When a company or person goes bankrupt in Norway, the trustee (bostyrer) investigates whether some creditors were paid at the expense of others in the period before the bankruptcy. Under Section 5-5 of the Satisfaction of Claims Act (dekningsloven), certain payments of debt can be reversed (avoidance, omstøtelse). This article explains the rule for creditors who have received payments, debtors and trustees.
The cut-off date
The time limits are counted from the cut-off date (fristdagen). In bankruptcy, this is the date the district court received the bankruptcy petition that was granted (Satisfaction of Section 1-2 of the Claims Act).
What can be avoided?
Under Section 5-5 first paragraph, a payment of debt made later than three months before the cut-off date can be avoided if it was made:
with unusual means of payment;
before the normal time of payment; or
with amounts that significantly impaired the debtor’s ability to pay.
In all three cases, the payment cannot be avoided if, in the circumstances, it nevertheless appeared to be ordinary.
The creditor’s good or bad faith is not a condition under Section 5-5. The rule is objective.
Related parties and spouses
Longer periods apply to related parties:
A payment to someone closely related to the debtor (nærstående) can also be avoided if it was made earlier, but later than two years before the cut-off date, unless it is proven that the debtor was still clearly solvent when the payment was made.
A payment to the debtor’s spouse, cohabitant or fiancé(e) can be avoided if it was made later than two years before the cut-off date (Section 5-5 second paragraph).
The Act defines who counts as a related party in Section 1-5.
Security counts as payment
Pledging or assigning ordinary monetary claims (enkle fordringer) as security is treated as payment under Section 5-5 (third paragraph).
Unusual means of payment
A payment is made with unusual means if the debtor did not use the agreed or normal means of payment. A typical example is paying a supplier with goods or other assets instead of money.
Payment before the normal time
This alternative covers payment before the due date. It can also cover payments that were made earlier than they would have been if the debtor’s financial situation had been normal. A payment shortly before the due date will often be regarded as ordinary, especially if it is not connected to the debtor’s payment problems.
Amounts that significantly impaired the ability to pay
The third alternative concerns payments that significantly reduced the debtor’s ability to pay. The size of the payment relative to the debtor’s liquidity is decisive, not the absolute amount. The assessment is always concrete.
The exception for ordinary payments
Even if one of the three alternatives applies, the payment cannot be avoided if it nevertheless appeared to be ordinary. Payments of current expenses in the normal operation of the business, such as rent, wages, taxes and payment for goods delivered, will often be ordinary. The debtor’s own payment habits and whether the payment was necessary for continued operation can also be relevant.
Effect of avoidance and deadline
If a payment is avoided, the estate can require the recipient to return the benefit received (Section 5-11).
The estate’s right to claim avoidance becomes time-barred one year after the opening of bankruptcy. However, the time bar occurs no earlier than six months from when the estate knew or should have known about the circumstances behind the claim, and no later than 10 years from the opening of bankruptcy (Section 5-15).
Other avoidance rules
Section 5-5 is one of several avoidance rules. Others cover, for example, gifts (Section 5-2), set-off (Section 5-6) and the general rule on improper transactions, where the other party knew or should have known of the debtor’s weak financial position and the circumstances that made the transaction improper (Section 5-9). Read more in our article on Norwegian bankruptcy proceedings.
How we can help
Advokatfirmaet Sterk AS (org. no. 931 556 584, St. Olavs plass 3, 0165 Oslo, advokats.no) advises creditors, debtors and bankruptcy trustees on avoidance and other insolvency matters. If you would like us to look at your situation, you can contact us. Information about our fees is available at advokats.no/priser.
This article provides general information as of 29 October 2026 and is not legal advice for your specific situation.
