Use the Lexology Navigator tool to compare the answers in this article with those from other jurisdictions. 

Cross-border insolvency

Recognition of foreign proceedings

Under what circumstances will the courts in your jurisdiction recognise the validity of foreign insolvency proceedings?

Finnish courts will recognise the validity of foreign insolvency proceedings when such proceedings fall within the scope of applicable EU regulations or international treaties.

The EU Recast Insolvency Regulation (2015/848) entered into force on 26 June 2015, applying to insolvency proceedings from 26 June 2017. The regulation is directly applicable law in Finland and governs the validity of insolvency proceedings within the European Union, excluding Denmark.

According to the Nordic Bankruptcy Convention of 7 November 1933 (as amended) between Finland, Sweden, Denmark, Iceland and Norway, a bankruptcy declared in one Nordic country is recognised in the other Nordic countries as automatically applying to the bankrupt company’s assets in those countries. However, in insolvency proceedings between Finland and Sweden, the EU Recast Insolvency Regulation has replaced the convention.

Winding up foreign companies

What is the extent of the courts’ powers to order the winding up of foreign companies doing business in your jurisdiction?

Generally, Finnish courts have jurisdiction to open insolvency proceedings that aim at the liquidation and winding up of a foreign company where such foreign company’s centre of main interests is located in Finland. Further, Finnish courts generally have jurisdiction where the EU Recast Insolvency Regulation does not apply and the debtor has substantial assets in Finland (certain exceptions apply in respect of Icelandic, Norwegian and Danish debtors).

Centre of main interests

How is the centre of main interests determined in your jurisdiction?

Pursuant to the EU Recast Insolvency Regulation, the debtor’s centre of main interests will be presumed to be at the registered office. However, the presumption may be overridden if the central administration is located in another EU member state and a comprehensive objective assessment of all the relevant factors establishes that the company’s actual centre of management and supervision and the management of its interests is located in that other EU member state. The registered office presumption will not apply if the registered office was moved during the three months before the opening of proceedings.

Cross-border cooperation

What is the general approach of the courts in your jurisdiction to cooperating with foreign courts in managing cross-border insolvencies?

Finnish courts have long traditions of cooperation with other Nordic courts in managing cross-border insolvencies. Due to the similarity of the Nordic insolvency laws, cooperation is generally smooth and straightforward. Cooperation within the European Union is largely regulated at EU level. Cooperation with third-country courts depends on the particular situation at hand, and can be difficult due to the differences in domestic insolvency laws. 

Click here to view full article.