Bankruptcy proceedings can last for years. The process is meant for closing down an insolvent and unprofitable company. Openness is always the best course of action during bankruptcy proceedings. You retain your reputation by cooperating with creditors, employees, customers and partners.
You can file for bankruptcy yourself, or the petition may also be filed by any of your creditors. A bankruptcy can also be reversed if there are valid reasons for doing so.
Contact the Yrittäjän talousapu counselling service before filing the bankruptcy petition to avoid errors that are difficult to undo.
If your company is permanently insolvent and it can no longer be made profitable, it will be closed down through bankruptcy proceedings.
A court decides on the initiation of the bankruptcy proceedings on the basis of a bankruptcy petition. The petition can be filed by your company or any of its creditors. Read more about the stages of bankruptcy proceedings.
During bankruptcy proceedings, your company may no longer manage its assets. Instead, a court appoints an estate administrator for the bankruptcy estate. The estate administrator converts the company’s assets into cash and distributes the funds among the creditors. Even though the estate administrator has extensive powers in the bankruptcy estate, the creditors nevertheless usually have the final say. Read more about the role of creditors in bankruptcy proceedings.
After the bankruptcy proceedings have been completed, the Finnish Patent and Registration Office is notified and enters the details into the trade register. In most cases, this also means the dissolution of your company and no separate termination notification is required.
Your company may also file for a bankruptcy on its own initiative. It makes sense when you know that your company is unable to clear its financial difficulties by any other means over any period. In such a case, your company should not wait for the creditors to file a bankruptcy petition. In other words, do not unnecessarily prolong your unprofitable business operations, because there is nothing shameful about bankruptcy. Sometimes it is simply the only way to terminate business operations.
If you are filing the bankruptcy petition yourself and start the bankruptcy proceedings in time,
If the actual relationship between the company’s assets and liabilities is not clear, it must be put into liquidation before bankruptcy in order to clarify the financial situation.
The Finnish Patent and Registration Office (PRH) may also order the company to liquidate.
A bankruptcy petition must always be filed in writing. You can use the application form for voluntary bankruptcy of a debtor company available in Finnish and Swedish on the website of the court systemOpens in a new window..
The application must indicate
The application must be accompanied by the document to which the applicant refers. It may for example be an account of the debt that the creditor uses as a justification for the bankruptcy. An extract from the Trade Register must also be attached to the application.
If you file for bankruptcy personally, also deliver with your application
If you need advice on filing for bankruptcy, you can reach out to parties such as the District Court or legal experts.
The responsibility for a company’s debts and commitments depends on the type of company:
Employees’ receivables include
If there are no assets in the bankruptcy estate, the employee can apply for their receivables from state wage guarantee. The estate administrator can also submit an application on the employees’ behalf. The wage guarantee is paid to the employee, and the state is added to the creditors. Instructions for applying for wage guarantee
A court appoints an estate administrator for the bankruptcy estate. The estate administrator acts as its representative and manages its administration. A lawyer is often appointed as the estate administrator. A person that has previously managed your company’s matters or the matters of its creditors cannot act as the estate administrator.
The tasks of the estate administrator are to
The creditors decide on the fee paid to the estate administrator. The estate administrator also receives compensation for managing the bankruptcy estate. The fee and compensation are paid from the assets of the bankruptcy estate.
The work of estate administrators is supervised by the Bankruptcy Ombudsman. Lawyers’ activities are also supervised by the Finnish Bar Association.
A bankruptcy can be cancelled if a cancellation application is submitted to the court within eight days of the start of the bankruptcy. However, there must be a valid reason for the cancellation. One reason may be that your company has been able to pay its debts to its creditors.
If a creditor has filed for bankruptcy for your company, the creditor and your company must jointly file for cancellation. Other creditors and the estate administrator may be heard concerning the application for cancellation. The hearing may affect the court’s decision on whether to cancel the bankruptcy or not.
If you have personally filed for bankruptcy, apply for the cancellation personally as well. Even in that case, the creditors and the estate administrator may be given an opportunity to be heard.
The court will notify your company, the creditor who filed the bankruptcy petition and the estate administrator of the cancellation. You will receive an account from the estate administrator on what the assets of the estate have been used for. Pay the estate administrator the court-appointed fee.
Once the bankruptcy has been cancelled, your company can continue to operate normally.
If the district court decides that bankruptcy proceedings cannot be launched, the bankruptcy petition is rejected or dismissed. Reasons for this may include:
If the application is rejected, the applicant may have to pay court fees.
A bankruptcy petition is dismissed if the application is cancelled or the debtor company pays its debts before the district court issues a decision.
The business operations included in the bankruptcy estate can also be sold in their entirety, in which case the new owner can continue the profitable part of the company or use the company’s business premises.
The estate administrator decides whether to sell the business as a whole or whether to sell tangible and intangible assets in instalments. The creditors have the power to decide on the liquidation of the bankruptcy estate.
The insolvency register of the Legal Register CentreOpens in a new window. lists information on debtors in bankruptcy or corporate restructuring proceedings. The register is meant for public use, so anyone can view the information in the register.
When a company’s status is marked as liquidation or bankruptcy in the Trade Register, it is no longer possible to act on behalf of the company on the basis of the authority to sign entered in the Trade Register.
Previously granted mandates are valid until their end date. If new mandates are needed after that, the company can apply for the registration of mandates.
The right to grant a mandate can also be applied for the liquidator or estate administrator. After this, they can grant themselves and other people the necessary mandates for transactions independently on Suomi.fi e-AuthorizationsOpens in a new window..
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