Unified insolvency centre would aid debtors and creditors

A unified competence centre could help both debtors and creditors navigate insolvency proceedings, Signe Viimsalu, head of Estonia’s insolvency service, writes in an opinion piece published by ERR.

Viimsalu says the debate over insolvency usually divides people into two camps: those who want to protect debtors and those who want to protect creditors. Estonia’s fragmented system, she argues, serves neither side well. It prolongs proceedings, blurs responsibility and leaves both parties to manage the process on their own.

A state procedural centre would not choose one side over the other, but would create a single entry point where both could receive meaningful assistance, she writes.

For an individual debtor, the path to debt relief is currently complicated. A debt counsellor, court, temporary bankruptcy trustee, trustee and other officials each have separate roles, procedures and timetables.

People already struggling with debt must work out the order of the steps themselves and determine whom to contact. One official may not know what another has done, while data protection rules can make information-sharing more difficult. Some people abandon the process because they cannot manage the different stages of the system.

A unified competence centre would allow a person to receive advice, a plan, a payment schedule and, ultimately, debt relief under one roof, without having to look for a new point of contact at every stage. Viimsalu says this would not be more lenient towards debtors, but fairer. Those who genuinely demonstrate a willingness to meet their obligations could receive a clean slate sooner instead of facing years of uncertainty.

Creditors also need better protection, she writes. A company waiting for unpaid invoices or an employee waiting for unpaid wages wants to know whether and when the money will be recovered and what happened to it.

At present, creditors may have to communicate with a trustee, a court, a bankruptcy committee, investigative and supervisory authorities and various registers. A unified procedural centre could provide the status of a case, evidence, deadlines and information on recovered funds in one place.

Technology could keep the information in a single system and provide a clearer overview of the economy, Viimsalu says. Creditors would no longer have to deal with numerous trustees and several different authorities.

A single database could automatically track the movement of a debtor’s assets across registers, including bank accounts, real estate, vehicles, business interests, cryptocurrency and art collections. This would replace separate information requests from trustees, administrators and investigative bodies, followed by weeks of waiting for replies.

The same system that would speed up the recovery of money for creditors would also give debtors a transparent view of their proceedings, Viimsalu writes.

“The fragmented system punishes those who try to act correctly, whether they are debtors or creditors,” she says.

Viimsalu argues that the current model is not sufficiently fair to either side. She cites an example in which the head of an assetless insolvent company can leave creditors in Estonia with an average loss of nearly 400,000 euros without legal consequences. This harms honest companies trying to survive in the same economic environment, she writes.

In her view, the system creates the impression that irresponsibility pays in Estonia. It punishes those who try to behave properly and rewards those who know how to exploit gaps in the system.

According to the Ministry of Justice and Digital Affairs, the number of bankruptcy petitions has increased over the years: 1,451 in 2022, 1,936 in 2023, 2,058 in 2024 and 1,973 in 2025. By the end of May this year, 839 petitions had already been submitted.