Estonia, Financial Services

At present 40% of claims on the average are satisfied in bankruptcy proceedings in Estonia, compared with 88%  in Finland. Toomas Kivimagi, deputy chair of the Riigikogu legal affairs committee, said that the target for the authors of the bill is to bring that ratio to 80% and reduce the average duration of the proceeding from the current three years.

"Absolutely absurd, absurdly long. The target on that is one year, just like in Germany,"  Kivimagi said.

The bill would also make a broader circle of persons subject to the obligation to file for the bankruptcy of a legal person. At present only members of the management board are obliged to do it.

Chairman of the legal affairs committee Jaanus Karilaid said that if a company has a supervisory board but no manager, the supervisory board must file for bankruptcy on time. 

Kivimagi said it's also important to trace down the reasons why and how is it possible for companies to be emptied of assets before they are declared bankrupt.

"In that sense, the bankruptcy ombudsman serves as a rather good example, and based on that example an insolvency service is planned to be established in Estonia according to the same bill of the Bankruptcy Act," Kivimagi said.

According to Justice Minister Raivo Aeg, the service would deal with cases of major public interest. For instance, it would engage in restoring of accounting, reversal of transactions, establishing the causes of insolvency.

The insolvency service made up of four employees would conduct special audits to chart the ways by which companies are emptied of assets. That may help receivers to reclaim the money funneled out, Kivimagi said.

The service financed from the state budget would itself decide in what cases to launch a special audit. The service is estimated to cost the state 600,000 euros a year.

The bill is planned to take effect on Jan. 1, 2021.