Legal protection and insolvency

The Office of Bankruptcy Ombudsman | National Enforcement Authority Finland | Pay Security

The Bankruptcy Ombudsman supervises bankruptcy proceedings

Source: The Office of Bankruptcy Ombudsman

Bankruptcies in 2018–2022

The uncertain economic situation, the energy crisis caused by Russia’s invasion of Ukraine after the coronavirus pandemic, and high inflation rates have affected the financial standing of companies and the number of insolvency proceedings. From the Bankruptcy Ombudsman’s point of view, this global change has resulted in an increase in the number of monitored bankruptcy estates. The risk of an increase in insolvency proceedings still exists, considering the current economic uncertainties and the fact that some companies required support to survive the pandemic, which has led to this situation. The Bankruptcy Ombudsman has monitored and continues to closely monitor the development of insolvency proceedings.

In 2022, a total of 2,656 bankruptcy petitions were submitted (2,473 in 2021), up by 7.4 per cent from the previous year. A total of 2,189 bankruptcy proceedings (1,945 in 2021) were initiated in 2022. The number of initiated bankruptcies increased by 12.5 per cent from the previous year.

Public receiverships in 2018–2022

In 2022, the number of new public receiverships initiated was 26, which was significantly fewer than in 2021 and roughly half of the previously usual number. This can largely be explained by the KOSTI project and its delay. As a result of the delay, the Bankruptcy Ombudsman no longer has access to the additional resources allocated for the project. The KOSTI project has consumed the resources of several specialists which has significantly reduced basic monitoring, including the assessment of the need for public receiverships. Currently, 536 public receiverships are pending, accounting for 16.5 per cent of all pending bankruptcy cases.

Special audits in 2018–2022

A total of 65 special audits concerning debtors’ operations and finalisations of accounting records was conducted, which is significantly below the previously usual number. The shortage of resources mentioned above can be regarded as the primary reason for the decrease in audits.

Costs of special audits in 2018–2022

In 2022, special audit costs totalled roughly €578,568, while approximately €212,785 were recovered from bankruptcy estates.

Costs of public receiverships in 2018–2022

Public receivership costs totalled €558,230 (including VAT). A total of €177,000 was recovered from bankruptcy estates in previously paid public receivership costs. Roughly €327,700 were paid to creditors in disbursements from the public receivership cases closed in 2022.


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 2022, approximately €1.26 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 2022, 256 new special enforcement investigations on debtors were started and the enforcement matters of 296 debtors were processed with approximately €33 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 2022, 2.8 million cases were submitted to the National Enforcement Authority, which is around 1.3 per cent less than in 2021. The number of cases related to social and healthcare services – which has been increasing for several years now – decreased around 13 per cent. In contrast, in 2022, the number of cases related to taxes increased by around 2.5 per cent compared with the previous year. The number of private law cases continued to increase slightly. The number of corporate debtors increased by more than five per cent.

Last year was the second full year of operations after the National Enforcement Authority’s organisational restructuring. A total of €1.26 billion were collected. This is an increase of five per cent compared to the previous year, and the highest amount ever collected by 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.


Pay security payments correlate strongly with economic trends

Source: Centre for Economic Development, Transport and the Environment

Pay security covers employees’ employment-related claims in situations where the employer is insolvent. Statistics on the amount of pay security represent the significant correlation between pay security and economic trends. Employees’ claims are transferred to the state when pay security is paid. Only a fifth of the paid amount can be recovered from insolvent employers.

Neglected statutory employer contributions or notifications do not prevent pay security, but they are rather indications of employers’ insolvency, which is a requirement for pay security. In case law, pay security can, however, have been rejected if the mutual understanding between the employer and employee for carrying out work as undeclared can have been demonstrated.

Preventing misuse is one reason for rejecting pay security, and these cases may also involve shadow economy operators. Roughly half of misuse cases involve situations where an employee has considered to have become aware of their employer’s insolvency after an extended period of unpaid work.

In 2022, cases of misuse accounted for 9.9 per cent (10.0 per cent in 2021) of all rejected claims. The total number of cases rejected based on misuse was 852 (1,071 in 2021), and the amount of rejected claims totalled €2,062,069 (€1,705,015 in 2021).

Page last updated 4/12/2023