In order for a district court to open bankruptcy proceedings, whoever owes money must be insolvent. That means that their assets and income do not cover their debts and that they have long-term payment problems. In the event of a bankruptcy, whoever owes money loses the right to make decisions about their assets.
What conditions must be met for bankruptcy proceedings?
The district court can open bankruptcy proceedings when the debtor is insolvent. Insolvency means that assets and income do not cover the debt, and the payment problems are long-term.
How do you request the district court to open bankruptcy proceedings?
If you want the district court to open bankruptcy proceedings, you must submit a bankruptcy petition. You can use our forms for bankruptcy petitions and voluntary liquidation. Submit or send the petition with an original signature to the district court, or send it with a digital signature via email.
The district court where the person or company that owes you money is located will handle your petition.
Do you have to pay to file for someone's bankruptcy?
To file for someone's bankruptcy, you must provide security for costs. If you lose the case, you may be liable for the other party's legal costs.
If you file for voluntary liquidation of your own company, you do not have to pay. Employees with claims covered by the wage guarantee scheme generally do not have to pay either.
When the district court has received the bankruptcy petition
After we have received the petition, we check if it meets the conditions for bankruptcy proceedings. If the petition meets the conditions, the parties are summoned to a court hearing. When a company files for voluntary liquidation, the district court can open bankruptcy without a court hearing.
The summons to the court hearing is served to the parties via the postal service's digital signing service, or by police/bailiff. The defendant receives the bankruptcy petition along with the summons.
Service is a special form of notification about legal actions and decisions. The goal is to ensure that the recipient is quickly and securely informed.
Court hearing
A court hearing usually lasts up to one hour. In addition to the parties involved, a judge participates. In the court hearing, the judge can decide to open bankruptcy, reject the petition, or postpone the case for a short period.
If you are summoned to a court hearing, it is important that you attend. If you do not attend the meeting, the case can be decided without you being heard. Bankruptcy can be opened.
If you disagree with the district court opening bankruptcy, you should bring documents that show your side of the case.
Opening of bankruptcy proceedings
When the district court opens bankruptcy, the person or company loses the right to control their assets. The district court appoints a lawyer as the trustee. The trustee will search for assets, and can sell assets and collect outstanding debts. The funds collected will be distributed among the creditors by the trustee.
During the bankruptcy proceedings, the trustee may discover that criminal activities have been carried out in the company. The trustee will assess whether the circumstances provide grounds for proposing a bankruptcy quarantine and will notify the district court of this. If the district court imposes a bankruptcy quarantine, the person subject to the quarantine will be deprived of the right to establish or manage most types of companies. The district court can also remove the person from existing positions. The bankruptcy quarantine applies for a period of up to two years. The purpose of a bankruptcy quarantine is to stop individuals who are frequently involved in bankruptcies.
Conclusion of the bankruptcy proceedings
The duration of bankruptcy proceedings varies. When the trustee has completed the processing of the bankruptcy estate, the court receives a final report. In the final report, the trustee proposes how the estate should be concluded, and the court issues a ruling.
The estate can be concluded in various ways:
- Cancellation of the administration in bankruptcy - if the estate's funds cannot cover the costs.
- Conclusion of the estate and final division of assets - if the estate has funds to distribute to the creditors.
- Return of the estate to the debtor - if all unsecured claims are covered, or if all creditors agree to the return.
In the final ruling, the court also determines the trustee's fee.