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Press release: The share of companies to distribute assets after bankruptcy has hit a record low

12. Mar 2013

As a panel survey of Estonian bankrupts conducted by Krediidiinfo shows, the share of enterprises holding no assets among bankrupt companies has hit record 70.5 per cent in 2012. In the two previous years, the indicators had reached 62 and 49 per cent respectively. 

A total of 495 businesses were declared insolvent in Estonia last year, and in 349 cases bankruptcy was not declared and bankruptcy proceedings abated. 

The number of bankrupt companies displayed an ongoing rapid downward trend for the second year in a row: in 2012, the number of bankrupt companies decreased by 128, i.e. 20.5 per cent, and in 2011, by 40 per cent. 

According to Annel-Ly Ots, a financial analyst at Krediidiinfo, the bankruptcy rate of Estonian companies has reached the pre-crisis level, and it actually should remain within 400–500 companies in stable economic conditions. The above is also supported by the number of registered bankrupts within the first two months of this year, which has changed little compared to the respective indicator for the same period of the last year. 

The region to display the highest bankruptcy rate was Pärnu County, followed by Harjumaa and Saaremaa (4.24, 3.37 and 3.27 bankruptcies per thousand of companies respectively), while the number of bankruptcies per thousand of companies in the majority of counties decreased. 

Similarly to the European Union as a whole, two sectors have been showing the highest bankruptcy rate in Estonia for several consecutive years: the accommodation and catering sector and the construction sector with the number of bankruptcies per thousand of companies reaching 7.21 and 5.97 respectively. As many as four sectors had no bankrupt companies at all: energy and water management and waste handling; healthcare, mining, and public administration. 

Every 331st company became bankrupt last year, which amounts to 0.30 per cent of all the Estonian businesses. Banks were the largest creditors of bankrupt companies. 

A typical bankrupt company will be a firm with sales revenue below 0.5 million euros, no equity capital and several years of operating at a loss. Over three thirds of bankrupt companies were in tax arrears in the last year, and around a quarter were constantly in tax arrears throughout the year. Around 85 per cent of bankrupt companies received low rating from Krediidiinfo (C, B, BB) in their last year of active operation.