generally belong to the bankruptcy estate of the bankrupt company and the liquidation and recovery of such assets is governed by Finnish law. In practice, however, the possibility of recovering overseas assets of the Finnish debtor is dependent on whether or not the Finnish court order on bankruptcy, and its effects on such assets, are recognised by the relevant local law and are enforceable through the local courts. The Finnish Bankruptcy Act contains a prohibi-
tion of discrimination against foreign creditors, and non-Finnish creditors have full right to participate in Finnish insolvency proceedings (cer- tain foreign government and tax claims can, how- ever, be treated differently on grounds of public policy or as regulated in international treaties). The claims can be submitted in English. The Council Regulation (EC) No 1346/2000
on insolvency proceedings (the Insolvency Regulation) is applicable in insolvencies within the EU, except for Denmark. Pursuant to the Insolvency Regulation, the courts
with jurisdiction to open insolvency proceedings are those of the EU Member State in which the “centre of a debtor’s main interests” (or COMI) is situated. In case of a company or legal person, the place of the registered office is presumed to be the centre of its main interests. Pursuant to the Insolvency Regulation, the opening of secondary proceedings without re-examining insolvency is possible in another EU Member State in respect of assets located in that EU Member State. Such secondary proceedings may be requested by the liquidator/administrator in the main proceedings. According to the Nordic Bankruptcy
Convention of November 7 1933 (as amended) between Finland, Sweden, Denmark, Iceland and Norway, a bankruptcy declared in one Nordic country is recognised in the others as automatical- ly applying to the bankrupt company’s assets in those countries. In insolvency proceedings between Finland and Sweden, however, the Insolvency Regulation has replaced the Convention.
Enforcement and asset sale in insolvency proceedings Sale of assets In bankruptcy, the liquidator will sell all the assets of the bankrupt company and, eventually, use the net proceeds to settle creditors’ claims. The liquidator has the obligation to sell the assets of the bankrupt company in a way that yields the best possible net proceeds in the circumstances. The liquidator can generally sell the assets independent- ly, for example by way of private sale or auction. In company administration, the company in
032 IFLR|RESTRUCTURING & INSOLVENCY
of significant casualties of insolvency is still very low in Finland
“ ”
The number
administration may sell assets out of the ordinary course of business (no significant discounts or auc- tions unless in the ordinary course of trading of the company) if so provided for in the administration programme and/or with the consent of the administrator. After the administration pro- gramme has been approved, the assets can be sold as provided for in the programme. The programme can contain provisions such as the minimum sale price. After bankruptcy or administration proceedings
have been commenced, unsecured creditors are no longer allowed to enforce their rights independently, and any enforcement action already commenced but not completed will be discontinued.
Enforcement of security in bankruptcy The enforcement of security (with the exception of a floating charge) can take place either independ- ently (either directly by the secured creditor or by the public enforcement authorities engaged by the secured creditor) outside of bankruptcy proceed- ings, or as part of the bankruptcy proceedings (by the liquidator).
Pledges over specific movable property Pursuant to the Bankruptcy Act, a pledgee can enforce a pledge over specific movable property (such as shares and registered IP rights) independently despite the pending bankruptcy proceedings of the pledgor. The pledgee must, however, notify the bank- ruptcy liquidator of the intended enforcement, and the liquidator may on certain grounds order the enforcement to be temporarily discontinued. After enforcement, the net proceeds will go to
the secured creditor up to the amount of the creditor’s secured claim, whereas any excess pro- ceeds will form a part of the assets of the bankrupt- cy estate (to be distributed to unsecured creditors) unless there are second lien pledgees. Should the enforcement proceeds not suffice to satisfy the secured creditor’s secured claim, the outstanding balance of the secured claim will constitute an ordinary unsecured claim and will rank pro-rata with the claims of other unsecured creditors.
Floating charges A floating charge must be enforced through the bankruptcy liquidator. Further, only 50% of the net proceeds of the assets covered by the floating charge, which remain after secured claims of creditors with better priority than the holders of floating charge (in particular debts secured by pledges over specific assets) have been satisfied, will be applied to satisfy the floating charge holders, while the balance will be applied to satisfy the unse-
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