FINLAND Law and Practice Contributed by: Timo Lehtimäki, Niklas Thibblin, Essi Hietaoja and Oona Honkamaa, Waselius
Secured hedging is often provided by the bank pro - viding the super-senior revolving credit facility, which simplifies intercreditor matters somewhat. If hedging is needed and the providing bank is adamant on secu - rity, private credit providers may seek to limit such security to hedging proceeds only, thereby effectively limiting the impact of this competing security interest to the broader financing arrangements. 5.10 Appointment of Collateral Agent The concept of a security agent is commonly used and recognised in Finland. No parallel debt provisions are needed. As regards loan assignments, in most cases, secu - rity does not need to be re-taken, as the assignment is usually covered by the relevant finance and secu - rity documents. Re-taking of the security should be avoided where possible, since it may also reset the clock for the hardening period, potentially exposing the security to claw-back. 6. Enforcement 6.1 Enforcement of Collateral by Non-Bank Secured Lenders Non-bank secured lenders may enforce their collat - eral similarly to secured bank lenders. The process for a secured lender to enforce its security depends first on the type of security, the terms and conditions of the relevant security agreement, and the nature of the relevant security assets. The Finnish Commercial Code stipulates a default method for the enforcement of a security of movable property. However, the parties may contract out of most parts of the default process, and this is commonly done. However, the parties’ discretion with regard to enforce - ment methods is limited by: • the statutory invalidity of a contractual provision providing that title to the security assets shall automatically transfer to the pledgee upon default (the pledgee may, however, enforce the security by assuming ownership of the security assets, thereby effectively discharging secured obligations in full or in part); and
• the pledgor’s general duty of care towards the pledgee. Within the limits set out above, the method by which the security assets are realised is typically agreed to be fully at the pledgee’s discretion. It is often possible to commence enforcement proceedings outside for - mal insolvency proceedings. As regards enforcement of security over specific mov - able property, such as shares, bank accounts and receivables, the enforcement is primarily governed by terms of the respective security agreement and other relevant finance documents. Finnish law secu - rity agreements commonly provide that the pledgee (often the security agent acting on behalf of pledgees) is authorised to enforce the security in any manner it deems appropriate, including by selling, transfer - ring or otherwise disposing of the pledged property, be it through public auction or privately, which would also include arranging a limited auction (ie, an auc - tion where the pledgee seeks bids from pre-selected potential buyers). The enforcement of a floating charge will, for prac - tical purposes, take place in a bankruptcy scenario where the bankruptcy trustee realises the assets cov - ered by the floating charge and distributes the net enforcement proceeds to the beneficiary of the float - ing charge (with 50% going to unsecured creditors). Enforcement of security in insolvency proceedings is subject to specific rules. For example, the filing for company restructuring usually triggers a moratorium. 6.2 Foreign Law and Jurisdiction Pursuant to the Rome I Regulation, a contract shall be governed by the law chosen by the parties. Accord - ingly, the choice of a foreign law as the governing law of the contract is a valid choice of law between the parties and will be recognised by the courts of Finland. However, a Finnish court may not apply foreign law of a state if it is against the ordre public. However, the Rome I Regulation does not regulate the effects of transactions in relation to third parties (ie, ultra partes), and there is no harmonisation on this. Therefore, interpretation may vary from jurisdiction to
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