Waselius & Wist Navigation
  • Our team
  • In Focus
    • Recent Work
    • News
    • Legal Updates
    • Publications
    • Rankings
    • Blog
    • Newsletter
  • About Us
    • Corporate Social Responsibility
  • Expertise
    • Banking and Finance
    • Capital Markets
    • Corporate and Commercial
    • Corporate governance and Investigations
    • Data Protection
    • Dispute Resolution
    • Employment and Incentives
    • Energy and Natural Resources
    • EU and Competition
    • Financial Regulatory and Compliance
    • Insurance
    • Intellectual Property and Technology
    • Marketing
    • Mergers and Acquisitions
    • Private Equity
    • Real Estate
    • Restructuring and Insolvency
    • Tax and Structuring
  • Careers
    • Lawyers
    • Law students
    • Support staff
    • Open Positions
    • Contact
  • Contact
  • Our team
  • In Focus
    • Recent Work
    • News
    • Legal Updates
    • Publications
    • Rankings
    • Blog
    • Newsletter
  • About Us
    • Corporate Social Responsibility
  • Expertise
    • Banking and Finance
    • Capital Markets
    • Corporate and Commercial
    • Corporate governance and Investigations
    • Data Protection
    • Dispute Resolution
    • Employment and Incentives
    • Energy and Natural Resources
    • EU and Competition
    • Financial Regulatory and Compliance
    • Insurance
    • Intellectual Property and Technology
    • Marketing
    • Mergers and Acquisitions
    • Private Equity
    • Real Estate
    • Restructuring and Insolvency
    • Tax and Structuring
  • Careers
    • Lawyers
    • Law students
    • Support staff
    • Open Positions
    • Contact
  • Contact
In Focus
Home In Focus Covid-19 and insolvency – update on temporary amendment of insolvency legislation

Legal Updates04.05.2020

Covid-19 and insolvency – update on temporary amendment of insolvency legislation

Due to the global Covid-19 pandemic, many undertakings are suffering from unexpected financial difficulties and, according to a recent survey, one third of Finnish companies worry of becoming insolvent. New insolvency legislation has not yet been enacted since the Covid-19 pandemic spread to Finland, but the Finnish government and authorities have expressed their concern regarding the potential wave of bankruptcies in the suite of the Covid-19 crisis. Below we list some of the efforts made by Finnish authorities to date in response to the feared wave of insolvencies.

Bankruptcy

The Finnish Parliament approved on 29 April 2020 the government proposal for the temporary amendment of the Finnish Bankruptcy Act (120/2004, as amended, Fi: konkurssilaki). The newly amended Act limits creditors’ right to petition for bankruptcy on the basis of a debtor’s temporary insolvency.

Under the current Finnish Bankruptcy Act, a debtor is considered bankrupt if it has not repaid its debt in a week from receiving a demand for payment including a threat of the creditor filing for bankruptcy. With the amendment, this susceptibility to bankruptcy will be temporarily removed from the Finnish Bankruptcy Act and, consequently, debtors will no longer be subject to threatened bankruptcy based on a creditor’s payment claim given with a weeks’ notice. A creditor is, however, still able to petition for a debtor’s bankruptcy provided that the creditor is able to prove that the debtor is unable to pay its debts as they fall due. In addition, the amendment does not have any effect on petitions for a debtor’s bankruptcy made by a creditor based on the fact that debtor has not repaid its debt in a week from receiving a demand for payment (including a threat of the creditor filing for bankruptcy) if such demand has been verifiably served on the debtor prior to the entry into force of the amendment. In the event the demand for payment is served on the debtor after the entry into force of the amendment, a creditor may only petition for a debtor’s bankruptcy based on the above susceptibility to bankruptcy criteria if the debtor’s unpaid debt which the petition is based on has fallen due two months prior to the entry into force of the amendment.

As noted above, the amendment is only aimed to be temporary and will be in force until 31 October 2020. The aim of the amendment is to temporarily suspend the use of a payment demand as grounds for bankruptcy and to determine the potential insolvency of a company by a broader review of the company’s financial difficulties so that companies would have a better chance of surviving the temporary financial hardships caused by the Covid-19 crisis.

The amendment entered into force on 1 May 2020.

Restructuring of Companies

The Finnish Tax Administration decided on 17 April 2020 that it unpaid tax payments are no longer an obstacle for a company applying for restructuring in accordance with the Finnish Act on Company Restructuring (47/1993, as amended, Fi: yrityssaneerauslaki) provided that the restructuring application has been filed in between 25 March 2020 and 31 August 2020.

In the same decision the Finnish Tax Administration also amended the grounds based on which the restructuring programme may lapse. According to the Finnish Tax Administration’s decision, restructuring programme may only lapse if the debtor fails to make payments in accordance with the payment schedule, new tax debt not connected to the restructuring programme is created by the debtor or the debtor fails to comply with the reporting obligations under Finnish tax law.
Similarly as the amendment concerning bankruptcy legislation, the above reliefs granted by the Finnish Tax Administration are aimed to be temporary and will be in force until 31 August 2020.

For further information, please contact:

Christoffer Waselius

Partner

Ville-Veikko Vänttinen

Senior Associate

Share:
Image

Contact info

Eteläesplanadi 24 A
00130 Helsinki, Finland

+358 9 668 9520
+358 9 668 95 222
ww@ww.fi

Quick links

  • Our Team
  • In Focus
  • About Us
  • Expertise
  • Careers

E-invoicing

E-address: 003710525214
Operator: Apix Messaging Oy
Service ID: 003723327487


BUSINESS ID 1052521-4
VAT ID FI10525214

Legal notice
Privacy notice
General Terms and Conditions

© 2022 Waselius & Wist

This website uses cookies to compile statistical data on the use of our website in order to enable us to evaluate and improve our site. OK Decline Cookie Policy
Manage Cookies

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are as essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Non-necessary
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
SAVE & ACCEPT