In the 2022 Summer issue of Eurofenix, the journal of INSOL Europe, our insolvency experts, senior associate Dr. Mari Agarmaa and associate Aleksandr Šapovalov published a report about Estonia focusing on the establishment of an Insolvency Division in Estonia.
Late initiation of bankruptcy proceedings
The main issues in Estonian bankruptcy proceedings are associated with the late initiation of bankruptcy proceedings and their financing. If bankruptcy proceedings are initiated later than prescribed by law, the debtor may not have the funds to conduct the bankruptcy proceedings. If there is a lack of assets to conduct the bankruptcy proceedings and there are no creditors who are willing to finance it, the company will be deleted from the Commercial Register without conducting bankruptcy proceedings. In such cases, the reasons for the company´s bankruptcy will not be investigated and the persons involved in causing the bankruptcy will not be held liable. This damages the credibility and transparency of the Estonian economic environment.
To solve this problem, a special governmental institution – the Insolvency Division (maksejõuetuse teenistus) – was established as of 1 January 2022. Its task is to investigate bankruptcy proceedings and find out the causes of bankruptcy and possible misconduct by the debtor’s management. Moreover, the Insolvency Division must supervise the debtor and the persons related to it in connection with transactions concluded just before the declaration of bankruptcy.
Please find the full report here.