Frequently Asked Questions
When is a company insolvent under Estonian law?
A company is insolvent when it cannot meet its creditors’ claims and this inability is not temporary. Indicators include overdue debts the company has no realistic way to pay, negative equity, and liabilities permanently exceeding assets. Whether insolvency is “permanent” is a judgement call — and it is exactly the question we help boards answer with a documented financial analysis.
Is the management board obliged to file for bankruptcy?
Yes. Once insolvency has become permanent, the management board must file a bankruptcy petition without delay, and no later than 20 days after insolvency became evident. This is a legal obligation of the board, not an option.
What happens if the board files too late — or not at all?
Board members risk personal liability for damage caused to the company and its creditors by the delay, and in serious cases criminal liability. Courts look at what the board knew and when. This is why we document the timeline of the board’s decisions as part of our service — so the board can demonstrate it acted diligently.
What documents does a bankruptcy petition require?
The petition must prove the company’s insolvency. In practice this means: an overview of assets and liabilities, a list of creditors and their claims, recent financial statements, an explanation of the causes of insolvency, and the board’s resolution to file. We prepare the complete, court-ready package.
How much does bankruptcy cost? What is the court deposit?
The court may require a deposit to cover the costs of the proceedings — typically when the company itself has no funds. The amount is set by the court case by case. We advise on the expected deposit, who can pay it, and what options exist when the company’s accounts are empty, including the consequences of abatement (termination of proceedings without declaring bankruptcy) when no funds are available.
Can a creditor file a bankruptcy petition against my company?
Yes. A creditor with a clear, due claim can petition for the debtor’s bankruptcy. If your company has received a bankruptcy warning or petition from a creditor, contact us immediately — the response deadlines are short and the board’s room to act shrinks quickly.
What happens after the petition is filed?
The court reviews the petition, may appoint an interim trustee to assess the company’s assets and the causes of insolvency, and then decides whether to declare bankruptcy. After declaration, a trustee takes over the administration of the company’s assets. We support you through the hearing and cooperation with the trustee.
What is the difference between bankruptcy and liquidation?
Liquidation is a voluntary, solvent wind-down: the company pays all its debts and is then deleted from the register. Bankruptcy is for insolvent companies and runs under court supervision. If your company can still pay its debts, liquidation is the simpler and cheaper route — we can assess which applies to you.