Legal protection and insolvency

The Office of Bankruptcy Ombudsman | National Enforcement Authority Finland

The Bankruptcy Ombudsman supervises bankruptcy proceedings

Source: The Office of Bankruptcy Ombudsman

Bankruptcies 2017–2021

For the Bankruptcy Ombudsman, 2021 was characterised not only by basic supervisory activities, but also by the impact of the global coronavirus pandemic. After its outbreak in 2020, the pandemic has made the financial situation more difficult in many companies. The significance of these changes varies from one sector to the next. Public subsidies and the long-term effect and flexibility of creditors, continued far into 2021, have softened the impact of the pandemic. The temporary amendments to the Bankruptcy Act between 1 May 2020 and 30 September 2021 helped reduce the number of bankruptcy petitions significantly. Creditors can already be estimated to have largely returned to normal debt collection practices, while the risk of the growing number of insolvency proceedings has not been fully eliminated. The Bankruptcy Ombudsman has monitored and continues to closely monitor the development of applicant information and the number of insolvency proceedings.

In 2021, a total of 2,473 bankruptcy petitions were submitted, up by 15.8 per cent from the previous year. For the sake of comparison, it should be stated that the number of petitions decreased by 5.7 per cent from 2019. This means that more petitions were still submitted than before the pandemic. A total of 1,945 bankruptcy proceedings were initiated in 2021. The number of initiated bankruptcies only increased by three per cent from the previous year, which can partly be explained by postponing the processing of the growing number of petitions submitted at the end of 2021 to 2022.

Special audits in 2017–2021

A total of 93 special audits concerning debtors’ operations and finalisations of accounting records were conducted, in addition to which one administrative bankruptcy estate audit was carried out. The total number of audit decisions was 94, which was roughly 20 per cent lower than normal. This can also be explained by the Bankruptcy Ombudsman receiving fewer requests to audit creditors’ pre-bankruptcy operations using state funds. In addition, audits were targeted at large bankruptcy cases that were considered to have a high societal impact.     

Costs of special audits in 2017–2021

In 2021, special audit costs totalled roughly €925,000, while approximately €168,000 were recovered from bankruptcy estates.

Public receiverships in 2017–2021

In 2021, a total of 46 new public receiverships were started, which was roughly 25 per cent lower than normal in previous years. This can largely be explained by the type of the pending bankruptcy estates: the companies declared bankrupt have often been engaged in small-scale operations, and estate administrators have sent fewer requests regarding cases in which public receiverships would be useful. Resources have also been purposefully directed at certain large bankruptcy cases to enforce criminal liability. Currently, 535 public receiverships are pending, accounting for 17.9 per cent of all pending bankruptcy cases.

Costs of public receiverships in 2017–2021

Public receivership costs totalled €968,479 (including VAT). A total of €110,000 was recovered from bankruptcy estates in previously paid public receivership costs. Roughly €1,739,000 were paid to creditors in disbursements from the public receivership cases closed in 2021.


Enforcement measures are taken as a response to neglecting an obligation

Source: National Enforcement Authority Finland

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 

In 2021, approximately €1.2 billion were collected. In special enforcement, there is annual variation in the amount of monetary receivables paid to creditors and the number of debtors investigated. In 2021, 313 new special enforcement investigations on debtors were started and the enforcement matters of 281 debtors were processed with approximately €30 million collected.

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.

Record amounts were paid to creditors

In 2021, 2.8 million cases were submitted to the National Enforcement Authority, which is around seven per cent less than in 2020. The number of cases related to social and healthcare services – which has been increasing for several years now – decreased around 16 per cent. The number of cases related to taxes also decreased. In contrast, the number of private law cases continued to increase slightly. The number of corporate debtors decreased more than four per cent.

Last year was the first full year of operations after the National Enforcement Authority’s organisational restructuring. A total of €1.2 billion was paid to creditors. This is an increase of four per cent compared to the previous year, and the highest amount ever collected by the National Enforcement Authority.

“Considering the challenges brought on by the large organisational restructuring and the coronavirus pandemic, the result was significantly better than we expected,” says Juhani Toukola, Director General of the National Enforcement Authority.

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.