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Press release: Number of bankruptcies increased 110% in 2008

25. Mar 2009

The bankruptcies survey of Estonia conducted by Krediidiinfo AS for nine years already reveals that after a declining trend in bankruptcies observed for a number of years the amount of bankruptcies soared in 2008, and the same trend is continuing this year as well.

Last year 429 companies were declared insolvent in Estonia, therefore the number of bankruptcies increased by 110 per cent as compared to the year 2007. Every 280th company, i.e. 0.36 per cent of all the companies in Estonia became bankrupt. 

In contrast to the recent years in 2008 the level of bankruptcies per 1000 companies is considerably higher among public limited companies; this shows that the year has been difficult even for larger and better-capitalised businesses. However, one of the positive aspects is that the share of companies holding no assets of all the companies declared bankrupt is less than one-half, amounting to 45 per cent. 

A typical bankrupt company is one with up to 10 million kroons sales volume, operating at a considerable loss, and having no equity. Typical are long-term arrears owed to the Tax and Customs Board – nearly half of the companies that went bankrupt in 2008 had long-term tax arrears for over a year before they were declared insolvent. Krediidiinfo has not been granting a credit rating for such company for several years, or has ranked the business by giving a low rating (C, B, BB). 

In 2008 the region with the highest bankruptcy rate in Estonia was, surprisingly, the Valga County, where the level of bankruptcies was twice as high as the nationwide average. It is followed by the Ida-Viru County, which has been a region with a high bankruptcy rate for years. The most bankruptcy-prone fields of activity are the processing industry and the entertainment business. 

Vis-à-vis to other European countries the rate of bankruptcies has increased slightly more than the average – 108 bankruptcies per 10 000 companies. The lowest bankruptcy rates are observed in Poland – only 3 bankruptcies per 10 000 companies. The bankruptcy rate is the highest in Luxembourg, where the relevant figure is 233. In Latvia and Lithuania the number of bankruptcies per 10 000 companies is 115 and 99 respectively. 

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