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The Actions Following the Discovering of Bad Practice

The Ombudsman can inform the administrator or the creditors about any cases of negligence or abuse that he has discovered. In many cases this kind of information will be enough to have the incorrect course of action corrected. The Ombudsman can also inform the proper authority, as the police, the prosecutor or the taxing authorities.

The Ombudsman can also turn to the court and demand

  • that the administrator who has neglected his duties is fined unless he fulfils his duties (see section 7,1 of the Act). This coercion can be applied for instance if the administrator has failed to send the Ombudsman the information he has asked for or deliver the documents that are requested for the purposes of inspection.
  • that the administrator is dismissed from his duties, if the administrator has essentially neglected his duties or for other weighty reasons (see section 7,2). According to the starting points of the Act, while measuring the essentiality of the negligence the Ombudsman and the court should pay attention especially to the significance of the negligence for the administration of the estate and the harmfulness and repetition of the negligence. A weighty reason exists if the competence of the administrator has proved to be insufficient or if some other circumstances prove that he cannot be regarded as a suitable person for the job.
  • that the administrator's fee must be reduced if he has essentially neglected his duties or if the fee is clearly above a reasonable level (see section 7,3 of the Act). The demand concerning the reduction of the fee must be made to the proper court in 30 days after the minutes of the creditors’ meeting including the creditors’ decision about the fee have been delivered to the Office of the Ombudsman (7,3).

The Ombudsman has also the right of legislative initiative and other suggestions for actions in order to correct faults that he has discovered (see section 1,1 of the Act). A similar right belongs to the Advisory Board for Bankruptcy Affairs.

Published 2.9.2013