Ministry rejects claims of widespread insolvency in Estonia

Estonia’s Ministry of Justice and Digital Affairs has rejected claims by the Insolvency Service that the country is facing a widespread wave of insolvencies, ERR reported. The ministry said long-term court and commercial register statistics instead point to a stable economy and moderate normalisation.

“Statistical data do not confirm the position that insolvency is spreading widely and rapidly in Estonia,” ministry adviser Marja Roht wrote in a response to the Insolvency Service.

According to Roht, court statistics do not show an exponential increase in bankruptcy petitions over the past three years.

Although 33 percent more bankruptcy petitions were filed in 2024 than in the previous year, the number of bankruptcies declared did not increase. In 2025, the number of petitions fell by 5 percent year on year, while the number of bankruptcies declared remained unchanged.

“The statistics show that the number of proceedings has remained within a similar range to previous years, meaning that there is no widespread and rapidly spreading insolvency,” Roht said.

Roht added that commercial register statistics dating back to 2000 also show that the number of bankruptcies has not increased significantly. She said Eesti Pank, Estonia’s central bank, has assessed companies’ payment behaviour as generally good and loan quality as having improved over the past year.

The ministry also criticised the Insolvency Service’s calculation of estimated losses amounting to 12.5 billion euros, saying it was based on mathematically flawed and empirically unproven assumptions.

In its response, the ministry said the Insolvency Service had arbitrarily equated companies late in submitting reports with assetless major debtors, making the data unreliable.

“This is an arbitrary calculation that assumes all 50,000 legal entities violating reporting requirements are assetless and insolvent, and leave behind the same average debt as the assetless debtors sent to the Insolvency Service by the courts for analysis,” Roht said.

“Therefore, 12.5 billion euros must be treated as a conditional multiplication exercise. It is not an identified loss or a reliable statistical estimate,” she added.

The ministry also disputed the service’s estimate that Estonia’s businesses contain 18 billion euros in latent debt. It said extending the average figures for specific major debtors to the entire economy artificially inflated the result and had no mathematical basis.

“An arithmetic average of 400,000 euros does not describe a typical assetless company, and multiplying it by tens of thousands of companies inflates the result because of the influence of individual major debtors,” the adviser said.

She added that the figure could only be treated as a scenario based on very strong and unproven assumptions, not as an identified or reliably estimated amount of hidden debt, and should not be used as an indicator of the economic scale of insolvency in Estonia.

The ministry also rejected the service’s position that bankruptcy benefits paid by the Unemployment Insurance Fund are exclusively the result of deliberate management errors.

It said the payments, which are intended to protect employees, represent the sharing of social risk rather than deliberate damage caused to the state.

“It is wrong to assume that all companies whose employees have received compensation from the Unemployment Insurance Fund have made serious management mistakes, or that this compensation should be recovered from their managers,” Roht wrote.

She said the payments were part of an insurance and protection mechanism established by law to deliberately share the social risk of an employer’s insolvency and did not automatically constitute damage caused to the state.