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The Scope of the Ombudsman's Authority

General. The authority and duties of courts in bankruptcy proceedings were not affected by the Act. Also the decision making process in bankruptcy 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 bankruptcy estates. The Ombudsman cannot order the administrator 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 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 who has neglected his duties to fulfil his duties by means of coercion or to apply for the dismissal of the administrator 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.

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 and the same kind of right to get information about the activities of the debtor as the administrator or the debtor himself. The Ombudsman can get the information he needs a) without an explicit request, b) by request or c) by making an inspection. The administrator has to send the Ombudsman

a) without request

  • estate inventory
  • debtor description
  • annual report of the administration of the estate
  • final settlement of accounts
  • minutes of the meeting of the creditors

b) by request and 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 bankruptcy estate to get information necessary to the performance of his duties without any impediment about the financial situation of the debtor or the bankruptcy 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. 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 bankruptcy estate. If his entrance is denied, he has the right to get official assistance to get the inspection properly done.

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 bankruptcy estate.

The Ombudsman has the right to inspect the documents and recordings of the estate also in those cases when the bankruptcy proceedings have lapsed because of insufficient assets.

The Ombudsman can also order an auditor or several auditors to audit the administration, accounts and activities of the bankruptcy estate. This so called special audit can be made also when the bankruptcy has lapsed 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 bankruptcy 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 bankruptcy 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 bankruptcy estate can bring the issue to the court that will decide if the special audit has been necessary for the estate.

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 to Cooperate. In addition to the duty to give information the administrators have also the general duty to act in a manner that enables the Ombudsman to fulfil his duties properly (see section 3,1 of the Act).

The administrator 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.

The Right of the Ombudsman to Give Confidential Information. 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 interests or rights or to fulfil his duties. A creditor has the right to get information concerning the bankruptcy estate from the administrator and also the right to see the documents concerning the estate.

 
Published 2.9.2013