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31 May 2013
According to the principal rule of the Bankruptcy Act (120/2004), in order to be entitled to a disbursement, a creditor must lodge a claim by sending a written statement to the estate administrator. After the debtor's assets have been inventoried, the estate administrator will set a due date for the lodgement of creditors' claims.
Chapter 12 of the act includes detailed provisions regarding the right and/or obligation of creditors to lodge a claim in bankruptcy, as well as the exceptions which enable the estate administrator to take the claim into account without the lodgement of a claim. In addition, the EU Insolvency Regulation (1346/2000) has established certain rules for cross-border bankruptcy cases in the European Union.
In a recent Supreme Court case, a creditor misunderstood the obligation to lodge a claim. The creditor presented its claim to the estate administrator for the drafting of the estate inventory and a description of the debtor. However, the creditor failed to fulfil the obligation to carry out the lodgement of claim.
The estate administrator will inform the creditors, the district court and debtor's representative of the lodgement date. Normally, the request to present the claim in bankruptcy is submitted to known creditors, by both written letter and email. In addition, the lodgement date is announced in the Official Gazette.
The creditor's letter of lodgement must be submitted to the estate administrator in writing and contain the following information:
The creditor has the right to present the claim in a currency other than euros. It is the estate administrator's duty to convert the amount of the receivable into euros. The total value of the receivable is determined in accordance with the exchange rate at the commencement date.
Additionally, the creditor must provide precise and detailed information regarding the contractual relations between the debtor and creditor, or other written evidence which will be relied on by the creditor for making its claim and regarding the whereabouts of such documents if they are not presented to the administrator.
In accordance with Article 39 of the Insolvency Regulation, any creditor which has its habitual residence, domicile or registered office in a member state other than that in which the bankruptcy proceedings opened has the right to lodge claims in writing. Article 39 is mandatory and directly applicable in the member states. Therefore, regionally applicable bankruptcy legislation cannot conflict with it.
The requirements regarding the content of the lodgement of claim are not as detailed as the provisions set out in the Bankruptcy Act. Pursuant to Article 41 of the Insolvency Regulation, the lodgement of the claim must contain, among other things, the following:
The relationship between the bankruptcy acts of the member states and the Insolvency Regulation in respect of the content of the lodgement of claim has not been resolved. To clarify the situation, the European Commission drafted a model document which may be used to fulfil the minimum requirements when presenting the claim.
In order to secure the creditor's right to lodge a claim, the creditor which, among other things, has its habitual residence in a member state other than that of the commencement of the bankruptcy proceedings may lodge its claim in the official language, or one of the official languages, of that state. In addition, the creditor may be required to provide a translation into either of Finland's official languages - Finnish or Swedish (Article 42 of the Insolvency Regulation).
The estate administrator may take a claim into account without the lodgement of a claim if there is no dispute in respect of the basis and amount of the claim. However, taking a claim into account without the lodgement of a claim is exceptional and the power to make this kind of a decision rests with the estate administrator alone. Claims lodged by private individuals, ordinary invoice-based receivables and receivables resulting from prior insolvency-related restructuring proceedings could be taken into account without the lodgement of a claim.
Further, the estate administrator may take priority of the claim into account if the estate administrator is aware of the precedence. If a claim or its priority is taken into account without lodgement, the estate administrator will notify the creditor as appropriate.
A creditor may also lodge a claim or make an additional claim after the lodgement date (retroactive lodgement) if the creditor pays up to 1% of the lodged claim or the additional claim to the bankruptcy estate. In any event, the charge shall not be less than €600 or more than €6,000.
The estate administrator may decide that the charge, among other things, shall not be collected if:
The estate administrator of a Finnish bankruptcy estate submitted a notice in respect of the lodgement date to its creditors, including to its Swedish parent company. The notice was drafted in Swedish and did not follow the model document recommended by the European Commission. Further, the notice did not contain the title "Invitation to lodge a claim, time limits to be observed" in all official languages of the European Union.
The parent company was also declared bankrupt under Swedish legislation. The bankruptcy estate of the parent company presented its claim in the early phase of the bankruptcy proceedings for the purpose of finding out the assets, debts and liabilities of the debtor. The receivables of the bankruptcy estate of the parent company were also taken into account while drafting the estate inventory. In addition, the estate administrator of the parent company's bankruptcy estate participated in the debtors' meeting.
Regardless of this, the parent company's bankruptcy estate did not fulfil the obligation to carry out the lodgement of a claim in the manner required under the Bankruptcy Act. Therefore, the receivables of the parent company's bankruptcy estate were not taken into account in the draft disbursement list or the disbursement list certified by the district court.
The bankruptcy estate of the parent company took the case to court and demanded that its receivables be taken into account as a part of the bankruptcy proceedings. The parent company's bankruptcy estate based its demand, among other things, on the provision of the act which enables the court to take a receivable into consideration and amend it to the certified disbursement list if the receivable has been omitted due to error, neglect or some other comparable reason which occurred during the bankruptcy proceeding.
The district court accepted the reasoning and ruled in favour of the parent company's bankruptcy estate. Thereafter, the bankruptcy estate of the Finnish subsidiary appealed the decision. Both the Court of Appeal and the Supreme Court ruled that the certified disbursement list would not be modified and the receivables of the parent company's bankruptcy estate thus were not taken into account.
According to the reasoning of the Court of Appeal and the Supreme Court, the parent company's bankruptcy estate did not present its claim as required by the act. The notification submitted to the Finnish bankruptcy estate did not contain a demand for payment or any reference in relation to the lodgement of a claim.
The Supreme Court noted that an error had occurred during the bankruptcy proceeding, as the request to the creditors to present their claim had not been drafted in accordance with the Insolvency Regulation (ie, containing the title in all EU languages). However, the Supreme Court did not consider it credible that the estate administrator of the parent company's bankruptcy estate had misunderstood the meaning of the request. In Finland and Sweden, the terms used in the applicable bankruptcy legislation, and especially concerning the lodgement of a claim, are similar. The Supreme Court concluded therefore that the error had not resulted from a reason attributable to the creditor.
For further information on this topic please contact Matias Leskinen at Hammarström Puhakka Partners, Attorneys Ltd by telephone (+358 9 474 21), fax (+358 9 474 2222) or email (email@example.com).
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