Reorganisation Act in Practice Apr 21, 2010
The Estonian Reorganisation Act came into force on 26 December 2008. The Reorganisation Act is the first act in Estonia to regulate the reorganisation of a company outside of bankruptcy proceedings.
On 18 November 2009, the National Court of Estonia made its first ruling on the application of the Reorganisation Act (ruling no 3-2-1-122-09). The National Court thoroughly explained the definition and the procedure relating to the reorganisation of a company. The ruling of the National Court also considered the important practical question of whether a company’s tax liabilities to the State could be rearranged. The National Court found that the tax liabilities of a company may be rearranged using the reorganisation plan. As a company that is in financial difficulty may have obligations to the State arising from the obligation to pay tax, any solution where the tax liabilities could not be rearranged within the reorganisation proceedings may possibly entail the bankruptcy of a company, as the reorganisation of a company without reorganising its tax liabilities would not reasonably be possible.
The National Court appears to have reached a wise conclusion because within reorganisation proceedings the interests of the debtor must be regarded as somewhat more important than the interests of the creditors – even if the State itself is one of the creditors.
The full text of the National Court ruling can be found here.
For further information please contact Mr Helmut Pikmets
The National Court appears to have reached a wise conclusion because within reorganisation proceedings the interests of the debtor must be regarded as somewhat more important than the interests of the creditors – even if the State itself is one of the creditors.
The full text of the National Court ruling can be found here.
For further information please contact Mr Helmut Pikmets
