Tarmo Peterson participates in expert group auditing restructuring procedures
and head of bankruptcy and insolvency Tarmo Peterson participates as an expert
in compiling a state-commissioned analysis of the potential for making
insolvency proceedings more efficient in Estonia. This extensive analysis is
related to a revision of the Reorganisation Act carried out by the Ministry of
Justice and will serve as a basis for new amendments to the act.
A number of
problems have arisen with insolvency proceedings in practice and reorganisation
often fails to achieve the expected goal. For example, applications for
reorganisation tend to be submitted too late, when the insolvency of the
company is no longer temporary and sustainable management may not be possible
even after the reorganisation. Other problems include the insufficient
information available to creditors concerning difficulties with solvency, the
fact that inappropriate claims and claims of related creditors are included in
reorganisation plans, and the general stigmatisation of companies experiencing
insolvency, which reduces debtors’ motivation to implement reorganisation
measures early on. It should be noted that these problems are also common to
restructuring proceedings in other jurisdictions.
In addition to the above, Estonia needs to incorporate the European Parliament and Council Directive of June 2019 on new preventive restructuring frameworks, discharge of debt and disqualifications, and measures to increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt.The analysis of insolvency proceedings commissioned by the Government Office will help the government to discuss the potential for making insolvency frameworks more efficient in accordance with the EU Directive and to develop an appropriate new legal framework.