Finland: Bankruptcy Legislation Reform

An extensive general bankruptcy legislation reform will be implemented in Finland, which will repeal the established Bankruptcy of Act 1868. The new Bankruptcy Act (hereafter BA of 2004) will come into force on 1 September 2004. Also several additional laws will be altered due to the BA of 2004.

The most essential separate change in the new law concerns provisions on the public liquidation the purpose of which is to avoid suspension of the bankruptcy of limited means without adequate settlement of the debts.The general aim of the new law is to clarify the bankruptcy legislation and to improve its forseeability.

BA of 2004 will change the procedural prerequisites of the bankruptcy petition, since the minimum limit for the receivables of the bankruptcy applicant has been setted. According to the BA of 2004 chapter 2 section 1 paragraph 2 of the bankruptcy applicant’s receivable cannot be minor nor can the pursuable legitimate interest in the proceedings be unsuitable or clearly against the good method of collection, or else the bankruptcy petition will be dismissed.

According to the BA of 2004,the hearing of creditors is not organized after the beginning of the bankruptcy, and the final choice of the receiver for the whole proceeding is tried to be made immediately. Consequently, in the BA of 2004, there is only one conceptual title, "receiver", for a person who acts as a liquidator of the bankrupt’s estate.

The Bill for the Bankruptcy Act considers the sections of the public liquidation as the most essential reform of the new BA of 2004. The regulation regardindg the public liquidation is destined for the situations in which the bankruptcy would be suspensed already in an early stage of the proceeding due to inadequate assets.

The protection of reasonable good faith will extend in BA of 2004 as an expection for the old Bankruptcy Act. BA of 2004 will protect a party who is in reasonable good faith as regards to the beginning of the bankruptcy. The legal act concluded at the time binds bankrupt’s estate.

Formal, striclty preclusive proof of debt in bankruptcy duty is contained in Bankruptcy Act. Formally obligatory proof of debt in bankruptcy will maintain, but according to BA of 2004 Chapter 12 Section 8, the receiver can take into account a claim in bankruptcy in the suggestion of partitioning list without proofing of debt in bankruptcy, if there are no indistinctness of the amount and grounds of the receivables. In addition the supplementary registration is to loose its previous significance, since an obligee is allowed to file any supplementary registration in his discretion.

BA of 2004 will bring also some changes to settlements of debts in bankruptcy. In the Bankruptcy Act receivables are confirmed to drawn by a final decree in bankruptcy, but in the BA of 2004 the same matter is solved by the distribution list of the receiver.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.