Bankruptcy

An entrepreneur subject to accountability for his or her business operations can be filed bankrupt quite easily and quickly. An unpaid invoice may form the grounds for the bankruptcy petition already on the eighth day after its due date, for example.

According to the Bankruptcy Act (Konkurssilaki, no. 120 of 2004), a creditor whose receivables from the debtor are based on a legally valid judgement, decision, or other grounds for enforcement or a contract signed and not justifiably denied by the debtor, may file for the debtor to be declared bankrupt.

Assumption of insolvency: the debtor must be considered insolvent if he or she so declares, and there are no special reasons for not accepting the declaration.

The debtor should also be considered insolvent in the following cases.

  1. The debtor has cancelled all payments,

  2. debt recovery proceedings have, 6 months prior to the bankruptcy application, revealed that the debtor does not receive a sufficient amount of assets to pay out the receivables in full, or

  3. the debtor, who is or during the last year before the bankruptcy application was subject to accountability for his or her business operations, has not paid the amounts payable to the creditor within one week of receiving the payment reminder. The creditor must verifiably or through a bailiff deliver such a reminder to the debtor.

If the debtor cannot be reached, the bailiff may present the reminder to a family member or an employee in the company. The reminder must list the amount payable and its grounds. It must also state that the creditor may require the debtor to be declared bankrupt unless the debt is paid by its due date. Bankruptcy cannot be applied for based on a payment reminder after more than three months of issuing the reminder.

See also

Debt arrangement for private persons

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