The Finnish legislation knows three parallel insolvency procedures: bankruptcy, debt arrangement for private persons, and corporate reorganisation. Collective execution and the inability of the debtor to pay his or her debts are two common factors in all of these procedures.

The proceedings will determine the entire financial standing of the debtor, including any and all assets and debts. Whilst a bankruptcy leads to shutting down business operations and distributing its funds to the creditors, the debt arrangements for private persons and corporate reorganisation aim to restore the operational abilities of the debtor.

The corporate reorganisation procedure with its debt arrangement possibilities can be applied generally to any kinds of business operations. In addition to the various types of companies and other communities intended by the Act, even private entrepreneurs are covered by the Restructuring of Enterprises Act (Laki yrityksen saneerauksesta, no. 47 of 1993). The Act covers both private entrepreneurs listed in the Trade Register, and self-employed agriculture, forestry, and fishing professionals.

When the Act was being prepared, it was considered that particularly debt arrangements in accordance with the reorganisation proceedings may be quite useful for small companies as well. A self-employed physical person may be covered by the reorganisation proceedings when they have financial difficulties related to the commercial activities in question.

It must be noted that if the debtor under reorganisation proceedings is a physical person, the proceedings also cover the debts of their private household. If a self-employed physical person has difficulties that are mainly related to the debts of his or her private household, they may be eligible for the debt arrangement for private persons with special conditions.

In business operations taking place in company form, only the company itself can be the object of the reorganisation proceedings. A partner in a partnership or shareholder in a limited liability company may, if the requirements are met, be covered by the debt arrangement for private persons.

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