Finland
Answer ... The most common security is security over receivables and bank accounts of the SPV. Typically, claims that the SPV has against other entities involved in the securitisation, such as the servicer, will also be included in the security package. To the extent that the securitised receivables are secured or guaranteed, such security will also be included in the security package together with the receivables.
A floating charge covering the qualifying movable assets may be registered against the purchaser’s assets. A floating charge will, by operation of law, cover all of the pledgor company’s movable assets insofar as any specific assets have not been separately pledged.
In addition to Finnish law-governed security, it is typical that the SPV also grants security over its assets under other applicable laws.
Finland
Answer ... This depends on the security asset in question. A pledge of receivables and claims is perfected by notifying the underlying debtor of the pledge, with instructions to make any payments of the receivable to the pledgee or its order. This notice need not be registered, notarised or otherwise confirmed by any officials.
A bank account pledge is perfected by way of notice to the account bank. The SPV’s rights to the account will be blocked and the security trustee, cash manager and/or servicer will control the bank account instead.
Finland
Answer ... There are no charges, fees or taxes in connection with the perfection of a security interest in receivables or a bank account. A minor registration fee is charged for registration of a floating charge.
Finland
Answer ... The perfection measures should be taken without delay.
Finland
Answer ... The obligations and liabilities of the parties will generally be set out in the security agreement. Notwithstanding the terms of the transaction documents, mandatory Finnish law requires a pledgee to take the reasonable interests of the pledgor into account. Among other things, this means that the secured creditor has a duty of care in relation to the pledged assets. The duty of care relates to:
- the safekeeping of assets during the life of the pledge; and
- enforcement of the pledge.
Traditionally, the duty of care entails, among other things:
- storing the security assets carefully in a manner that does not cause a risk of damage, loss or loss of value; and
- in the enforcement process, obtaining the best possible price that is reasonably obtainable in the circumstances.
Finland
Answer ... Finnish law recognises two statutory forms of insolvency proceedings:
- bankruptcy; and
- company administration.
Enforcement can take place either outside of bankruptcy proceedings or during bankruptcy proceedings. However, in company administration proceedings, a moratorium applies and enforcement is generally not possible. The terms of the relevant security agreement regulate the enforcement, subject to constraints set by mandatory Finnish law.
Enforcement outside of bankruptcy proceedings: Depending on the type of security arrangement/asset under security, the secured creditor may generally enforce the security independently or through public enforcement authorities.
Enforcement during bankruptcy proceedings: In a bankruptcy scenario where the secured creditor enforces the security independent from the concurrent bankruptcy proceedings, the secured creditor will use the enforcement proceeds to satisfy its secured claim. The secured creditor will then:
- render to the bankruptcy liquidator an account of the proceeds of the enforcement; and
- transfer to the bankruptcy liquidator the net proceeds from the enforcement that exceed the creditor’s secured claim.
In a bankruptcy scenario where the bankruptcy liquidator enforces the security, the bankruptcy liquidator will distribute the enforcement proceeds to the secured creditor up to the amount of the creditor’s secured claim. Any excess proceeds will form part of the assets of the estate (to be distributed to the creditors).
The secured creditor must, however, notify the bankruptcy liquidator of the intended enforcement at least two weeks in advance of such enforcement. Once the bankruptcy liquidator has received the secured creditor’s notice of the upcoming enforcement, the bankruptcy liquidator may prohibit the secured creditor from enforcing the pledge for a maximum period of two months in order to either:
- determine the secured creditor’s right to enforce; or
- protect the interests of the bankruptcy estate.
Company administration: If company administration proceedings have been initiated against the debtor:
- the secured creditor can no longer enforce the security independently (or accelerate the underlying loans against the pledgor); and
- any enforcement procedures already initiated and not completed will be discontinued.
The prohibition against enforcement of the security will remain in force until the court has passed a decision either to accept or reject the administration programme proposed by the administrator. However, this moratorium does not apply where the security in question qualifies as a financial collateral arrangement under the Act on Financial Collateral (11/2004, as amended).
Finland
Answer ... The enforcement of foreign judgments in Finland is always subject to the provisions of any applicable regulations, conventions or treaties. If no regulation, convention or treaty applies, enforcement may require a re-examination of merits and/or a judgment of:
- a Finnish court;
- a court of another EU member state under EU Regulation 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters; or
- a court of a country which is signatory to an enforcement treaty with Finland or the European Union, as applicable.
Finland
Answer ... Generally, a power of attorney may revoked at any time by the principal. If the servicer becomes insolvent, a back-up servicer is typically appointed (or, if already appointed, the back-up services are activated).
Finland
Answer ... It is generally considered that a creditor can contractually subordinate its claim to those of other creditors. However, the effectiveness of limited recourse, non-petition and subordination provisions in relation to third parties remains untested in Finland. Based on the general principle of pacta sunt servanda, such provisions will generally bind the parties to the transaction documents, but not third parties. To mitigate possible risks:
- the SPV is commonly set up offshore; and
- the limited recourse and non-petition provisions are governed by foreign laws and subject to foreign dispute resolution in a jurisdiction that has clarity on these issues.