FINLAND Law and Practice Contributed by: Tarja Wist, Wist Attorneys
7.2 Claw-Back Risk The Finnish claw-back provisions may be applied in bankruptcy, in corporate reorganisa- tion proceedings and in the event of an unsuc- cessful enforcement attempt against the debtor. The applicable hardening period is calculated from the filing of an application for the first of any such event. The general grounds for claw-back apply for any actions taken by the insolvent debtor within the hardening period of five years. The application of these general grounds presupposes that such action is inappropriate and that the parties are aware of this. In arm’s length acquisition finance transactions between unrelated parties, this is seldom the case. However, specific claw-back provisions apply for the repayment of debt within the hardening period of three months. These provisions may be applied where the repayment is premature or substantial with respect to the total assets of the debtor or if the repayment is made by unu- sual means, except where the payment may be deemed ordinary in the circumstances. In addition, a payment obtained by means of enforcement may be avoided where the enforce- ment is effected within the hardening period of three months. In acquisition finance transactions the highest claw-back risk relates, however, to the security, which is not always fully perfected before an event of default has occurred. Under the spe- cific provisions on claw-back of security, a secu- rity given within the hardening period of three months may be avoided where the grant of such security had not been agreed upon when the secured indebtedness was incurred or where the requisite measures for perfecting the secu-
would be issued by the holding companies fur- ther up in the structure (topcos) or, where the ultimate purchaser is an industrial group, the main entity of the purchasing group. 6.2 Restrictions Upstream guarantees are restricted by the pro- hibition against financial assistance and the requirement for corporate benefit of the target and each of its subsidiaries, as in the case of upstream security. See 5.5 Financial Assistance and 5.6 Other Restrictions . Accordingly, the financial assistance provisions prohibit the target company and its subsidiaries from guaranteeing the acquisition facility, and the subsidiaries’ capability to guarantee the tar- get’s obligations under the working capital facil- ity is subject to each subsidiary deriving suffi- cient corporate benefit from the working capital facility. 6.3 Requirement for Guarantee Fees No requirements for guarantee fees exist, nor are they common in Finnish acquisition finance transactions. The general view in the market is that a guarantee fee alone would not be suffi- cient to justify corporate benefit. 7. Lender Liability 7.1 Equitable Subordination Rules As a civil law jurisdiction, Finland does not have equitable subordination rules in its company or insolvency laws. Events of unfair favouring of a shareholder-creditor are addressed based on the claw-back provisions in the insolvency laws and the provisions of the company law concern- ing liability of directors and shareholders.
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