Several principles are changing in the Bankruptcy Act

The Ministry of Justice is developing a number of amendments to the Bankruptcy Act aimed at making bankruptcy proceedings faster, more cost-effective and more transparent. In total, there are 15 topics in the discussion, of which the most important ones are presented below.

Establishment of insolvency institution

In Estonia, a large part of the proceedings is being abandoned without declaring bankruptcy, therefore the reasons for bankruptcy remain unexplained and the persons who caused the unlawful insolvency are not prosecuted. In order to avoid this, a separate institution is to be set up, the main task of which would be to supervise the activities of debtors on state level. The purpose of the supervision would be to check whether it is reasonable to continue the bankruptcy proceedings and if so, the institution would pay the procedural costs itself. The necessary resources for this purpose would be allocated from the state budget.
On one hand, the Chamber of Commerce agrees that the problem exists and is important. However, it is not reasonable to create a separate institution for this task – these tasks could be given to an existing state agency.

Clarification of the concept of insolvency

According to the current wording of the Bankruptcy Act, it is not clear when the debtor becomes permanently insolvent. However, this is important for the timely filing of the bankruptcy petition. Therefore, additional criteria (such as the emergence of certain accounting indicators), for which there is a presumption of permanent insolvency, are foreseen.
The Chamber of Commerce does not agree with the proposal. In practice, it is difficult to determine the moment of permanent insolvency and it is not possible to rely solely on specific accounting indicators. It should be borne in mind that the data in the accounts show the company's past, not the future. However, the future cash flows need to be taken into account in order to establish a permanent insolvency.

Increased specialization of judges in insolvency matters

Insolvency cases take too long in courts, and different courts have applied the bankruptcy law differently. The solution to this problem is the increased specialization of courts and judges. The concentration of most cases of bankruptcy proceedings in specific courthouses or judges should lead to faster and better quality decisions.
The Chamber of Commerce supports this idea and agrees with the proposal, according to which special jurisdiction would be established in two county courts (Harju County Court and Tartu County Court).