In bankruptcy proceedings, an insolvent and unprofitable company is closed down after a court process. You may file for a bankruptcy yourself or the petition may also be filed by any of your creditors. The court appoints an estate administrator who manages the bankruptcy estate and acts as its representative. A bankruptcy may also be reversed if there are valid reasons for this.
Your company becomes bankrupt if it is permanently insolvent and it can no longer be made profitable. Bankruptcy proceedings will lead to the closing down of your company.
A court decides on the initiation of the bankruptcy proceedings. It makes its decision on the basis of a bankruptcy petition. The petition can be filed by your company or any of its creditors.
In a bankruptcy, your company may no longer manage its assets. Instead, a court appoints an estate administrator for the bankruptcy estate. Even though the estate administrator has extensive powers in the bankruptcy estate, the creditors nevertheless have the final say in a number of matters. The estate administrator converts the company’s assets into cash and distributes the funds among the creditors.
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.
The bankruptcy petition can be free-form and it must be filed in writing. A petition must contain the following information:
- the company is filed for bankruptcy
- the reasons for the bankruptcy petition
- name, domicile and Business ID of the company in question
- petitioner’s contact information
- why the court in this particular district should consider the matter.
The documents which the petitioner refers to must be appended to the petition. They can include details of the debts that the creditor uses as a basis for the bankruptcy petition. An extract from the trade register must also be appended to the petition.
If you are filing the bankruptcy petition yourself, you must also append the following documents to the petition:
- a decision on filing for bankruptcy made by your company's competent body (such as the board of directors of a limited liability company)
- details of your company's assets and debts
- list of the largest creditors and their contact information.
You can contact your district court or legal experts for advice on how to prepare a bankruptcy petition.
A court appoints an estate administrator for the bankruptcy estate. The estate administrator acts as its representative and manages its administration. A person that has previously managed your company's matters or the matters of its creditors cannot act as the estate administrator. In practice, a lawyer is often appointed as the estate administrator.
The estate administrator determines your company’s debts and prepares an estate inventory of its assets and debts. The estate administrator also prepares the debtor description of your company and the disbursement list, on the basis of which the debts are paid. The estate administrator also sells your company's assets, pays the debts of the bankruptcy estate and provides the creditors with their disbursements.
The estate administrator ensures that your employees will receive their wages and salaries through the pay security scheme. The administrator is also responsible for the bookkeeping of the bankruptcy estate and organises the creditors’ meetings and prepares the final settlement of accounts of the bankruptcy estate.
The creditors decide on the fees paid to the estate administrator. The estate administrator also receives a compensation for managing the bankruptcy estate. The fee and the compensation are paid from the assets of the bankruptcy estate.
The work of the estate administrators is supervised by the Bankruptcy Ombudsman. The work of lawyers is also supervised by a supervisory board acting under the Finnish Bar Association.
A bankruptcy can be reversed if a request for the reversal is submitted to a court within eight days of the initiation of the bankruptcy. There must always be a valid reason for the reversal. For example, your company may have paid all its debts and the creditor in question decides not to pursue the bankruptcy any further.
If the bankruptcy petition has been filed by a creditor, the creditor and your company must jointly request the reversal. The other creditors and the estate administrator may be consulted in connection with the request. The consultations may impact the court decision on whether the bankruptcy is reversed or not.
If you have filed the bankruptcy petition, you must also file the request for reversing the bankruptcy. In that case too, the creditors and the estate administrator may be provided with an opportunity to be heard.
The court notifies your company, the creditor filing the bankruptcy petition and the estate administrator of the reversal. The estate administrator will provide you with details of how the assets of the estate have been used. Pay the estate administrator the fee ordered by the court.
After the reversal of the bankruptcy, your company can continue its operations as before.