Dividend (dividende)
Also known as bankruptcy dividend, distribution from the estate, konkursdividende, dækning i boet
The dividend is the percentage of its claim that a creditor is paid out of a bankruptcy estate once the estate's funds have been distributed by order of priority.
In practice
The dividend is what is left once everyone ahead of you in the queue has been paid. And the queue is long: first the estate’s own costs, then the trustee’s fee, then employee claims, then supplier claims — the ordinary claims — and only at the very end the subordinated ones. The order is set by Konkursloven (the Danish Bankruptcy Act).
In practice this means that in many bankruptcy estates ordinary creditors receive nothing. Not a little. Nothing. That is not an argument for failing to file the claim — it costs next to nothing — but it is a very strong argument for acting long before matters get that far.
Where it commonly goes wrong
- The dividend is budgeted for. Provide for a full loss instead, and book the dividend as a surprise.
- The order of priority is only discovered once the estate is open. A retention of title or a security interest, agreed before delivery, would have taken you out of the queue altogether.