Debt Collection Guide

Debt Collection Guide

Contents About Euler Hermes... 1 Good advice in connection with selling at home and abroad... 2 Denmark... 3 Collection procedure... 3 Euler Hermes... 3 Judicial recovery of debts... 3 Bankruptcy... 5 Finland... 6 Collection procedure... 6 Euler Hermes... 6 Judicial recovery of debts... 6 France... 8 Collection procedure... 8 Euler Hermes... 8 Judicial recovery of debts... 8 Germany... 10 Collection procedure... 10 Euler Hermes... 10 Judicial recovery of debts... 10 Great Britain... 11 Collection procedure... 11 Euler Hermes... 11 Judicial recovery of debts... 11 Judicial steps... 12 Norway... 13 Collection procedure... 13 Euler Hermes... 13 Judicial recovery of debts... 13 Euler Hermes experience... 14 Norway (continued)...14 Poland... 15 Collection procedure... 15 Euler Hermes... 15 Judicial recovery of debts... 15 Sweden... 16 Collection procedure... 16 Euler Hermes... 16 Sweden (continued)...17 Judicial recovery of debts... 17 Euler Hermes experience... 17 Liability etc. The debt collection guide has been copyrighted by and belongs to Euler Hermes Danmark, branch of Euler Hermes Europe S.A., Belgien ( Euler Hermes ) and any company of the Euler Hermes group. The guide cannot be reproduced in any other form or be distributed in any way. Euler Hermes cannot guarantee or be held liable for the correctness of the guide relative to the reader s use or requested use thereof. Reservations are made that the information contained in the guide may be incorrect as a result of changed practice or legislation.

Debt collection through Euler Hermes Debt collection through Euler Hermes collaborator Euler Hermes is part of the Allianz group one of the world s largest financial groups. About Euler Hermes Euler Hermes is the world s largest credit insurance company with offices in 50 countries. Globally, we oversee more than 40 million businesses and protect 52,000 clients against losses. The guide describes briefly how a debt collection procedure normally takes place as well as the interest terms and fees which apply locally, unless otherwise agreed between the parties. We are among the largest players globally in the foreign debt collection market, and we offer professional trade debt collection services worldwide. With Euler Hermes you are therefore given the possibility of recovering a debt irrespective of where in the world the debtor is located. The guide provides you with an insight into how debt collection is carried through in Denmark and in our most important neighbouring markets that is Sweden, Norway, Finland, Germany, Great Britain, France and Poland. Under each country headline you can read more about the local procedures in connection with collecting debts, including the pre-action procedure and the judicial recovery of debts as well as what documentation you should or must procure as a minimum. In addition, we state which fees you will have to expect to pay as creditor in connection with the judicial recovery of debts. The guide will be updated and extended with more countries on an ongoing basis. The most recent version can be downloaded on www.eulerhermes.dk. 1

Good advice in connection with selling at home and abroad Discover fraud in time Fraud may have considerable impact on your business. Perhaps the firm which the buyer represents does not exist at all or perhaps it is a firm of many names which is difficult to trace when payment is not made. To many businesses it may seem impossible to get an overall view of whether a new customer is serious or not. If you are a client with Euler Hermes Danmark, we will assess whether your customer is creditworthy and genuine. Nevertheless, there are numerous things you may also do yourself. Below you will find a list of typical danger signals to be observed. Get the correct information from the beginning In addition to paying attention to the small danger signals, you can also protect yourself and your business by demanding that the placing of an order is made in writing and includes specification of either central business registration (CVR) number (or the equivalent thereof abroad) in case your customer is a business or civil registration number in case your customer is a private individual. Furthermore, your customer should state his name and telephone number in block capitals on the order. If your buyer places his order over the cell phone, you should be careful and as a minimum check the number and call him back. If you suspect fraud If you experience any kind of suspicious behaviour of Danish debtors, contact the police in your police district for a discussion of the need for taking any measures on the part of the police. If you are a client with Euler Hermes and experience danger signals in relation to a Danish or foreign debtor, contact Euler Hermes to discuss the further process of the matter. Have you made any agreement on exclusive choice of law and jurisdiction? It is important that you inform Euler Hermes whether your business terms include exclusive choice of law and jurisdiction in the creditor s own country. In case thereof, proceedings typically cannot be commenced in the debtor s country. On the other hand, they must be commenced in the jurisdiction agreed (most frequently in the creditor s country). Where in spite of the above-mentioned clauses, the creditor chooses to institute proceedings in the debtor s country, the debtor can claim that the creditor is suing him in the wrong country and is using the incorrect choice of law. A consequence thereof may be that the case is stopped, the claim rejected and the legal costs will be imposed on the creditor. Remember to save your receipt When you send the goods off to your customers, they sign for the goods. The shipping agent, who delivers the goods, gets a receipt signed by your customer. If you do not get this receipt automatically then make a permanent agreement with your agent to send you your receipt when the goods are delivered. Should there later occur a collection case with your customer, it may be needed to obtain proof that the goods are received. With a receipt we can later help you to conduct a potential case. Danger signals - The debtor presses often and at short intervals for delivery of the goods. - Set-up of an account for large purchases within a relatively short period of time. - The order is out of proportion to the business volume of the customer. - The firm does not try to negotiate the price but accepts the price specified without any hesitation. - The official address of the firm is a PO Box address. - The purchaser places his order by cell phone. - The address and the PO Box address of the firm are not located in the same area. - Frequent changes of the firm name. - The purchaser requests to collect the goods at your premises. - The delivery address is not the same as the official address of the firm. 2

Denmark Collection procedure Letters requesting payment Normally maximum three letters requesting payment will be sent to the debtor. Placing a debt for collection In order to place a debt for collection, the last letter requesting payment the Letter Before Action must include a time for payment of 10 days as well as a warning of debt collection. Standard interest rate for debt collection in Denmark The standard interest rate is calculated based on a standard interest rate fixed by Denmarks Nationalbank + 7% p.a. Fees A fee of DKK 100 can be charged each letter requesting payment and in connection with the Letter Before Action. This fee can be charged for a maximum of three times of which the last one will be the fee for the Letter Before Action. Euler Hermes Pre-action procedure A collection letter including a debt statement is sent to the debtor. The debtor can make a proposal for a possible instalment agreement in the debt statement. The debtor is contacted by phone and is informed that the matter may become the subject of judicial procedure in case of non-payment. Documents required for the pre-action procedure Copies of invoices Copy of statement of account Copies of letters requesting payment (in regard to Danish debtors, it is paramount to send a Letter Before Action including a warning of debt collection and stating a time for payment of 10 days) Correspondence between the parties. Judicial recovery of debts Documents required for the judicial recovery of debts The documents required for the judicial recovery of debts are the same as those required for the pre-action procedure. Judicial steps Summons A Summons (British civil law term: Claim Form) must include among other things: Names and addresses of the parties in Denmark Name of the court where the proceedings are instituted The Plaintiff s (present British civil law term: Claimant) claim Details of the claim, including the facts and judicial circumstances List of documents and other evidence which you request to produce during the proceedings. You have the possibility of using a Summons form. The Summons form must be signed and in connection with filing a Summons form, you will typically have to pay a court fee. Time horizon for legal proceedings It is difficult to predict but typically six months. Fees for the judicial recovery of debts A court fee is a fee which the courts charge on behalf of the Danish state, and as a main rule, it must be paid in connection with all civil proceedings. If you have been granted free legal aid to conduct the litigation, you will not have to pay the court fee. Calculation of the court fee The size of the court fee payable by you depends on the nature of the civil proceedings. When you have calculated the court fee, the amount must be rounded up to the nearest amount in Danish kroner dividable by 10. >> 3

Denmark (continued) For claims which relate to amounts or which can be assessed as amounts, the following applies: A basic amount of DKK 500 must be paid. If the value of the claim exceeds DKK 50,000, an additional amount of DKK 250 must be paid + 1.2 per cent of that part of the value which exceeds DKK 50,000. The value of the claim is determined according to the claim of the Summons (interest and costs are not part of the calculation of the value of the claim). The total court fees (including the basic amount of DKK 500) cannot exceed DKK 75,000. When the pre-trial work of the court has ended and the claim is to be listed for trial (or written consideration which shall then replace the trial), an additional court fee (the pre-trial fee) must be paid insofar as the value of the claim exceeds DKK 50,000. The value of the claim is determined according to the claim at the time when the fee is to be paid. The pre-trial fee is calculated in the same way as the court fee which is paid when the proceedings are instituted (cf. above). In this way the pretrial fee in the example mentioned below amounts to DKK 1,050. The pre-trial fee is subject to the same maximum amount stipulations as those which apply to the court fee. For claims where the legal proceedings are instituted based on a claim for payment, special rules apply. The rules for simplified debt collection procedure was adjusted on 1 October 2011 and apply to outstanding debts below DKK 100,000 ( small claims procedure ). Pursuant to this Act, the creditor can send his claim directly to the enforcement court in the form of a special claim for payment which the enforcement court will then serve to the debtor. If the debtor does not file a defence to the claim within the time stated, the claim for payment functions both as judgment and as basis for enforcement. In relation to most claims, this is expected to reduce the processing time of the court s handling of the claim to 1-2 months compared to the previous approximate duration of 6 months. If, on the other hand, the debtor files a defence, the claim will proceed as a normal legal action. Payment of the court fee If you have calculated the court fee yourself, you must pay it when you file your Summons with the court. If you do not pay the court fee at the same time as you file the Summons (or claim for payment), the court will calculate the court fee and state a time for payment thereof. If you do not observe the time limit for payment of the court fee, the court may dismiss the case. The court fee is calculated in this way: DKK 500 + DKK 250 + ((value of the claim - 50,000) x 0.012) = the court fee Example: The value of the claim is DKK 75,000. The court fee amounts to DKK 500 + DKK 250 and 1.2 percent of DKK 25,000 totalling DKK 1,050. >> 4

Denmark (continued) The pre-trial fee need not be paid until the court has fixed a time for the trial (or written consideration which shall then replace the trial) however not earlier than three months prior to the trial. Further information The court fee is part of the legal costs. Fees for judicial recovery of debts where the debtor files a defence The claim must be processed via an attorney who typically charges legal fees of DKK 1,250 per hour + VAT. Bankruptcy Who can file a petition for bankruptcy? Any creditor who has an outstanding account against a debtor can file a petition for bankruptcy. It is a condition that the cause of non-payment is lack of available funds and not lack of will to pay, for instance in connection with dissatisfaction with work performed. Where this is the case, legal action must be brought before the ordinary courts. The same thing applies if a dispute is involved. A person or a company in insolvency can file a petition for bankruptcy against him/itself. If sufficient funds are not found in connection with the administration of the estate, the party who filed the petition for bankruptcy shall pay the costs. Where to file a petition for bankruptcy? If the debtor owns a business, the petition for bankruptcy must be filed with the bankruptcy court in the judicial district where the business is located. If the debtor does not own a business, the petition for bankruptcy must be filed with the bankruptcy court in the judicial district where the debtor lives. If such location is Greater Copenhagen, the petition must be filed with the Copenhagen Maritime and Commercial Court. The petition for bankruptcy must be in writing. What must be included in the petition? The petition for bankruptcy must state the name and address of the debtor as well as any central business registration number. Moreover, the petition must include information on the claim and the debt as well as contact information on the party filing the petition for bankruptcy. If a debtor files a petition for bankruptcy against himself, he must enclose a statement of his assets and liabilities as well a list of his creditors. In general, it is recommended that one contacts an attorney before filing a petition for bankruptcy. How much does it cost to file a petition for bankruptcy? The court fee for filing a petition for bankruptcy is DKK 750. The party filing a petition for bankruptcy must normally provide security for payment of the costs of the bankruptcy proceedings. The amount of the security is fixed by the bankruptcy court and must be provided before the bankruptcy court will make a decision on bankruptcy. The costs in connection with the bankruptcy proceedings are always covered first by the funds in the estate in bankruptcy. 5

Finland Collection procedure Letters requesting payment We recommend that you send maximum two letters requesting payment. After this, the debt collection procedure can be commenced. It is a good idea to send requests for payment by e-mail or fax because it is faster than by ordinary mail. Placing a debt for collection The debt should be placed for collection not later than 60 days after the time for payment was exceeded. The sooner a debt is placed for collection the more likely a successful recovery of the debt is. Standard interest rate for debt collection in Finland Unless otherwise agreed between the parties in writing, the standard interest rate is the European Central Bank s lending rate + 7% p.a. pursuant to the Finnish Interest Act. Fees Fees are normally not charged in connection with requests for payment in business relations; but the creditor can charge a reasonable fee for the costs thereof. However, there is no guarantee that the fee will be paid. Euler Hermes Pre-action procedure The first letter requesting payment is sent to the debtor and shall state a time for payment of 7 days. The debtor is then contacted by phone Another letter requesting payment is sent to the debtor and includes a warning that the debtor will be registered in a public register unless the debt is paid within 10 days. The effect of this letter is extremely positive in Finland. As the debtor does not wish to have poor creditworthiness, the debtor will usually pay subsequent to this letter. If the claim has not been paid and the debtor has not filed a defence, the debtor will be entered in the official register. This will naturally affect the debtor s creditworthiness. Based on an assessment of the debtor s financial situation, the creditor can choose to close the case or to consider the risk involved in taking judicial steps. Documents required for the pre-action procedure Copies of invoices If further documents are required, such as order and delivery documents, Euler Hermes will contact you. Judicial recovery of debts Documents required for the judicial recovery of debts Copies of invoices Copy of settlement where such has been agreed between the parties Order and delivery documents Correspondence and other supporting documents Euler Hermes will send the creditor a power of attorney which must be signed and returned by the creditor. Judicial steps Application of Summons will be sent to the court within 1-2 business days after Euler Hermes has received the information requested. Time horizon for legal proceedings The processing time of the court depends on the district court. Normally it takes 2-4 months to get a court order. In large district courts, the processing time is usually longer than in the smaller district courts. When an order has been issued, the case will be sent to the bailiff who will then enforce the order. Where a debtor cannot pay immediately, the bailiff will try to make an instalment agreement with the debtor or look into the debtor s income or assets. How long time it takes before the creditor can receive the amount recovered varies from case to case. It may take 1-2 years if an instalment agreement has been made or if it is difficult to find other assets. Where other assets cannot be found, the case is lost. The bailiff charges a commission of 0.5% of the amount recovered. >> 6

Finland (continued) Fees for the judicial recovery of debts The fees payable in connection with undisputed judicial steps are approximately EUR 150. Fees for the judicial recovery of debts when the debtor files a defence Where the debtor files a defence, the case must be turned over to an attorney. In such cases, the costs start at EUR 4,000-5,000. It is not possible to estimate the final costs because they depend on the extent of the procedure. It is naturally possible to obtain quotations for this. Bankruptcy Before taking judicial steps, it is possible to threaten the debtor with a petition for bankruptcy. This can also be made before the petition is sent to the enforcement court. This threat can be made against the debtor if he has not filed a defence to the claim. The debtor then has 8 days to pay his debt. The threat of petitioning bankruptcy does not necessarily mean that the creditor will file a petition for bankruptcy it is merely an effective way to try to recover payment. A business may risk to be adjudicated bankrupt if it cannot pay its debt to the creditor. The procedure commences with a petition for bankruptcy from the creditor or debtor and ends with a liquidation of the debtor s business as well as sale of assets at the best possible price. After this, the creditors will be paid in accordance with the order of priority. Note that where a creditor files a petition for bankruptcy, the creditor shall be liable for the costs connected with the administration of the bankruptcy if the debtor has no assets which can cover such costs. The administration costs can amount to several thousand euros, and consequently careful consideration is required before a petition for bankruptcy is filed against a debtor. As the threat of petitioning bankruptcy is not effective in all cases, it must be considered carefully in each individual case. The threat should be made in large cases where the debtor has not filed a defence in addition the financial background of the debtor should be considered. The fee for threatening to petition bankruptcy is EUR 150. 7

France Collection procedure Letters requesting payment No general rules apply in relation to letters requesting payment. It is possible to commence the debt collection procedure even though the creditor has not sent one or more letters requesting payment. The letter requesting payment is however needed to add interests to the claim. Placing a debt for collection The debt should be placed for collection as soon as possible. This increases the possibility of recovering the debt. Standard interest rate for debt collection in France The interest rate changes every year. For 2007 the standard interest rate is 2.95%. However, if a case is processed without problems, French debtors generally do not pay interests but ask for their annullment. Fees Letters requesting payment are not subject to collection of fees. Euler Hermes Pre-action procedure As soon as the case is handed over to debt collection, a dunning letter is sent. The debtor may be contacted by phone 7 days after the first letter requesting payment The debtor is contacted personally at his private address if it was not possible to contact him by phone If a payments agreement or other agreement is not possible (the debtor has gone, is not possible to reach or has filed a defence), judicial steps may be taken depending on debtor s solvency. Documents required for the pre-action procedure Copies of invoices Statement of account Power of attorney signed by the creditor s legal representative. Judicial recovery of debts Documents required for the judicial recovery of debts Copies of invoices Statements of account Power of attorney signed by the creditor s legal representative Order and delivery confirmation. If the debtor has filed a defence, additional documents are required: Terms of sale and delivery All relevant correspondence between the parties All information needed to make the dispute easier to understand Judicial steps Basically, there are two kinds of legal proceedings: Recovery procedures for uncontested claims so that an enforceable title can be obtained relatively quickly Recovery procedures in the event of disputed claims. Uncontested claims Request for order to pay is sent to the court. The court hears the request and makes its decision within 2-8 weeks. The decision is sent to the bailiff who will then notify the debtor. The debtor is given one month to raise a defence If the debtor raises a defence, the action must be submitted by an attorney If the debtor does not raise a defence, the decision will be sent to the bailiff for enforcement, and monitored by the local collections department Disputed claims The case should be handed over to an attorney. >> 8

France (continued) Time horizon for legal proceedings The time horizon depends on the court; but in connection with issue of an order to pay, the time horizon is normally 3-5 months for an undisputed claim. Taking it by and large, the costs for simple cases are the same irrespective of the size of the debt and must be paid irrespective of whether the debt is recovered or not. The costs may be higher in more complicated cases. If the assistance of an attorney is required, for instance if a defence is raised or in connection with a complicated cases, the time horizon may be 6-12 months, dependent on the court and on the nature of the disagreement between the parties. Fees for the judicial recovery of debts The estimated cost for a court ruling is approximately EUR 200 for an order to pay in case of an uncontested claim and if no defence has been raised. Add to this the costs of the debt collection case, which depends on the individual case and its complexity, but typically totals EUR 150. These costs are charged by the bailiff who also charges a fee of 10% of the recovered amount. If the judicial recovery of debts is successful, the creditor has the right to collect the fees payable to the bailiff and VAT, but not legal fees. However, the decision entitles to some compensation, but this is never big enough to cover the legal fees. The decision may entitle the creditor to compensation for damage incurred. Bankruptcy The court fee for filing a petition for bankruptcy against a debtor is approx. EUR 1,000. Actions regarding retention of title can be monitored by Euler Hermes Debt Collections Services. The costs depend on the complexity of the case. Fees for the judicial recovery of debts where the debtor files a defence In the court of first instance, the estimated costs are approximately EUR 1,500. The Summons delivered by the bailiff: Approximately EUR 60 VAT: EUR 8.84 Attorney: EUR 1,400 inclusive of taxes (average). 9

Germany Collection procedure Letters requesting payment One letter requesting payment is sent to ensure that the debtor does not file a defence to the claim. Placing a debt for collection The sooner the debt is placed for collection the better. Standard interest rate for debt collection in Germany Where an interest rate has not been agreed between the parties, German legislation makes it possible to charge a standard interest rate fixed by the Deutsche Bundesbank + 8% p.a. Fees Foreign creditors cannot charge any fees from German debtors based on letters requesting payment. Euler Hermes Pre-action procedure Confirmation of receipt of the claim is sent to the creditor One letter requesting payment is sent to the debtor the letter may include a proposal for a payments agreement The debtor is contacted by telephone within 5 business days A list of the outstanding debts is sent to the debtor. How the matter proceeds from here depends on the individual case. The following are possible steps: Where the debtor does not react, Euler Hermes will try to contact the debtor at his home address Contact by phone with the debtor Sending more letters requesting payment Receipt of proposal for a settlement Mahnbescheid (the German payment order) is commenced via Euler Hermes. Mahnbescheid is the first judicial step in a judicial recovery of debts Where the debtor files a defence to the claim, the creditor will be contacted. Documents required for the pre-action procedure Debt collection orders (agreement between Euler Hermes and the creditor concerning recovery of the debt on behalf of the creditor) Copies of invoices. Judicial recovery of debts Documents required for the judicial recovery of debts Inquiries will be made in each individual case. But normally the following documents are necessary and must be sent to Euler Hermes: Invoices Power of attorney Order confirmation Delivery confirmation. Judicial steps The judicial step is Mahnbescheid (cf. previously). Time horizon for legal proceedings The time horizon depends on the circumstances (the court, the area, the debt, etc.). Fees for the judicial recovery of debts irrespective of whether the debtor files a defence or not The fees are governed by the law and depend on the circumstances (the court, the area, the debt, etc.). Bankruptcy Normally a creditor does not petition bankruptcy as it rarely results in any recovery. Petitions for bankruptcy are subject to payment of legal fees and a court fee laid down in the legislation. 10

Great Britain Collection procedure Letters requesting payment It is recommended that two letters requesting payment be sent after which a letter with the warning of legal action the Letter Before Action should be sent. The Letter Before Action gives the debtor 48 hours or 7 days to pay before judicial steps are taken. Normally, the notice given is 48 hours; but the creditor can decide what time frame to use. Placing a debt for collection The debt should be placed for collection not later than 4 weeks after the time for payment was exceeded. The sooner a debt is placed for collection the more likely a successful recovery of the debt is. Standard interest rate for debt collection in Great Britain Where the creditor has not stipulated anything regarding interest on late payment in his business terms, the rules of the Late Payment Act 2002 will be applied. This provides the creditor with the compulsory right to charge the Bank of England s standard interest rate + 8% p.a. Fees Generally fees are not charged in connection with letters requesting payment as such letters are part of the general collection procedure. Euler Hermes Pre-action procedure The first letter requesting payment is sent to the debtor. The letter states that payment must be effected within two days Attempts are made at contacting the debtor by phone, and within two days another call is made again The second letter requesting payment is sent to the debtor The debtor is contacted for the third time by phone The Letter Before Action is sent to the debtor. This gives the debtor 48 hours to effect payment if he fails to do so, the judicial recovery of the debt will be commenced. Where the debtor files a defence, Euler Hermes will request a written statement from the debtor. The creditor must respond to the debtor s defence also where it has not been possible to obtain a written statement from the debtor. To be able to take judicial steps in the case, Euler Hermes must have been in contact with the debtor by phone; this is in particular the case where a limited company is involved. A limited company is a company with limited liability. In Denmark such companies are among other things designated aktieselskaber or anpartsselskaber. Where Euler Hermes has not succeeded in contacting the debtor by phone, the case will be turned over to a trace agent at a fee of GBP 65 + VAT. In connection with relatively more complicated cases, an investigation agent is employed, and the fee collected for this is GBP 90 + VAT. Documents required for the pre-action procedure All contact information on the debtor Copies of invoices Statement of account Debtor s corporate form: Limited company, sole trader or partnership (full names), PLC. Judicial recovery of debts Documents required for the judicial recovery of debts All contact information on the debtor Documentary proof (business terms, documents relating to the opening of an account, invoices, statement of account, proof of delivery, e-mails, letters). Produce and send as much information as possible Any information on car, cell phone, bank account and key customers Information on payments as soon as they have become available keep copies of cheques Alternative income Moreover, it is a good idea to ensure that witnesses, if any, are available. >> 11

Great Britain (continued) Judicial steps Two possible judicial steps exist: Through the court or through corporate or personal insolvency. In Great Britain, a terminological distinction is made between bankruptcy, which is used when the debtor is a person, and liquidation (winding-up), which is used when the debtor is a company or a partnership. In case of bankruptcy or liquidation, the outstanding amount must as a minimum be GBP 750. The proceedings are instituted at different courts dependent on the size of the debt Debts for up to GBP 5,000 small claims track are handled by the Bailiff s Court. The proceedings normally commence within 8-10 weeks Debts for GBP 5,000-15,000 fast track procedure are handled by the county courts. The proceedings commence within 30 weeks Debts for more than GBP 15,000 multi track are handled by the High Court. The proceedings commence within 30 weeks. Time horizon for legal proceedings- Day 1: Day 2: Day 9: The case is turned over to Euler Hermes internal legal department. They will check whether the documentary proof is sufficient and in order The case is turned over to an attorney a Letter Before Action is sent to the debtor One of the following events has occurred: The debtor has paid A payments agreement has been reached The debtor files a defence to the claim. The credtor is contacted and asked to respond to the defence of the debtor The Letter Before Action is returned and tracing of the debtor is commenced The judicial recovery of debts is commenced. Day 10: The claim form is sent to the court Day 11: The claim form is issued by the court and sent to the debtor Day 18: The court considers that service of the claim has been made Day 32: The debtor is expected to have returned his acceptance of the service. If this is not the case, a decision will be made on the non-payment. Where the debtor admits the claim, the decision will be made in accordance with the admittance Day 46: The debtor must have returned his acceptance of the service to the court Day 47: Application for a decision based on failure of defence Day 54: Judgment is delivered by the court. The debtor is requested in writing to pay Day 61: If payment is not made, a High Court enforcement officer is contacted with a view to recovering the debt. Fees for the judicial recovery of debts The standard fee is GBP 460 + VAT. Fees for the judicial recovery of debts where the debtor files a defence It is not possible to specify a general fee as it will depend on the specific case. Therefore payment is made on an hourly basis to an attorney. It is naturally possible to obtain quotations. Bankruptcy The costs of filing a petition for bankruptcy or liquidation against a debtor are GBP 1,700. 12

Norway Collection procedure Letters requesting payment After having sent the invoice, it is only necessary to send one letter requesting payment Letter Before Action containing a warning of debt collection. Placing a debt for collection In order to place a debt for collection, the Letter Before Action must state a time for payment of 14 days. Standard interest rate for debt collection in Norway The standard interest rate is calculated based on a standard interest rate fixed by Norges Bank + 7% p.a. Fees Debitor may be charged a fee of NOK 59 per letter requesting payment or in connection with the Letter Before Action. It is only possible to charge debtor in connection with either two letters requesting payment or one letter requesting payment and a Letter Before Action. Euler Hermes Pre-action procedure A letter requesting payment is sent to the debtor A warning of double fee is sent to the debtor A warning that judicial steps may be taken is sent to the debtor. Documents required for the pre-action procedure Name of the debtor Size of the debt Date of issue of the invoice Due date of the invoices (Copies of the invoices are preferred but not necessary). Judicial recovery of debts Documents required for the judicial recovery of debts invoice copies agreement (if it is made between the parties) order and delivery documents correspondence and other supporting documentation Power of Attorney (which we will send from here to be signed by creditor) Non-disputed claims Non-disputed claims may be sent straight to enforcement. The authorities will summon the debtor to investigate if the debtor has any assets to collect. If there is no money to collect, debitors properties may be pawned. The creditor may later file a petition to sell these items to cover the claim. If there is nothing to collect, the case will be returned. The cost is 1591 NOK (approx 200 Euro) if there is nothing to collect. Disputed claims If the debtor disputes the claim the the otion is to either try the case at a settlement court or file a lawsuit: Settlement court The settlement court consists of 3 non-legal judges, who will try to reach a settlement between the involved parties. If settlement is not possible the court will pass verdict. If the case is too complicated it may be transferred to a higher court. The creditor has to meet before court or use a representative. The meeting will take place in the city where the debtor is located. The cost for the proceedings is 100 Euro. The court ruling should be appealed within 30 days to avoid enforcement. >> 13

Norway (continued) Lawsuit A lawsuit will be handled by an external lawyer. The total costs may be 15,000 Euro depending on the hours spent by the lawyer. The loosing party will often have to cover all costs. Bankruptcy The costs of applying for bankruptcy proceedings to be instituted against a debtor are NOK 42,500. The NOK 42,500 rank as number one in the order of priority when the funds in the estate in bankruptcy are paid. Judicial steps It is possible to have the claim enforced (sale of assets, house etc.) and to apply for bankruptcy proceedings to be instituted against the debtor. Time horizon for legal proceedings Legal proceedings take 1-7 months. Fees for the judicial recovery of debts The fee is NOK 860. Euler Hermes experience Good advice to be considered when selling to Norway If the debtor has filed a defence to a claim, we recommend (dependent on the size of the amount) a settlement due to the very high legal fees. Fees for the judicial recovery of debts when the debtor files a defence to the claim If you appear before the court yourself, only the abovementioned fee of NOK 860 will be charged. If, on the other hand, you wish to be represented by an attorney, you will have to expect legal fees of NOK 1,250 per hour or fraction of an hour. 14

Poland Collection procedure Letters requesting payment The creditor may send letters requesting payment. However he is not obliged to do so. Placing a debt for collection The debt should be placed for collection as soon as possible, preferably on the day after the debt is due and within 30 days after the due date. Standard interest rate for debt collection in Poland Unless otherwise agreed between the parties, the interest will be calculated in accordance with the Polish legislation. Fees As a rule, fees are not charged for letters requesting payment; however it is possible to impose the actual costs relating to the debt collection case on the debtor. Euler Hermes Pre-action procedure The debtor is contacted by phone within 24 hours The debtor is contacted for the second time by phone within 7 days The debtor is contacted personally at his private address within 14 days A report is made after 28 days The legal adviser forwards a claim for payment after 30 days Proposal for enforcement proceedings is made after 45 days Legal proceedings are instituted after 57 days. Documents required for the pre-action procedure The following information must be sent to Euler Hermes: Contact information on the debtor Debtor s corporate form Copies of invoices Statement of account Confirmation of delivery Documentation of the debtor s defence General business terms Correspondence between the debtor and creditor of relevance to the case Pertinent agreements with a third party (factoring, debt acquisition etc.). Judicial recovery of debts The judicial recovery of debts necessitates the same documents as those necessary for the pre-action procedure and a signed power of attorney from the creditor. Judicial steps It is possible to recover the debt by way of a Summons issued by the court if the debtor has not raised a defence. If the debtor has raised a defence, the next stage will be general legal proceedings (with the possibility to appeal) which may produce an enforceable basis for enforcement proceedings. Time horizon for legal proceedings Normally, the matter will have become the subject of enforcement proceedings after 2-3 months; and after that, the case will have been finally processed within 8-12 months. Fees for the judicial recovery of debts The fee depends on the size of the debt. Debts for EUR 400-1500: EUR 300 Debts for EUR 1500-2500: EUR 600 Debts for EUR 2,500-12,500: EUR 1,200 Debts for EUR 12,500-50,000: EUR 1,800 Debts for EUR 50,000-100.000: EUR 3,600 Debts for EUR 100.000-150.000 EUR 5,200 Debts for EUR150.000-200.000 EUR 7,000 Plus a court fee of 8% and a translation fee of EUR 20 + VAT per page. Fees for the judicial recovery of debts where the debtor files a defence The debt collection fee is the same in case the debtor files a defence. Bankruptcy The fee for filing a petition for bankruptcy against a debtor depends on the size of the debt. Debts for up to EUR 10,000: EUR 450 Debts for EUR 10,000-50,000: EUR 1,000 Debts for more than EUR 50,000: EUR 1,800 15

Sweden Collection procedure Letters requesting payment According to custom in debt collection, maximum two letters requesting payment (reminder letter) and one Letter Before Action (dunning letter)-including the warning of legal action - should be sent to the debtor before taking legal actions. The first letter requesting payment can be sent the next day after the due date, and the dunning letter within 7-10 days after the time for payment set out in the first letter. Placing a debt for collection The debt collection case can be commenced on the day after the debt has fallen due. Interest rate Interest can be charged according to what is agreed between the parties or in accordance with the Swedish Interest Rate Act (Räntelagen). The interest is calculated according to a reference rate set by the Swedish Riksbank every six months plus 8 %. Fees There are several fees that according to Swedish law can be charged from the debtor: Reminder fee: In order for a creditor to be able to charge a fee of SEK 50 per letter requesting payment, the general rule is that the creditor needs to have made a prior agreement with the debtor to this extent. Payment plan fee: a fee of SEK 150 for establishing payment plan. Demand letter fee: of SEK 160 for sending a demand letter. Euler Hermes Pre-action procedure A collection letter giving the debtor 7 days to pay is sent to the debtor. An application of injunction of payment is made to the Swedish Enforcement Administration (SEA) 12 days after the collection letter was sent, if no payment is made. The cost of the application is SEK 300. An application to the Swedish Enforcement Administration will give the debtor a remark in all official registers that the debtor has a payment due. This procedure can therefore give the debtor problems getting new credits. The Swedish Enforcement Authority will then issue an order stating that the debtor must respond. If the claim for payment is not disputed, the Swedish Enforcement Authority will issue an order to pay (the purpose thereof is to determine whether the debtor holds assets on which execution can be levied). If the debt is not paid or disputed after this action, the Swedish Enforcement Authority will issue a judgement, which can be enforced. The execution cost is SEK 600. If a debtor opposes an order to pay, the creditor normally has 10 days to file a request for the case to be heard by the court. Documents required for the pre-action procedure Copies of invoices Business registration number of the debtor. >> 16

Sweden (continued) Judicial recovery of debts Documents required for the judicial recovery of debts: Copies of invoices Business registration number of the debtor Order confirmation Contracts Correspondence between the parties Written defence Power of attorney Judicial steps Three possible judicial steps exist: Injunction of payment Institution of legal proceedings (lawsuit) Application for insolvency. Note that issue of an order to pay only applies to undisputed debts. Bankruptcy When filing a petition for bankruptcy against a Swedish debtor, you must pay an application fee of SEK 500. You can request assistance from an attorney in connection with the petition for bankruptcy. Euler Hermes experience Good advice to be considered when selling to Swedish businesses We recommend that the Swedish Enforcement Authority (Kronofogdemyndigheten) is used as this solution is easy and inexpensive. Further information can be obtained at http://www.kronofogden.se/. Information is available in both Swedish and English. Time horizon for the judicial measures The issue of an order to pay takes 2-12 months. It takes 4-36 months to conduct legal proceedings. The application for insolvency takes 4-12 months. Fees for the judicial recovery of debts Basically, the costs of an issue of an order to pay are SEK 300. In addition SEK 600 will be charged for the execution thereof. The standard fee for instituting legal proceedings is SEK 450. The application for insolvency is subject to a court fee of SEK 500. Fees for the judicial recovery of debts if the debtor files a defence is SEK 450 for the court fee of + lawyers fees. In cases where the debt is small, the legal costs are to be born by each party. 17

Euler Hermes Danmark Amerika Plads 19 DK-2100 København Ø 01.13 Tel: +45 88 33 33 88 Fax: +45 88 33 35 35 e-mail: inkasso.dk@eulerhermes.com www.eulerhermes.dk