring and insolvency market in 2026 is at an inflection point. After several years of heightened pressure — driven by post-pandemic inflation, rising interest rates and the delayed effects of corporate distress — conditions are beginning to moderate. Bankruptcy volumes, which in 2024 reached their highest levels since the financial crisis of the 1990s, fell significantly in 2025 and have continued to decline in early 2026. The nature of restructuring work has shifted accordingly: large cross-border mandates have become less prominent, while more localised Swedish and Nordic matters have come to the fore, and the client base has returned to a more traditional high-yield profile.

The legal framework governing this activity is also developing at pace. The Company Restructuring Act, introduced in 2022 as a modernised and more flexible alternative to bankruptcy, is now generating important case law as it approaches its fourth anniversary. Courts are beginning to grapple with fundamental issues concerning creditor rights, plan confirmation and the scope of judicial review. Legislative reform is advancing in parallel, with jurisdiction over insolvency proceedings now concentrated in a smaller number of more specialised courts.

The outlook remains finely balanced. Geopolitical uncertainty, particularly the Iran war, could reignite inflation pressure and trigger a renewed increase in corporate distress. At the same time, the EU Insolvency Harmonisation Directive is expected to modernise key aspects of Swedish insolvency law. Combined with a growing body of domestic case law, these reforms should enhance the predictability and attractiveness of Sweden’s restructuring framework for international investors and creditors.

Market Trends and Economic Conditions

In recent years, restructuring and insolvency activity in Sweden has been elevated, with bankruptcies in 2024 reaching their highest level since the financial crisis of the 1990s. Activity moderated in 2025 as interest rates and inflation stabilised, although consumer spending has yet to recover to pre-2022 levels. Against a more positive market outlook and a broader shift towards growth, Swedish bankruptcies levelled off in in 2025, and the number of employees affected fell by 7%. This downward trend continued into early 2026, with April figures showing a 14% year-on-year decline in the actual number of bankruptcies. In-court restructurings have followed the same trajectory, with filings in January to April 2026 running 56% below the equivalent period in 2025. (Swedish Agency for Growth Policy Analysis, Konkurser och offentliga ackord 2025 and Konkurser i april 2026, available at tillvaxtanalys.se; Creditsafe, Rekonstruktion i Sverige – statistik och utveckling 2026, available at creditsafe.com.)

As financial conditions have improved, market activity has shifted away from the large corporate clients that dominated the past three years. The client base has returned to a more typical profile, led by high-yield bond issuers across sectors including real estate, retail, media and automotive. Restructuring mandates have also become more localised, moving away from large cross-border processes towards Swedish and broader Nordic matters.

In recent years, several major Swedish corporates pursued US Chapter 11 proceedings. This trend has stalled amid broader economic improvement, and may also have been influenced by the widely publicised inability of Swedish battery developer Northvolt to successfully emerge from the Chapter 11 process it initiated in late 2024.

Legal Developments

In 2025, Swedish restructuring law continued to develop rapidly. Legislative reform has since advanced in parallel, with changes aimed at streamlining insolvency proceedings taking effect on 1 July 2026.

Two appellate decisions have limited the absolute priority rule to creditor or shareholder classes directly affected by a restructuring plan. This may allow shareholders to retain equity despite creditor write-downs, creating a controversial loophole and potential risks for subordinated, unsecured and, if interpreted broadly, even secured creditors. However, the issue remains unsettled: the decisions may be challenged in future cases, and the Supreme Court has not yet ruled on the matter.

A further appellate decision held that, once the 15-month statutory time limit on restructuring has expired, a higher court cannot confirm a plan rejected by a lower court. The same reasoning may also prevent a higher court from overturning a confirmed plan after the time bar, even if the plan fails to meet cross-class cramdown requirements, raising concerns about creditors’ access to effective judicial review. Here too, the legal position remains uncertain, as the Supreme Court has yet to address the issue.

Legislatively, the government has decided to concentrate bankruptcy and company restructuring cases in fewer district courts. From 1 July 2026, bankruptcy cases have been handled by 12 district courts, rather than by all 48 district courts as was previously the case. Company restructurings are concentrated in four district courts: Sundsvall, Stockholm, Gothenburg and Malmö. In addition, several tasks that had historically been performed by courts in bankruptcy cases were transferred to bankruptcy administrators. These measures form part of a broader reform aimed at modernising and streamlining insolvency proceedings and freeing up court resources.

Together, these developments show a maturing framework in which courts and legislators are beginning to address core questions of Swedish restructuring law.

Looking Ahead

Recent market volatility triggered by the Iran conflict has made the outlook for the coming year uncertain. If the conflict persists, prolonging volatility and potentially fuelling higher inflation and interest rates, we are likely to see a new wave of bankruptcies and restructurings in the months and years ahead, with activity potentially approaching the elevated levels seen from 2022 to 2024. Conversely, a swift resolution could help stabilise markets, support continued economic growth, and lead to a more muted insolvency environment.

The EU Insolvency Harmonisation Directive, due to be implemented by member states no later than January 2029, is expected to significantly affect Swedish insolvency law, particularly regarding pre-packs, transfers of contracts in bankruptcy, and avoidance actions. The Directive requires member states to introduce pre-pack frameworks under which contracts necessary for the continuation of the business may, subject to safeguards, be transferred to a buyer without counterparty consent. This should improve predictability and recovery prospects for lenders and investors, while leaving member states flexibility under a minimum-harmonisation approach. The Directive also introduces minimum standards for avoidance actions, including preferences, transactions at no or manifestly inadequate consideration, and transactions intentionally detrimental to creditors, together with improved access to asset registers to support transparency and asset recovery.

As the legal landscape continues to mature through emerging case law and the further development of legal doctrine, the Swedish restructuring market is likely to attract increasing international interest. Greater predictability, transparency and consistency in judicial practice should give foreign investors, creditors and restructuring professionals more confidence in the Swedish framework and its practical application.

Key Takeaways

• Swedish insolvency activity has declined from its 2024 peak but remains above normal historical levels.
• As economic conditions have improved, restructuring activity has become more localised, with renewed attention on Swedish and Nordic high-yield issuers.
• Recent restructuring case law has introduced uncertainty around creditor ranking and appeal rights. There is currently no Supreme Court precedent on these issues, but guidance is likely to emerge in due course and could rapidly change the legal landscape.
• The concentration of insolvency cases in fewer courts is expected to enhance efficiency, specialisation and predictability.
• The EU Insolvency Harmonisation Directive is likely to strengthen Sweden’s restructuring and insolvency framework and increase international interest.