Estonia: essential amendments of bankruptcy law

Bankruptcy proceedings more efficient in the new year

On 1 February 2021, the Bankruptcy Act Amendment Act entered into force. The amendment seeks to ensure faster, more cost-effective and transparent bankruptcy proceedings and higher payments to creditors.


The most important changes are creation of an insolvency service and specialization of courts in insolvency cases.


Current practice shows that more than half of bankruptcy proceedings in Estonia are terminated due to lack of funds necessary to investigate the causes of insolvency. As a result, one important goal of bankruptcy proceedings is not fulfilled – to find the causes of insolvency. To change the situation, an insolvency service will be established as of January 2022. The Insolvency Service will supervise the activities of bankruptcy if suspicion exists that the debtor has acted unlawfully in causing the insolvency. The role of the new service will be to detect malicious behaviour, make bankruptcy proceedings more transparent, investigate the causes of unlawful insolvency, and increase the rate of payments to creditors. Altogether, a fairer business environment will be created. The service will contribute to the investigation of bankruptcy offences and develop common practice in the field of insolvency. In addition, the service would exercise administrative supervision over trustees in bankruptcy.


As a result of the service’s activities, debtors should file for bankruptcy on time. That way, when bankruptcy is declared, the debtor has more assets from which to pay creditors’ claims. The attraction of discontinuing insolvency for lack of assets should also be reduced. The work of the service will also facilitate criminal prosecution in bankruptcy cases.

The amendment also provides flexible opportunities for restructuring of companies.


In order to speed up bankruptcy proceedings in court, jurisdiction in insolvency matters of company debtors will be transferred to the county courts of Harju and Tartu, and it will be ensured that all county courts have judges specializing in insolvency, assisted by appropriately trained judicial officers.


One essential change concerns the circle of bankruptcy petitioners: in the absence of a management board, the application must be submitted by persons who normally must ensure the existence of a management board. These are, for example, in the case of a private limited company, the shareholders or members of the supervisory board.


Riigi Teataja –; RT I, 04.01.2021, 49


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