Co-operative housing associations that find themselves in financial trouble are increasingly experiencing threats from banks, warning them that individual board members will be held financially responsible if the association defaults on its loans.
In order to escape financial responsibilities they have little chance of repaying, many andelsboligforeninger have in the past chosen to dissolve themselves, yet allow residents remain living in their flats as renters.
“Our system doesn’t let you just throw away the key and walk away, like you can in the US,” Bjørn Mortensen, the head of Nykredit, a bank, said. “When you’ve bought something, you’ve bought something.”
A letter in time
There are currently five co-operative housing associations, made up of about 200 flats in total, seeking to declare bankruptcy. Many more are in debt however and banks fear they could follow suit.
Lawyers for Nykredit and Danske Bank have reportedly sent letters to the board members of all five organisations informing them of their financial responsibility.
Board members said they were angered by the threats, but Birgitte Gammeljord, a lawyer for Danske Bank, said the housing association’s own lawyers should have informed them better.
