FINLAND Law and Practice Contributed by: Timo Lehtimäki, Niklas Thibblin, Essi Hietaoja and Oona Honkamaa, Waselius
security assets to an entity set up by the pledgee – valuation issues will, however, need to be addressed. Further, when enforcing security, the secured creditor has a duty to take into account – in a way appropriate in the circumstances – the interests of the pledgor and those of other potential interested parties, such as any second lien pledgees or floating charge holders. In practice, this means (for example) that the secured lender may not sell the secured assets for a price lower than fair market value in the then-current cir - cumstances. This duty of care is generally deemed to apply irrespective of the terms of the security agree - ment. If a company is insolvent or if there is a risk of it becoming insolvent, two primary insolvency regimes are available under Finnish law. The first, bankruptcy ( konkurssi ), is primarily designed to liquidate and distribute the assets of a debtor to its creditors and to wind up the debtor company. The second, company restructuring ( yrityssaneeraus ), is split into early company restructuring ( varhainen saneerausmenettely ) and regular company restructur - ing ( perusmuotoinen saneerausmenettely ). Regular company restructuring aims to evaluate whether the business has a reasonable possibility of and sufficient resources for carrying on, and, if so, to rehabilitate the company’s viable business, ensure its continued viability and make arrangements with credi - tors (eg, debt haircuts, extension of payment sched - ules). The objective of early company restructuring, meanwhile, is to prevent potential insolvency. Bankruptcy Proceedings In bankruptcy proceedings, the process begins with a filing of a bankruptcy petition by the company itself or a creditor. If the bankruptcy order is granted by the court, the court will appoint one or more external trus - tees (in Finland, practising lawyers serve in this role) to assume the control and management of the company 7. Bankruptcy and Insolvency 7.1 Impact of Insolvency Processes
in bankruptcy. In this case, the trustee manages the bankrupt company (the bankruptcy estate) during the bankruptcy proceedings. The court-appointed bankruptcy trustee will seize and liquidate all of the bankruptcy estate’s assets in a manner most favourable for the bankruptcy estate. The actual method of sale is decided by the bankrupt - cy trustee (who runs the day-to-day management of the bankruptcy estate) or is put to a vote at the meet - ing of creditors (who make certain major decisions by vote as set out in the Finnish Bankruptcy Act). A pledgee holding security over a movable asset (eg, shares, bank accounts or receivables), may generally enforce the security independently notwithstanding the bankruptcy proceedings, after notifying the bank - ruptcy trustee. The trustee may prohibit the independ - ent enforcement if: • the bankruptcy trustee decides to redeem the pledged asset from the pledgee at a price equal to the principal plus accrued interest of the pledgee’s secured claim; or • the trustee requests the court to impose a tem - porary moratorium of up to two months for the purpose of determining any lack of clarity in the secured creditor’s claim or protecting the interests of the bankruptcy estate. A floating charge cannot be enforced separately from the bankruptcy. Company Restructuring In company restructuring, an order on the basis of a petition for company restructuring is filed by the company itself or a creditor. Company restructuring proceedings can be initiated even without the sup - port of the debtor company if necessary to protect a material interest of the applicant creditor. If the com - pany restructuring order is granted by the court, the court will appoint one or more external administra - tors (in Finland, practising lawyers serve in this role) to assume the control and oversight of the company in restructuring; unlike in bankruptcy, the board of direc - tors of the company stays in place, but with limited powers.
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