Insolvency
Experienced attorneys of Annia assist companies in bankruptcy matters, including filing for bankruptcy, creditor investigations, and asset realization. We also provide assistance in debt collection.
Many assignments can be carried out through remote services as well.
Liquidation Procedure
The liquidation procedure is an optional method for a limited company to end its operations, and it is usually chosen when the company is in a favorable situation. As a result of this procedure, both the company and its operations cease entirely. Liquidation may be considered when you do not want or cannot continue the company’s operations despite its profitability. Often, the situation arises when the company has not been successfully sold. The decision to enter liquidation and the appointment of a liquidator are determined by the company’s general meeting.
The liquidator converts the company’s assets into cash and pays off its debts. They also distribute any remaining assets to the owners and prepare the final settlement. The company is considered dissolved once the liquidator presents the final settlement at the general meeting.
Who is the liquidator?
The liquidator is typically a neutral attorney specialized in liquidation proceedings, whose role is to assess the company’s situation, including its debts and assets, and to liquidate its assets. In Annia, attorney Maria Puputti handles the tasks of a liquidator.
How is a company placed into liquidation?
The procedure begins when a notification of the commencement of the liquidation process, along with details of the appointed liquidators, is submitted to the Finnish Trade Register Authority (PRH). Prior to this, a company general meeting makes the decision to enter the liquidation process and selects the liquidators, who must promptly inform the decision for registration.
Stages of the liquidation process:
1. Decision by the general meeting of the limited company to initiate the liquidation process and appoint liquidators.
2. Notification to the Finnish Trade Register Authority (PRH) of the liquidation process, including registration of the liquidation status and the appointed liquidators.
3. Public notice to creditors.
4. The liquidators are then required to issue a public notice to the company’s creditors. Protecting the rights of creditors is a key aspect of the Finnish Companies Act.
5. Payment of debts.
6. After the deadline of the public notice, the liquidators pay off all known debts of the company. If a debt is disputed, not yet due, or for any other reason cannot be paid, necessary funds are set aside and the remainder is distributed.
7. Distribution of the remaining assets and the possibility of contestation.
8. Once all known debts have been settled, the remaining assets of the company are distributed. Shareholders have the right to receive their share of the company’s net assets unless the articles of association dictate otherwise. A legal action against the company (Action for Contestation) must be initiated within three months of the final settlement being presented at the general meeting.
9. Final settlement.
10. Upon completion of their duties, the liquidators must promptly provide a final settlement by compiling a report on the entire liquidation process, including details of the asset distribution. The report must include financial statements, management reports, and possible audit reports for the period of liquidation. After these actions, the liquidators must promptly call a general meeting for shareholders to review the final settlement.
11. Dissolution of the limited company.
12. The company is considered dissolved when the liquidators present the final settlement at the general meeting. The liquidators must promptly notify the dissolution for registration in the Finnish Trade Register.
Debt Collection
When a professional handles the matter, debtors typically pay off their debts faster. Professional assistance is particularly important if the client has, for example, contested the debt, or if there is a possibility that non-payment stems from a cause other than insolvency.
Bankruptcy
FAQ – Frequently asked questions
Filing for Bankruptcy
A company is declared bankrupt by submitting a bankruptcy application to the district court. The requirement is that the company is permanently unable to pay its debts. The bankruptcy application can be filed by a creditor or the debtor. Most bankruptcies are initiated by creditors, often instigated by tax authorities and pension insurance companies. The application is submitted to the registry of the district court where the company’s operations have been managed.
The content and steps of the application depend on whether it’s filed by the debtor or a creditor. If the debtor applies for their own company’s bankruptcy, the application should detail the company’s debts, assets, major creditors, and contact information of creditors. If a creditor files the application, the district court must first notify the debtor about the application and provide an opportunity for the debtor to respond. Only after this, the district court can declare the company bankrupt.
Bankruptcy of an Estate
An estate can also be declared bankrupt. In this case, the process involves the usual bankruptcy procedure, meaning a bankruptcy application is prepared and submitted to the district court. When an estate is declared bankrupt, its beneficiaries and possible estate administrator lose control over the estate’s assets. An estate administrator is appointed to manage the bankruptcy process of the estate. Even if the estate has a negative value, it’s not always necessary to apply for bankruptcy.
The district court declares bankruptcy and appoints an estate administrator.
As part of the bankruptcy decision, an estate administrator is appointed to assess the company’s situation and manage its execution. The estate administrator is typically a neutral attorney specialized in bankruptcies, whose task is to assess the company’s situation, including debts and assets, and to liquidate assets. At Annia, the tasks of the estate administrator are handled by attorney Maria Puputti.
The tasks of the estate administrator for the bankruptcy estate - What happens?
Initially, the estate administrator compiles an inventory of the estate and also conducts a debtor investigation into the company’s finances prior to the bankruptcy and the circumstances leading to it. The inventory outlines the debtor’s individual assets and wealth and lists all creditors and the amounts of their claims. Once the debtor confirms the inventory, the estate administrator can initiate the realization of assets and the distribution of funds.
The assets of the bankruptcy estate encompass the company’s working capital, property, and the proceeds from the business activities of the estate. The business operations of the company can be continued by the estate. The company’s assets are realized in a reasonable manner, for instance, through forced auctions, in order to generate the highest possible amount of funds for distribution to creditors.
If the assets of the bankruptcy estate are sufficient for distribution to creditors, the estate administrator informs a deadline by which all creditors must declare their claims against the company. It is the duty of the creditor or their representative to ensure that the claims are reported by the deadline set by the estate administrator. Failure to declare claims in a timely manner may result in the creditor losing their share of the distributed assets.
The company’s assets are distributed to creditors in proportion to their claims, as long as funds are available. Creditors have a priority order based on which the assets are distributed.
Ending of Bankruptcy
Often, bankruptcy concludes when the assets collected for the estate have been distributed among the creditors, and the estate administrator has prepared the final accounts. The final accounts of the bankruptcy include a distribution list that details the portions of claims paid to the creditors. Bankruptcy can also be terminated if there are no assets available for distribution. In certain situations, a company might transition to debt restructuring if its financial situation unexpectedly improves.
