FINLAND Law and Practice Contributed by: Timo Lehtimäki, Niklas Thibblin, Essi Hietaoja and Oona Honkamaa, Waselius
by the court (or the proceedings are terminated early, for example due to a lack of funds). Debts arising after the filing for restructuring proceed - ings must be paid as they fall due. The restructur - ing proceedings leading to the commencement of the actual restructuring programme generally take several months, with the duration depend - ing on the complexity of the debtor company. After the restructuring programme is approved by the court, and for the duration of the pro - gramme, the enforcement of security is only possible pursuant to the terms of the court- approved programme, which commonly entails that enforcement will not be possible in practice during the duration of the programme. During the moratorium, the court may, however, permit a secured creditor to enforce its security interest, if: • the security asset is clearly not necessary for the restructuring programme to succeed; or • the debtor has failed to pay interest on the secured debt, compensate any depreciation of the respective security asset due to its use during the moratorium, or maintain proper insurance on the security asset in question. The moratorium does not restrict the payment of accrued interest on secured debt if the interest is paid on the original terms of the loan and falls due during the restructuring proceedings. Although the secured creditors are subject to the moratorium on most enforcement actions, the Finnish Restructuring Act provides them with special protection in respect of their claims and rights as secured creditors during the pro - ceedings. However, a creditor is considered a secured creditor only to the extent that, at the time at which the reorganisation proceedings
are commenced, the value of the security asset is sufficient to cover the debt so secured. As such, any amount of the debt in excess of this is considered unsecured and can be subject to the same haircuts as other unsecured debt. In the early proceedings, a general moratorium is imposed, unless it is likely that a moratorium will not be necessary. However, a general mor - atorium shall not be imposed if the debtor so requests. If a general moratorium is imposed, it is in force for three months, and can be extended to a maximum of 12 months. Also, the court may, on application, impose a temporary moratorium before the actual proceedings are initiated. Upon the expiry of the maximum period, the early restructuring proceedings should be com - pleted; however, if that is not the case, it is pos - sible to commence regular proceedings or, if the company is insolvent, to apply for bankruptcy. 7.2 Waterfall of Payments The Act on the Ranking of Claims determines the order in which debts are settled. As a main rule, creditors with similar priority have an equal right to a disbursement from the funds of the bankruptcy estate in proportion to the amount of their claims, unless otherwise provided by law. However, the following creditors have prec - edence over unsecured creditors to receive dis - bursement for their claims, in this order. • Secured creditors (excluding floating charge holders) and holders of rights of retention have priority for the proceeds relating to the relevant security asset. • Creditors of the administrative expenses of the bankruptcy estate, and creditors with claims on the basis of contracts that the bankruptcy estate (rather than the debtor)
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