FINLAND Law and Practice Contributed by: Timo Lehtimäki, Niklas Thibblin, Essi Hietaoja and Oona Honkamaa, Waselius
Secured hedging is often provided by the bank providing the super-senior revolving credit facil - ity, which simplifies intercreditor matters some - what. If hedging is needed and the providing bank is adamant on security, private credit pro - viders may seek to limit such security to hedg - ing proceeds only, thereby effectively limiting the impact of this competing security interest to the broader financing arrangements. 5.10 Bank Licensing No licence is required for the taking or holding of security under Finnish law. The concept of a security agent is commonly used and recog - nised in Finland. No parallel debt provisions are needed. As regards loan assignments, in most cases, security does not need to be re-taken, as the assignment is usually covered by the relevant finance and security documents. Re-taking of the security should be avoided where possible, since it may also reset the clock for the harden - ing 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 collateral 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 secu - rity 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 enforcement methods is limited by: • the statutory invalidity of a contractual provi - sion 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 formal insolvency proceed - ings. As regards enforcement of security over spe - cific movable 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 security agreements commonly provide that the pledgee (often the security agent acting on behalf of pledgees) is authorised to enforce the security in any man - ner it deems appropriate, including by sell - ing, transferring or otherwise disposing of the pledged property, be it through public auction or privately, which would also include arranging a limited auction (ie, an auction where the pledgee seeks bids from pre-selected potential buyers). The enforcement of a floating charge will, for practical purposes, take place in a bankruptcy scenario where the bankruptcy trustee realises the assets covered by the floating charge and distributes the net enforcement proceeds to
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