Legal protection and insolvency

The Office of Bankruptcy Ombudsman | National Administrative Office for Enforcement

The Bankruptcy Ombudsman supervises bankruptcy proceedings

Source: The Office of Bankruptcy Ombudsman

Bankruptcies 2016–2020

Temporary amendments to the Bankruptcy Act resulting from the coronavirus pandemic entered into force on 1 May 2020, and they explain the decrease in the number of bankruptcy petitions from previous years.

In 2020, bankruptcy petitions decreased by 18.6%, and the number of debtors declared bankrupt by 5.1% year-on-year. There are currently 2,950 bankruptcy proceedings pending, of which 528 will continue under public receivership with state funds.

The numbers of bankruptcy petitions and debtors declared bankrupt are expected to increase significantly after the validity of the temporary amendments ends on 31 January 2021.

Special audits 2016–2020

The number of special audits has increased significantly. Special audits ordered by the Bankruptcy Ombudsman are mainly conducted on insolvent bankruptcy estates, in which the administrators have determined that there is a need for a more detailed investigation into the operations of the debtor prior to bankruptcy.

In 2020, the Bankruptcy Ombudsman financed the completion of the books of 65 bankruptcy estates. The number has kept increasing each year, and it was 38% higher in 2020 than in 2019.

Costs of special audits 2016–2020

Costs of audits have stayed well within the limits of annual appropriations, which is largely due to the use of tendering in procurement.

As special audits are carried out in insolvent bankruptcy estates, recovery is only possible if the bankruptcy estate manages to accumulate enough funds through recovery actions or criminal compensation, for instance.

A considerable part of special audit expenses came from a few major criminal operations in 2020.

Public receivership 2016–2020

During 2020, 75 new public receiverships started, showing an increase of 25% from the previous year. The number of cases under public receivership accounts for 17 per cent of all pending bankruptcy proceedings. The number of public receiverships has remained high, as criminal processes and the handling of civil lawsuits, as well as the initiation of recovery proceedings, typically take many years.  

In 2020, the Bankruptcy Ombudsman coordinated several investigations of the shadow economy, involving a number of bankrupt companies. For some of these companies, the bankruptcy proceedings are handled under public receivership.

Costs of public receivership 2016–2020

In 2020, the Bankruptcy Ombudsman coordinated several investigations of the shadow economy, involving a number of bankrupt companies. The costs of public receiverships have decreased.

The decrease in costs is primarily explained by their allocation, and public receivership costs are expected to increase in the next few years, along with an increase in the number of public receiverships.


Enforcement measures are taken as a response to neglecting an obligation

Source: The National Administrative Office for Enforcement

The enforcement authorities are part of the judicial administration. They carry out court rulings and collect  directly distrainable receivables, such as taxes, fines and insurance contributions. The enforcement authorities seek to combat the shadow economy and economic crime through their statutory tasks; that is, efficient enforcement collection. They also generate information needed in determining creditworthiness.

They co-operate actively with other authorities in combating the shadow economy and seizure of criminal proceeds, such as with the Police, Customs and Tax Administration. The objective is to take the proceeds of crime away from the offender and thus make it more complicated to operate a business that is based on criminal activities. The enforcement authorities identify assets for recovery proceedings. They may also apply enforcement measures if the debtor uses artificial arrangements to hide assets from creditors and avoid enforcement. Such cases are mainly dealt with by enforcement units in charge of special collection measures, which focus on the more time-consuming and labour-intensive cases.

Indebtedness remains high

In Finland, the payment morality of citizens and companies is at a high level in international terms. Finns pay their debts and take care of their obligations. However, there are situations in which both companies and people run into debt, and enforcement proceedings are initiated.

Running up debt and becoming subject to enforcement proceedings do not constitute either shadow economy phenomena or economic crime. People in all income categories can end up in debt.

In recent years, the enforcement authorities have paid close to a billion euros per year based on applications 

More than half a million debtor customers are in enforcement proceedings every year. In 2020, approximately EUR 1.157 billion were collected. There is major annual variation in the amount of monetary receivables paid to creditors and the number of debtors investigated. In 2020, investigations were initiated on 253 debtors and the enforcement matters of 332 debtors were processed. Approximately EUR 29 million was collected in 2020 through special collection. 

The shadow economy may be tempting

Those in financial difficulties may be tempted to do undeclared work, hide assets or neglect their obligations as an employer and otherwise in their business operations. For this reason, the Grey Economy and Economic Crime website also includes enforcement statistics.

Changes are evident in the statistics

The enforcement statistics provide us with information on changes in the amounts of debt and the number of debtors subject to enforcement proceedings. The statistics show the trend in the changes and help us to put things into perspective. In fact, the enforcement statistics should be examined by comparing them with the observations and statistics of other authorities presented on the website.

Number of enforcement matters still high 

The increase in the number of cases initiated in 2020 is largely explained by the changes in the tax refund schedule (Figure 1). For this reason, more cases were initiated at the end of 2018 and fewer cases than normal were received for enforcement in 2019. In 2020, fewer tax cases were initiated than in the previous year, while the number of other cases under public law increased.

Figure 3 shows the number of enforcement matters initiated in total and in groups based on taxes, other public receivership matters (e.g. insurance contributions and various payments owed to municipalities and other public organisations, such as health care and day care fees).

Half of Finns live in Helsinki and other parts of Southern Finland, and more than half of new companies are established there. This is reflected in the regional distribution of enforcement matters. Indebtedness increases the risk of participating in the shadow economy.