Background

Finnish law relating to the supervision of bankruptcy estates is codified in the Act on the Supervision of the Administration of Bankruptcy Estates (the Act) that came into force on 1 March 1995. The office of Bankruptcy Ombudsman was founded. The Act also includes provisions of the duties and the powers of the Ombudsman. The Bankruptcy Act itself contains only a reference to the Act.

The significance of the control system was explained among other things with the fact that despite of the social and economical importance of bankruptcies no actual supervision by the authorities existed. Neither had any official body the responsibility to develop the proceedings connected to the administration of bankruptcy estates or bankruptcies in general. Tax administration and labour administration had been active in bankruptcies also relating to the public interest but their activity had its grounds on their status as creditors. The supervision by the creditors or by the Finnish Bar Association over its members was regarded as insufficient.

Bankruptcy Ombudsman (the Ombudsman) is an independent authority. The Ombudsman is attached to the Ministry of Justice but only in an economical and organizational sense. The Ministry of Justice cannot give the Ombudsman any orders or instructions concerning the activities of the Ombudsman. The Ombudsman in his actions is subject to general legality control. The Ombudsman has to be also impartial in his actions. He does not attend to the interests of any particular group such as creditors or debtors not to mention any special group of creditors. Despite the fact that the Ombudsman is a government official himself he must be neutral to different groups of creditors irrespective of the fact that they are public corporation creditors or private sector creditors.