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Criteria for enforcement

What are the common enforcement triggers for loans, guarantees and security documents?

The most common enforcement criteria in Norway follow the Loan Market Association standard template, with an event of default having occurred and continuing and notice being served on the borrower to this effect.

Process for enforcement

What are the most common procedures for enforcement? Are there any specific requirements with which lenders must comply?

This will depend on the type of security. The most effective security interest is in the form of cash or securities which may be appropriated quickly by notification to the debtor on breach of agreed terms for the security. Security over other asset classes is customarily subject to enforcement proceedings, as set out in statutory law with the assistance of the enforcement authorities. 

Ranking in insolvency

In what order do creditors rank in case of the insolvency of a borrower?

A Norwegian bankruptcy estate of any party that has encumbered any of its assets as security for obligations owed has a statutory lien over any such pledged assets, as well as assets which a third party has encumbered as security for the obligations of the bankrupt party. The statutory lien has priority over all other liens or security interests in the relevant asset, regardless of whether such other liens or security interests have been created voluntarily or involuntarily. The statutory lien for the bankrupt estate is limited to 5% of the value of or sales proceeds for the encumbered asset; however, the statutory lien is limited to a maximum amount equal to 700 times the court fee (at present, NKr 734,300) in respect of any security registered in real registers which are organised by the specific items.

Other than the above, no statutory claims will prime a non-voidable security interest. Norwegian law provides detailed regulations as to the order of payments made with proceeds from the unsecured assets of a debtor during the bankruptcy proceedings.

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