[BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS IN FINLAND]
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At the end of the proceedings, the administrator prepares a draft of the restructuring programme. This programme is based on the debtor’s financial projections. In larger companies, the proceedings and programme may focus on a real business turnaround, inc luding changes in the company’s strategy, management etc. It is common for unsecured debts to be haircut by tens of percents. Secured debts cannot be reduced. The typical duration for the payment programme is between five to eight years. The restructuring proceedings conclude with a voting procedure on the proposed restructuring programme. Creditors can either accept or reject the proposed programme in the vote. If the programme receives majority approval in each group of participating creditors, it is approved by the district court. In Finnish restructuring proceedings, debt conversion is rare, so it is common for the company's shareholders to retain full ownership after restructuring. 3. Restructuring Programme The district court appoints a supervisor to monitor the implementation of the restructuring programme. The company is responsible for reporting to the supervisor on the programme's implementation and the company’s financial statements. Once the restructuring programme has been approved, the debtor is required to adhere to the payment schedule outlined in the programme. If the debtor fails to comply with the payment schedule, creditors have the right to request that the district court annul the programme. Upon annulment, creditors regain the right to initiate debt collection. Creditors should be aware that very rarely do companies fully succeed in implementing the restructuring programme. Unfortunately, most
restructuring proceedings fail at some point during the three steps outlined above. Bankruptcy proceedings in Finland Bankruptcy proceedings in Finland are initiated when a debtor is unable to meet its financial obligations on time, leading to insolvency. The process can be instigated either by the debtor themselves or by a creditor. In Finland, creditors are not liable to cover the costs of proceedings, other than application fee, if there are no current assets in the bankruptcy estate. A district court, where the debtor’s center of main interest is located, has jurisdiction for making the decision to declare bankruptcy. Once declared, the court appoints an impartial administrator to manage the bankruptcy estate. This administrator, known as ”pesänhoitaja” in Finnish, is typically an attorney and plays a crucial role in overseeing the affairs of the debtor and ensuring the fair distribution of assets to creditors. It’s essential that the administrator maintains neutrality and effectively communicates with all stakeholders throughout the process. In Finland, administrators of bankruptcy estates are supervised by the Bankruptcy Ombudsman, and as they are usually attorneys, also by the Finnish Bar Association. Employees Employments are usually terminated by the administrator at the beginning of the proceedings. The termination period for employment agreements under bankruptcy proceedings is 14 days. Employees of the bankrupt company have the right to their unpaid salaries and other employment-related costs through Pay Security. The process for Pay Security is usually handled by the bankruptcy estate in cooperation with the authorities.
ILN Restructuring & Insolvency Group – Bankruptcy, Insolvency & Rehabilitation Series
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