[BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS IN FINLAND]
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KEY FACTS OF BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS UNDER FINNISH LAW
Corporate restructuring in Finland Insolvency legislation in Finland provides for two alternative statutory processes: bankruptcy and corporate restructuring, which both have separate proceedings. The purpose of restructuring may be to rehabilitate the viability of the healthy parts of the business or to facilitate their operation, and to make debt adjustment possible. Corporate restructuring in Finland can be done via formal legal proceedings or via out of court proceedings. As it is common in other countries, also in Finland the voluntary, out of court proceedings are done mostly in big companies. In the SME sector it is popular to do restructuring by formal restructuring proceedings based on law. In this text we are focusing on formal corporate restructuring proceedings in Finland. Three steps of process Corporate restructuring in Finland divides into three steps: 1) Application 2) Restructuring proceedings 3) Restructuring programme. 1. Application The Corporate restructuring process in Finland starts when the debtor or a creditor files an application for restructuring to a district court. The decision to start a corporate restructuring process is made by a district court whose jurisdiction the general administration of the debtor is located in. The Court hears the biggest creditors about the application. Negative statement should be justified with arguments which are based on the law. Under the restructuring proceedings the restructuring debts are defined to the day when application for the proceedings has been filed for the district court. Debts which have arisen before that day are considered
as restructuring debts. Once the application has been filed, the company can apply a court order to protect it from the debt collection acts. Starting debt collection after the debtor has filed for restructuring is in most cases pointless and may cause extra costs for the creditor. Because the corporate restructuring in Finland is based on law, the court appoints almost without exception an administrator for the proceedings. An administrator appointed is almost in every case an attorney. 2. Restructuring proceedings Administrator´s role is to monitor and supervise the debtor´s activities during the restructuring proceedings. Administrator also audit the debtor´s activities before the proceedings. Administrator is responsible to react if illegal acts are founded. The administrator is also responsible to react if the company has started to lose money again and it cannot pay the debts which have arisen after the filing of the application. In those cases, administrator will file the application for interruption of the restructuring proceedings to the court. If it seems that the restructuring proceedings can continue, administrator prepares a report of the debtor´s assets, liabilities and other undertakings and on the circumstances that affect the financial position of the debtor. The report will be sent to all known creditors by the administrator. The report will be done in Finnish, but the administrator can usually give translation or summary of the report also in English if needed.
ILN Restructuring & Insolvency Group – Bankruptcy, Insolvency & Rehabilitation Series
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