Insolvency & Restructuring, Finland updates

Purchasing Business Activity under Restructuring
  • Finland
  • 27 February 2004

Purchasing the shares of a restructuring company, although possible, is seldom beneficial for the acquirer. Instead it is usually better to acquire the business activity of the company in part or in whole. However, where an investor considers the business of the debtor company to be sound, shares can be acquired to refinance it and, in practice, to end the restructuring.

New Bankruptcy Act Weakens Position of Creditors
  • Finland
  • 28 November 2003

The proposed new Bankruptcy Act weakens the position of secured creditors by allowing the realization of a pledge without the pledgee's consent and barring credit institutions from offsetting the assets in debtors' accounts, among other things. However, the act has yet to be finalized by Parliament and further changes may be introduced.

Board Issues Guidance on Employment Issues in Bankruptcies
  • Finland
  • 01 August 2003

The Bankruptcy Affairs Advisory Board recently issued guidance on employment issues in bankruptcies. It is designed to assist administrators on the proper actions when faced with typical employment issues in bankruptcies, such as the termination of employment agreements, wage security and transfer of business.

Bankruptcy Affairs Advisory Board's Authority Broadened
  • Finland
  • 18 July 2003

Recent legislative amendments will widen the authority of the Bankruptcy Affairs Advisory Board. The board currently prepares written guidance concerning administrative practice for bankruptcy estates. Under the changes, it will now also prepare guidance on restructuring.

Supreme Court Considers Bankruptcy Recovery
  • Finland
  • 06 June 2003

The Supreme Court recently ordered two previous shareholders and members of the board of directors of an insolvent company to return over €5 million to the bankruptcy estate. The court found that transactions they had initiated before the bankruptcy proceedings commenced were inappropriate and contributed to the company's insolvency.

Court Examines Validity of a Pledge of Revenue in Bankruptcy
  • Finland
  • 21 March 2003

The Supreme Court recently held that the bank to which a company had pledged the shares in a business premises, together with associated rental revenue, was entitled to rental revenue accumulated after the bankruptcy of the company. The court determined that since a valid assignment had been made to the bank prior to the bankruptcy, the bankruptcy estate was bound by the pledge.

Proposal on Status of Contracts in Bankruptcy
  • Finland
  • 13 December 2002

The proposed Bankruptcy Act regulates the legal effect of bankruptcy on agreements that the debtor has not performed. It provides that the bankruptcy estate has the right to choose which agreements will remain in force. Exceptions to this general principle include agreements that are personal in nature and certain types of established contract.

Board Publishes Asset Recovery Guidelines
  • Finland
  • 11 October 2002

The Act on Asset Recovery by Bankruptcy Estates nullifies certain transactions carried out during the period leading up to bankruptcy, in order to allow fair recovery by creditors. The Bankruptcy Affairs Advisory Board recently issued guidelines for bankruptcy estate administrators which covers the whole recovery procedure.

Overview (August 2002)
  • Finland
  • 09 August 2002

Including: Legislation; Bankruptcy Proceedings; Restructuring; International Insolvency

Reforms to the Bankruptcy Act
  • Finland
  • 19 April 2002

A legislative working party passed a proposed government bill for a new Bankruptcy Act on January 22 2002. The proposed new act focuses primarily on the form of bankruptcy proceedings and on modernizing certain aspects of these.

The Effect of Bankruptcy on IP Contracts
  • Finland
  • 08 February 2002

According to the Finnish Bankruptcy Act, all the debtor's distrainable property belongs to the bankrupt's estate. In addition, the bankrupt's estate can take advantage of different contracts and other rights of the debtor, although this is not specifically mentioned in any rule of law.

Law Office Found Liable for a Trustee's Embezzlement
  • Finland
  • 16 November 2001

In a recent case the Supreme Court ruled that liability for damages to the bankruptcy estate remains with a law office, even when a partner who has acted as a bankruptcy trustee has left the firm. In the case in question, the partner had embezzled the assets of bankruptcy estates.

Bankruptcy Proceedings and Privacy Protection
  • Finland
  • 20 July 2001

E-commerce companies have a very valuable asset in the shape of their customer databases, and if they go bankrupt it is in their interest to sell this asset. However, such a transfer of personal data contravenes the Finnish Data Protection Act. This update discusses how this conflict has been resolved.

Redistributing Profits
  • Finland
  • 04 May 2001

According to the Reorganization of Enterprises Act, if a company under reorganization surpasses the expectations of a reorganization plan, the excess profits can be distributed among the creditors. This update describes the process.

Compensation for Causal Connections
  • Finland
  • 02 February 2001

Until recently, creditors to a liquidation have often been awarded compensation without having to prove a causal connection between managerial negligence and damage suffered. However, a recent case has made it clear that future cases will hinge on proving this causal connection.

Contracts and Bankruptcy
  • Finland
  • 29 September 2000

There is no specific legislation in Finland to deal with the effect that bankruptcy has on contracts. This update examines several laws and their effects on various bankruptcy situations.

Contracts and the Reorganization of Companies Act
  • Finland
  • 06 February 2000

The Reorganization of Enterprises Act has been amended. This update examines its impact on the legal conditions for the reorganization of companies and the provisions for the effects of insolvency on contractual relationships.

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