Suspension of the management board’s obligation to file a bankruptcy application
- Under the Estonian COVID law the obligation of the management board to file a bankruptcy application is halted.
- This amendment applies to all legal and natural persons.
- However, an undertaking that lacks prospects of restoring and continuing its economic activities after the current emergency has passed should immediately file a bankruptcy application against itself.
- This does not hinder a creditor’s right to file a bankruptcy application instead.
Suspension of the period of limitation for recovery proceedings
- The deadlines related to recovery proceedings are being halted.
- The Estonian Bankruptcy Act sets out a period of limitation for transactions that can be revoked. The Estonian COVID law halts the expiration of limitation periods and therefore suspends the deadlines for transactions that can be revoked during bankruptcy proceedings.
The requirements on due diligence regarding prohibited payments remain intact
- When insolvency is evident, a management board member is allowed only to make essential payments, regardless of the deadline for filing a bankruptcy application.
- The prohibition on making payments, other than payments that conform with due diligence requirements will remain intact.
- Otherwise, a management board member will be liable with his or her personal property. In addition, criminal liability remains unchanged.
- Unequal treatment of creditors and favouring creditors related to oneself as well as concealment of property remains illegal under Estonian law.
The Estonian Parliament has adopted a draft law called “Measures related to the outbreak of the COVID-19” (the “Estonian COVID law). The Estonian COVID law amendments will come into force from 12 March 2020 (retroactively), when the emergency situation was announced, and will last until two months have passed from the end of the current state of emergency, likely to end on 18 May.