FINLAND Law and Practice Contributed by: Timo Lehtimäki, Niklas Thibblin, Essi Hietaoja and Oona Honkamaa, Waselius
sion, this may serve to materially postpone the enforcement proceedings. Further, enforcement measures regarding a floating charge typically result in formal insolvency proceedings. The costs associated with pre-insolvency enforcement typically consist of the fees for the advisers, valuers, etc, and, with regard to certain security assets, of the court’s and the bailiff’s fees. In bankruptcy, the bankruptcy estate has priority to receive payment of certain expenses from the proceeds of the realisation of security assets. The bankruptcy trustee is also entitled to a rea - sonable fee, considering the nature and amount of work required. 6.6 Practical Considerations/Limitations on Enforcement The primary practical considerations regarding enforcement are of a commercial nature – ie, as follows. • What is the best enforcement point in the structure? • How quickly can a buyer be found and assets sold? • Can the business be disposed of as a going concern? • Can all assets be sold at the same time? • How likely is the borrower to file for for - mal insolvency proceedings, which may be destructive for value and/or result in a mora - torium for enforcement, etc? As a slight limitation deriving from Finnish law, the pledgee may not just simply appropriate the security assets – ie, have the title to the assets automatically transferred to the pledgee upon default. However, even though appropriation as such is prohibited, Finnish law does not prohibit
the pledgee from effectively assuming owner - ship of the security assets (essentially by selling the security assets to itself) or selling the security assets to an entity set up by the pledgee – valua - tion 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 inter - ests of the pledgor and those of other poten - tial 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 circum - stances. This duty of care is generally deemed to apply irrespective of the terms of the security agreement. 6.7 Claims Against Secured Lenders Post-Enforcement Typically, no claims or other obligations become the responsibility of the secured lenders. How - ever, the situation may be different if the secured lender takes possession of the relevant assets itself (in particular, real estate). 7. Bankruptcy and Insolvency 7.1 Impact of Insolvency Processes 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 ( yritys- saneeraus ), is split into early company restruc -
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