Restructuring Act under reform
The Finnish Restructuring of Enterprises Act (the “REA” or the “Restructuring Act”) will be undergoing revision to bring it in line with the requirements established in Directive (EU) 2019/1023 of the European Parliament and of the Council on preventive restructuring frameworks, on discharge of debt and disqualifications, and on measures to increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt, and amending Directive (EU) 2017/1132 (the “Insolvency Directive”). In addition to implementing the Insolvency Directive, the purpose of the revision is also to implement the items recorded in the government programme with regard to amending Finnish insolvency and debt restructuring provisions.
Restructuring Act 2.0
As attorneys who assist our clients on corporate restructuring matters on a day-to-day basis in addition to acting as restructuring administrators, we do not consider the current Restructuring Act, which is almost 30 years old, to be capable of rising to modern challenges. In our view, in fact, the REA has become outdated in many respects.
As a point of comparison, the Finnish Bankruptcy Act was amended successfully in 2019, and we believe that these legislative amendments will simplify the already well-functioning Bankruptcy Act and the bankruptcy process even further. However, in the economic turmoil following the coronavirus epidemic, ensuring that we have well-functioning restructuring legislation is even more important for the economy and the entities that operate therein.
In our opinion, the Restructuring Act requires urgent and significant revisions. An actual larger revision of the REA, which we do not consider the revision done in 2007 to be, to bring the REA up-to-speed with the modern, more diverse financial system has yet to be completed.
Insights into possible amendments
The Finnish Ministry of Justice has established a working group to prepare the implementation of the Insolvency Directive and the revision of the REA. In order to assist in the work of both the working group and its steering committee, Borenius has compiled a memorandum regarding the amendments required by the Restructuring Act. These amendments proposed by Borenius are based on observations we have made in practice while acting as restructuring administrators or as a debtor’s or creditor’s legal counsel.
Some of the amendments we have proposed are fairly wide in scope, whereas some are only technical specifications. These amendments also comprise numerous other proposed revisions that would clarify or specify the existing legal provisions and their interpretation. The aim is to establish improved, efficient and functional restructuring provisions that can rise to the challenges imposed by our modern, more complex society.
Please click this link to read the memorandum (in Finnish).
Borenius’ lawyers are available to assist in addressing any questions you may have regarding the amendment.