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 if there are no current assets in the bankruptcy estate.

A district court, where the debtor’s center of main interest is located, is responsible 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

Employment is 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.

Creditors meetings

In the bankruptcy estate, decisions concerning the matters of proceedings, such as the liquidation of assets, are usually made by creditors in creditors meetings. Creditors meetings are convened and facilitated by the administrator, providing creditors with the opportunity to decide on significant matters related to the bankruptcy estate. While attendance at these meetings is not mandatory, it is conventionally advisable to participate to safeguard creditor interests. These meetings are primarily conducted in Finnish, emphasizing the importance of early contact with the administrator or local attorneys for guidance on navigating the meeting. In addition to the creditors’ meetings, it is also common for decisions to be made in a more informal procedure where the administrator hears from the largest creditors of the estate in written form via email or mail.

Lodgement of claims

Creditors must file lodgement letters of their claims with the administrator by the specified deadline, which is called the lodgement date. The lodgement date is announced to the creditors by the administrator. These claims are then included in the disbursement list, which is subject to approval by the district court. Creditors whose claims are listed in the disbursement list, and which are approved by the court, receive disbursements from the bankruptcy estate’s assets. Failing to lodge a claim by the lodgement date leads to an obligation to pay a lodgement fee or even the loss of the whole claim.

Duration of bankruptcy proceedings

Bankruptcy proceedings in Finland typically last between 18 to 36 months, with various factors such as the complexity of asset liquidation and ongoing court cases potentially extending the duration beyond 36 months. Disbursements are usually paid to the creditors at the end of the proceedings, which is important to take into account.