Creation of pre-insolvency early warning mechanisms and solutions for out-of-court settlements in Estonia
The Commission provided assistance to the Ministries of Economic Affairs and Justice in improving the preventive restructuring framework in Estonia and introducing a system of early warning tools so as to limit the unnecessary liquidation of viable entrprises.
Preventive restructuring frameworks should, above all, enable debtors to restructure effectively at an early stage and to avoid insolvency. With the assistance mobilised through the Commission, Estonia transposed, the new EU insolvency rules. The already existing restructuring procedure was reviewed and models for building an early warning tool were explored, taking advantage of Estonia’s digitalised public administration and the data availability that comes with it.
Experts mobilised by the Commission reviewed the existing insolvency framework in Estonia and made specific recommendations to amend it. Moreover, different options for setting up an early warning tool were weighed , the most appropriate of which where then presented to the national authorities.
Thanks to the support on the preventive restructuring,viable enterprises in financial difficulties will have access to early restructuring and debtors will have access to early warning tools which can detect a deteriorating business and lead to more restructurings at an early stage.