To declare a company bankrupt, a bankruptcy petition must be filed by the company or its creditors to the appropriate district court.
A company’s self-initiated bankruptcy petition must include:
– A trade register certificate
– Minutes of a board meeting declaring insolvency and deciding to file for bankruptcy
– A list of the company’s assets and liabilities
– Optionally, a declaration of independence and eligibility of the proposed bankruptcy estate administrator
Filing for bankruptcy in Finland
The district court may declare a company bankrupt if they are otherwise than temporarily unable to pay their debts as they fall due (insolvency). Upon the declaration of bankruptcy, a bankruptcy estate administrator is assigned by the district court.
A private individual, a corporation, a foundation or another legal person may be declared bankrupt. A legal person may be declared bankrupt even if it has been removed from the relevant register or dissolved. Also, a decedent’s estate and a bankruptcy estate may be declared bankrupt. The main themes of this text are limited to reviewing the process of a company’s self-initiated filing for bankruptcy and the associated bankruptcy petition.
For a district court to declare a company bankrupt the company itself or its creditors are required to file a bankruptcy petition to the appropriate district court. The district court with appropriate jurisdiction (forum) for the bankruptcy petition is largely determined by the location of the company’s financial activities center of main interest and management.
The bankruptcy petition
The bankruptcy proceedings are initiated by a written bankruptcy petition to the appropriate district court. The bankruptcy petition must be accompanied by the following documentation:
1. Trade register certificate
A trade register certificate that may not be more than 3 months old.
2. Minutes of a board meeting where insolvency / bankruptcy is declared
Minutes of a board meeting where insolvency is declared, and a decision is made to file for bankruptcy. Optionally the minutes of the board meeting may include a mandate for a possible entity to draw up the bankruptcy petition and file it on behalf of the company. Additionally, a possible proposed bankruptcy estate administrator may be decided.
In case of the company’s own bankruptcy petition the minutes of the board meeting where insolvency is declared are most of the times considered a sufficient demonstration of the insolvency of the company.
3. A list of the company’s assets and liabilities
The bankruptcy petition must include a list of the company’s assets and liabilities.
The list of the company’s assets should include a statement of company’s assets and their estimated values along with the estimated total assets liquidation value. The company’s balance sheet per the most recent bookkeeping month may be used as a basis, but a more detailed inventory of fixed and current assets would be good to be included.
The list of the company’s liabilities should include information or an educated estimate of the total liabilities. Additionally, the list of liabilities should include a more detailed list of the major creditors alongst with the amount of debt and contact details.
According to the legislator’s preliminary works of the Finnish bankruptcy act, the list of the assets and liabilities of the company may generally be a more general statement of the company’s assets and liabilities rather than a fully detailed list. Nonetheless the district court may require other information on the company’s financial situation or place of management if there is deemed specific need for this.
4. Declaration of independence and eligibility of the proposed bankruptcy estate administrator (optional)
The district court assigns a bankruptcy estate administrator for the bankruptcy proceedings of a company. A bankruptcy estate administrator must be a person who has the ability, skills and experience required for the position and who is otherwise suitable for the position. The administrator shall not have any relationship with the debtor or his creditors which is likely to impair their independence regarding the debtor, their impartiality towards creditors or their ability to perform their duties properly.
Whether a bankruptcy estate administrator is proposed in the bankruptcy petition, a declaration of independency and eligibility of proposed bankruptcy administrator shall be also delivered to the district court.
In case a bankruptcy estate administrator has not been proposed in the bankruptcy petition, the district court may seek to find an appropriate person for this role. Generally, the district court requests the associated parties to submit their statements regarding the possible person(s) proposed to be the bankruptcy estate administrator.
Processing of the bankruptcy petition and declaration of bankruptcy
After the filing of the bankruptcy petition, the district court will process the bankruptcy petition. If further requests for information are not necessary or the application does not contain any deficiencies, the district court will process the petition in a matter of a few days at the shortest. However, the processing time is also dependent on the general processing times of the district court. The processing time may be longer if the processing of the petition requires statements from the associated parties.
After the bankruptcy petition has been processed, the district court will declare the company bankrupt and assign a bankruptcy estate administrator to continue with the bankruptcy proceedings. Read more about the bankruptcy proceedings in Finland.
