Legal Alert – Recent Amendments in the Field of Bankruptcy in Finland
March 2013 brought some amendments to the Finnish bankruptcy legislation which affect both debtors and creditors legal rights related to the proceedings. A new Data Management System was also put into operation. The new system allows creditors to easily retrieve documents and information related to bankruptcy and restructuring proceedings.
Amendments to the Bankruptcy Act
The Finnish Bankruptcy Act was amended on 1 March 2013 and some new elements related to criminal proceedings were introduced into the act.
The Bankruptcy Act now includes provisions regarding protection against self-incrimination (nemo tenetur se ipsum accusare). A debtor or its representative is not liable to disclose information which may incriminate him or her. According to the Bankruptcy Act, this limitation only applies in situations where the debtor is a suspect in a preliminary investigation or charged with a crime, though. If there are no preliminary investigation or criminal proceedings pending, the debtor or its representative does not have the right to refrain from disclosing information to the administrator. Similarly, if the debtor or its representative is not aware of a pending preliminary investigation or criminal proceedings, he or she does not have the right to remain silent. Information disclosed without the knowledge of pending proceedings and the right to remain silent because of the proceedings may, however, be unexploitable in later criminal proceedings according to other laws related to evidence.
Earlier the Bankruptcy Act provided that the debtor description had to be delivered to the prosecutor by the administrator ex officio. Now the debtor description has to be delivered to the prosecutor only upon the prosecutors request. Instead of delivering the debtor description automatically, the administrator now has the obligation to report to the police about certain suspected crimes noticed during the bankruptcy proceedings. If the administrator notices that there might be a crime committed against creditors, a bookkeeping crime, or other crime committed in business, which may affect the creditors right to receive payment or the estate administration, the administrator must inform the police if he or she finds it necessary.
On one hand, the amendments protect the rights of the debtor, and on the other hand, they increase the administrators duties to report noticed malpractices.
Amendment to the Act on the Recovery of Assets to a Bankruptcy Estate
The Act on the Recovery of Assets to a Bankruptcy Estate was amended simultaneously with the Bankruptcy Act. The only amendment concerns the deadline for filing a recovery claim with a court.
Until now, the deadline for filing a recovery claim has been six months after the deadline for lodging claims in a bankruptcy. This has offered administrators a possibility to extend the deadline for filing a recovery claim by not determining the deadline for lodgement of claims, and in some cases, it can be even possible that there will be no deadline for lodgement of claims at all. Therefore the non-fixed deadline for filing a recovery claim was found undesirable and unpredictable. The non-fixed deadline may have also compromised the defendants legal rights in a recovery case.
After the amendment the deadline for filing a recovery claim is fixed and it is calculated from the beginning of bankruptcy. The deadline is one year after the beginning of bankruptcy. However, if the bankruptcy estate was not aware of the grounds for the recovery claim, it is still possible to file a claim later in three months time after noticing the grounds for a claim. The fixed deadline improves the defendants legal rights in a recovery case by adding predictability in the process. Now the defendant knows from the moment a bankruptcy begins when a possible recovery claim must be filed at the latest.
Kosti Data Management System for Bankruptcy and Restructuring Proceedings
During spring 2013 a new data management system for bankruptcy and restructuring proceedings (Kosti) was put into operation. The system is managed by the Finnish Bankruptcy Ombudsman. The system basically offers the parties in insolvency proceedings one centralised vehicle to find and share information, deadlines and documents related to each individual insolvency proceedings. The creditors are encouraged to file and find documents via the system.
The system works through a web browser and can be accessed by any organisation or entity with a Finnish business identity code. Foreign entities cannot access the system but they can, however, access the system by using a Finnish representative, such as a law firm. We are glad to help our clients to benefit from the new data management system.