In Sweden firms that fail to meet their debt obligations are

In Sweden, firms that fail to meet their debt obligations are immediately auctioned off to the highest bidder. (There is no re-organization through Chapter 11 bankruptcy). The current managers are often the high bidders for the company. Why?

Solution

Solution :

The current managers are the high bidders for the company because they have full knowledge of the financial position of the firm and if the current management continues then reorganizations can be arranged in a private
negotiation between senior creditors and the debtor, without major interference from courts and other claimants.