Insolvency is the main condition for opening bankruptcy in Norway. This article explains what insolvency means under the Bankruptcy Act (konkursloven), how it is proven and who can petition. It is written for creditors and debtors.
What is insolvency?
Under Section 61 of the Bankruptcy Act, a debtor is insolvent if they cannot pay their obligations as they fall due, unless the inability to pay can be assumed to be temporary. This is called illiquidity.
The same section contains an important exception: the debtor is not insolvent if their assets and income together can be expected to cover all their obligations in full, even if payment will be delayed because assets have to be sold first. In other words, insolvency requires that the debtor is also insufficient, meaning that the assets and income are not enough to cover the debts.
A debtor who temporarily lacks cash, but whose assets clearly exceed the debts, is therefore not insolvent.
Illiquidity: inability to pay
Illiquidity means that the debtor cannot pay obligations as they fall due. A short-term payment problem is not enough. The inability to pay must have a certain stability and is assessed on the basis of the debtor’s liquid assets, expected income and obligations. The longer the period of non-payment, the less likely it is that the problem is only temporary.
Insufficiency: negative financial position
When assessing whether the assets and income are sufficient, the court looks at:
the debtor’s total assets and expected income compared with all their debt, both due and not yet due;
the situation at the time of the assessment;
what the assets are likely to fetch on realisation.
Presumptions of insolvency
In practice, it can be difficult for a creditor to prove the debtor’s full financial position. The Act therefore contains presumptions. Insolvency is generally presumed if:
the debtor admits being insolvent or has stopped making payments, or
an attempt at enforcement (utlegg) or attachment (arrest) during the last three months before the petition did not give coverage (Section 62).
There is also a presumption based on a formal payment notice (konkursvarsel) where the debtor has a statutory duty to keep accounts, or had such a duty in the last year before the petition was filed (Section 63). The creditor must be able to prove that it has demanded payment of a clear and due debt, and at least four weeks later have the debtor served with a demand to pay within two weeks. The bankruptcy petition must then be filed within two weeks after the payment deadline expires. The demand must inform the debtor that the creditor can petition for bankruptcy and that insolvency will then generally be presumed.
The presumptions can be rebutted if the debtor shows that they are not insolvent.
Who can petition for bankruptcy?
Under Section 60, bankruptcy is opened when the debtor is insolvent and either the debtor or a creditor petitions for it.
The creditor does not need an undisputed claim. If the debtor disputes the claim, the court must take a position on whether it is sufficiently proven.
When security prevents bankruptcy
A creditor cannot have bankruptcy opened if their claim is adequately secured by a mortgage or similar security in the debtor’s assets. The same applies in some cases where the claim is secured in a third party’s assets, or by a guarantee as a primary obligor (selvskyldnerkausjon) (Section 64).
Costs
A creditor who petitions must normally pay security for the costs of the bankruptcy to the district court. 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 and debtors on 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.
