3.04.2020. At today’s sitting, the Government approved the draft legislation suspending the obligation for companies to file for bankruptcy and imposing a ban on creditors filing for bankruptcy during the emergency situation and for a further period of two months. This amendment provides entrepreneurs with an opportunity to adapt their economic activities to the current situation and use the state aid measures.
Based on the applicable law, the management board of a legal person has the obligation to submit a bankruptcy petition within 20 days of the occurrence of insolvency. In accordance with the approved draft legislation, the counting of time limit has been suspended as of 12 March, when the Government of the Republic declared an emergency situation. The counting of time limit will continue two months after the end of the emergency situation.
The longer timeframe will provide entrepreneurs with a breathing space to overcome the solvency problems caused by the coronavirus, and it is expected that the approved draft legislation prevents the filing of mass bankruptcy petitions.
As of the entry of the amendment, the possibility for creditors to file for bankruptcy will also be suspended. As an exception, employees who have not received their remuneration and do not receive compensation from the Estonian Unemployment Insurance Fund (Töötukassa) can file for bankruptcy against their employer.
The amendment will apply to all legal persons, however, entrepreneurs who do not have the prospect of resuming and continuing their economic activities after the end of the emergency situation should still file their bankruptcy petition without undue delay.
It must also be taken into account that if insolvency has occurred, no matter how quickly a member of the management board has to file for bankruptcy, they may only make absolutely necessary transactions on behalf of the company at that time.