Phases of bankruptcy proceedings
The bankruptcy proceedings are initiated when the court declares your company bankrupt and appoints the estate administrator. The estate administrator prepares the estate inventory of your company’s assets and debts and draws up the debtor description. The creditors register their claims with the estate administrator who prepares the disbursement list on this basis. The estate administrator sells the assets of your company, pays its debts and prepares the final settlement of accounts.
Your company may file the bankruptcy petition itself or the petition may be filed by any of the creditors. The bankruptcy proceedings are initiated when a court has considered a bankruptcy petition concerning your company and decided to declare the company bankrupt. In the same connection, the court also notifies the Trade Register of the matter.
If necessary, an announcement of the bankruptcy is published in the Finnish official journal (virallinen lehti) so that such matters as the number of your company's unknown creditors can be determined. The details of the bankruptcy are also entered into the trade register, insolvency register, the register of bankruptcy and reorganisation, and the credit information register.
If the bankruptcy petition has been filed by a creditor, the court will notify your company of this before it decides on the initiation of the bankruptcy proceedings. At this stage, your company still has an opportunity to give a written opinion in the matter.
After the bankruptcy proceedings have been initiated, you no longer have the right to decide on your company’s assets. A court appoints an estate administrator for the bankruptcy estate. The estate administrator acts as its representative and manages its administration. A lawyer usually acts as the estate administrator.
First the estate administrator prepares an estate inventory. The estate inventory lists all your company's assets and debts, as well as the estimated value of its property, when converted into cash.
The estate administrator also prepares the debtor description of your company for the period before the bankruptcy. The debtor description details the main characteristics of your company's operations and the key reasons for the bankruptcy. It also describes factors impacting the continuation of the bankruptcy proceedings and the assessment of your company's operations.
Even though the preparation of the estate inventory and the debtor description are the responsibility of the estate administrator, you must provide information for the documents. You must also attest the estate inventory with your signature.
The estate inventory and the debtor description must usually be prepared within two months of the initiation of the bankruptcy proceedings. The continuation of the proceedings is based on what is stated in them. If for example the bankruptcy estate does not have enough assets, the bankruptcy may lapse or it may continue under public receivership. In other cases, the bankruptcy proceedings will usually continue as ordinary proceedings.
Each of the creditors must notify the estate administrator of the amount of its claims by the lodgement date given by the estate administrator. The lodgement date is between one and two months from the date on which it is set.
Based on the notifications submitted by the creditors, the estate administrator prepares a proposal for the disbursement list. The disbursement list states how the remaining assets in the bankruptcy estate are distributed among the creditors. The estate administrator sends the proposal to your company and the creditors that have requested it.
If you think that the sum given by a creditor is incorrect, you can contest the claim. You must notify the estate administrator of your intention to contest the claim in writing within one month of the completion of the draft disbursement list. A creditor may also contest the disbursement list if for example, the claims of another creditor are incorrectly given precedence over its claims.
The estate administrator will make the necessary changes to the draft disbursement list on the basis of these reminders. The estate administrator will make the draft into the final disbursement list and submits it to the court. The court examines the disbursement list and the reminders and approves the document.
After the estate administrator has examined the bankruptcy estate and converted its assets into cash, the administrator will pay all the costs arising from the bankruptcy proceedings from the estate. The estate administrator will distribute the remaining assets among the creditors in accordance with the disbursement list.
After that, the estate administrator prepares the final settlement of accounts. The final settlement comprises a report on the bankruptcy estate's administration and the funds distributed to creditors. The meeting of creditors approves the final settlement of accounts and the estate administrator notifies the Legal Register Centre of its approval.
The bankruptcy proceedings are now complete and your company is closed down. No separate notification of the closure to the trade register is required because it will receive the information from the Legal Register Centre.