General. The authority and duties of courts in bankruptcy proceedings were not affected by the Act. Also the decision making process in bankrupts' estates remained the same.
Courts or bankruptcy administrations are not bound by the Ombudsman's decisions about the question if some course of action is illegal or in contradiction with the proper practice of administering bankrupts' estates. The Ombudsman cannot order the administrator or trustee to act in a certain way nor the meeting of creditors to make or not to make a certain kind of decision. Should the Ombudsman find that the estate has been administered inappropriately, he can inform the administrator or trustee and the creditors, and if necessary the proper authorities, about his view. The Ombudsman has the right to turn to the court to make an administrator or trustee who has neglected his duties to fulfill his duties by means of coercion or to apply for the dismissal of the administrator or trustee from his duties. The Ombudsman has the right to bring a decision of the meeting of creditors to the court only if the decision concerns the fee of the administrator or trustee.
The Ombudsman's Right to Get Information. The most essential powers of the Ombudsman are connected to his right to acquire information. The acquiring of information can be directed to the activities of the administrator or the debtor. The right to get information is limited to the interests of the supervision over the administration of the estate. The Ombudsman has in principle the same kind of right to get information about the activities of the administration as the creditors (see section 61 and 67 of the Act) and the same kind of right to get information about the activities of the debtor as the administrator or trustee. The Ombudsman can get the information he needs a) automatically without an explicit request, b) by request or c) by making an inspection. The administrator or trustee has to send the Ombudsman
a) without request
a copy of the minutes of the meeting of the creditors and
a notice about the transferring of the debtor's business or property or a part of them as a functional unit.
b) without delay all information necessary to the supervision that the Ombudsman has asked for. This information can deal with any issue connected to the administration of the estate, such as the keeping of the property and funds of the estate, the realization activities and the costs of the administration.
The Ombudsman has a similar right as the debtor or the administration of the bankrupt's estate to get information necessary to the performance of his duties without any impediment about the financial situation of the debtor or the bankrupt's estate or the financial situation of the business they have been doing, such as the taxation of the debtor or the bank accounts of the debtor or the estate. The Ombudsman can ask for this information from the administrator of the estate or turn directly to the proper bank or the taxing authority.
c) The Ombudsman has the right to inspect the documents or recordings of the debtor or the estate that belong to the bankrupt's estate. This inspection may be necessary for instance to find out if the inventory of property or the bookkeeping by the administrator is correct. The inspection can be carried out on the spot or elsewhere because the Ombudsman can take the documents or the recordings to his possession for as long as the inspection takes. For the purpose of this inspection the Ombudsman has the right to enter the premises held by the bankrupt's estate. If his entrance is denied, he has the right to get official assistance to get the inspection properly done.
According to the law, the Ombudsman has no right to enter the premises held by an outsider, for instance the premises of an independent realization business that has some property of the bankrupt in its possession to be sold for the bankrupt's estate.
The Ombudsman has the right to inspect the documents and recordings of the estate also in those cases when the bankruptcy proceedings have been nullified because of insufficient assets.
The Ombudsman can also order an auditor or several auditors to audit the administration, accounts and activities of the bankrupt's estate. A special audit can be made also when the bankruptcy has been nullified because of insufficient assets. The costs of the special audit are always paid to the auditors, for instance a firm of accountants, from public funds.
The bankrupt's estate must pay back these costs to the state on the condition that the special audit has been necessary for the estate. The special audit can be regarded as necessary especially when on the basis of the audit some property has been possible to get back to the estate for instance by taking action for recovery. The obligation of the estate to pay back is not always dependent on the increase of the assets of the estate due to the special audit. The starting point of the Act is that the special audit can be regarded as necessary also when the administration of the bankrupt's estate, differing from the normal practice, does not take the action to have the audit done even if the quality or size of the estate or other matters gave good reason to have it done. The obligation to pay back is in the first phase decided by the Ombudsman. The bankrupt's estate can bring the issue to the court that will decide if the special audit has been necessary for the estate but the court will not decide if the price of the audit has been correct.
The Ombudsman's access to information is secured also by the provision of the Act that gives him the right to take part and have the floor in the meetings of the creditors.
The Duty of the Administrator or Trustee to Cooperate. In addition to the duty to give information the administrators and trustees have also the general duty to act in a manner that enables the Ombudsman to fulfill his duties properly (see section 3,1 of the Act).
The administrator or trustee is bound by the duty to give information and cooperate also after his period of activity has ended. He cannot refuse to give information or cooperate on the grounds that he will not get paid for the action. Also those trustees who ended their period of activity before the Act came into force on March the 1st in 1995 have the same duties.
The Right of the Ombudsman to Give Confidental Information. The Act gives the Ombudsman, an employee of his office and the person who has been assigned a task by the Ombudsman (for example a special audit) the duty to keep confidential all information that he has recieved in his work about the financial situation of somebody, a business or professional secret or a matter concerning a private citizen's personal affairs (see section 16,1 of the Act). The same section of the Act gives the Ombudsman the right to give confidential information to the court, to authorities concerning pretrial investigations and to public prosecutors and also to taxing authorities and other authorities that have the legal right to get the information.
The Ombudsman has also the right to give information about a confidential matter to some one who needs the information to protect his or her interests or rights or to fulfill his or her duties.
A creditor has the right to get information concerning the bankrupt's estate from the administrator or trustee and also the right to see the documents concerning the estate (see sections 61 and 67 of the Bankruptcy Act). The Publicity of Documents Act (section 19) gives a party whose interest, right or duty is concerned the right to get information about a document if the document can affect or has affected the handling of the case even if the document is not public. Therefore a creditor or other party involved in a bankruptcy has the right to get such information from the Ombudsman that can affect their interests in that bankruptcy.
Last updated 26.08.2004
Bankruptcy Ombudsman, Bulevardi 30 B (2nd floor), PO BOX 157, 00121 Helsinki, Finland
Tel. +358 103 665 111, fax +358 103 665 110