According to the draft of the amendments to the Penal Code, in the future, failure to submit a statement of bankruptcy on time, is no longer penalized. Since the Supreme Court’s earlier rulings have stated the difficulty to accurately determine the occurrence of insolvency in a business, the application of relevant provision has been complex. Therefore the decision to decriminalize the failure to submit a statement of bankruptcy on time, has been made. However, the bankruptcy application filing will still be an obligation – under the Commercial Code, the members of the Management Board must file a bankruptcy statement immediately, but not later than 20 days after the occurrence of insolvency. In case of infringement of this obligation, the member of the Management Board should consider possible civil liability.
The article also analyses the problems of Estonian insolvency law and the issues related to filing a claim against a management board member. Siret considers the large amount of bankruptcy proceedings that abate, as one of the biggest problems related to Estonian insolvency law. In this situation, during the period when the accounting documents of the company reach to a bankruptcy judge and a trustee in bankruptcy, the company does not even have enough assets to cover the costs of the bankruptcy procedure. Another problematic matter is the position of the creditors of the bankrupt company to claim compensation of damages from the members of the Management Board. Particularly, the claim can generally be submitted by the trustee in bankruptcy and therefore, does not necessarily ensure that the rights of creditors are effectively protected.
Full-length article is available here: Failure to submit a statement of bankruptcy on time is no longer punishable
For further information please contact Siret by e-mail firstname.lastname@example.org or by calling +372 680 6850.
Law Firm ALTERNA