FINLAND Law and Practice Contributed by: Timo Lehtimäki, Niklas Thibblin, Essi Hietaoja and Oona Honkamaa, Waselius
has entered into, as well as any liabilities for which the bankruptcy estate is responsible by operation of law. • If the company has undergone company restructuring proceedings prior to the bank - ruptcy: (a) fees and expenses of the restructuring administrator and the supervisor of the restructuring programme, with penalty interest accrued until the time of payment of the fees and expenses; and (b) after satisfaction of payments mentioned in (a), creditors of a debt that has arisen between the commencement and discon - tinuation of restructuring proceedings, with penalty interest accrued until the time of payment of the debt. • Creditors with claims that are secured by a floating charge will receive (prior to other unsecured claims) a disbursement of 50% of the net proceeds of the assets (after the claims of creditors with a better priority posi - tion have been satisfied). There are no material statutory security interests or priming liens under Finnish law. For exam - ple, tax, employee and pension claims do not enjoy any super-priority but instead rank pari passu with normal, unsecured debt. In practice, the bankruptcy trustees’ fees and costs have a super-priority. 7.3 Length of Insolvency Process and Recoveries The timeframe for the completion of the bank - ruptcy proceedings and the distribution of the net proceeds depends mostly on the practicali - ties, such as how quickly the assets of the bank - rupt estate can be realised. Generally, this may take years, especially if the bankruptcy estate becomes involved in lawsuits.
The usual duration of a restructuring programme is five to seven years. However, the early compa - ny restructuring proceedings should be complet - ed within 12 months, though may be followed by the commencement of regular company restruc - turing proceedings or, if the company is insol - vent, bankruptcy proceedings. Through a company restructuring, creditors are typically able to recover a larger portion of their debts compared to what would be possible in bankruptcy. 7.4 Rescue or Reorganisation Procedures Other Than Insolvency Finnish law does not provide for formal proce - dures for preventative financial restructuring of a company, apart from the regulations for a pre - ventative reorganisation of debt set out in the Restructuring Act. However, a debtor and creditor may voluntarily agree on arrangements, such as payment plans, in order to avoid insolvency proceedings under the general principle of freedom of contract. A voluntary contractual payment arrangement between a creditor and a distressed debtor often results in a faster and more inexpensive process than a bankruptcy or regulated restructuring pro - cess. Nonetheless, there is an inherent risk in such voluntary arrangements, as they may be rendered moot by the mandatory provisions of applicable insolvency laws if they fail. Addition - ally, there is an increased risk of claw-back in such arrangements. 7.5 Risk Areas for Lenders If the borrower, security provider or guarantor were to become insolvent, most typical risks for lenders are the value-destructive effects of insolvency and delays, including a moratorium on enforcement – this may trap a lender in an
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