The Finnish Supreme Court’s recent preliminary ruling on reversing the repayment of the principal and payment of interest of the capital loan to the bankruptcy estate

Capital loans are a type of mezzanine financing instrument portraying features of both equity and liabilities. These types of loans enable companies to strengthen their balance sheet and increase their equity ratio. Capital loans do not increase the equity of the company but depending on the situation capital loans may be marked as either equity or liabilities on a company’s balance sheet. Regardless of how the capital loan is marked on a company’s balance sheet certain provisions of the Finnish Companies Act (624/2006) (Companies Act) are applicable to capital loans.

General mandatory provisions concerning capital loans

Generally parties to loan agreements may negotiate on the loan terms which is also the case when negotiating terms for capital loans....