Estonia Considers Replacing Bankruptcy Trustees with Civil Servants
Estonia's Ministry of Justice proposes replacing bankruptcy trustees with civil servants or covering their fees from the state budget to prevent the insolvency system from collapsing.
Justice Minister Liisa Pakosta has proposed replacing bankruptcy trustees with civil servants or covering trustee fees from the state budget in certain proceedings. The ministry argues that the current insolvency system is unsustainable and needs reform to avoid collapse.
A bankruptcy trustee is an impartial official appointed by a court to manage and carry out bankruptcy proceedings, acting as an intermediary to protect the interests of both debtor and creditors. Currently, trustees cannot declare bankruptcy if there is no property, as no one pays the trustee—neither the state nor creditors.
The ministry believes trustees should not be required to work for an unknown period without reasonable compensation. If the state paid reasonable fees, the quality of bankruptcy proceedings could improve. The exact cost of such a solution was not specified, but the ministry noted it could be significant.
Andres Hermet from the Estonian Chamber of Enforcement Agents and Trustees in Bankruptcy supports additional state funding but disagrees that the system is collapsing. He notes that entering the profession is difficult for newcomers due to unpredictable fees.
Insolvency Service head Signe Viimsalu said creating a state competence center would be the most reasonable option. She wrote to Prime Minister Kristen Michal, warning that widespread insolvency could cause economic, social and institutional uncertainty and threaten Estonia's internal security. Viimsalu proposed several funding options, including an insolvency tax or partial funding from wrongdoers.
Hermet rejected the idea of state bankruptcy trustees, saying there is no economic logic and that a civil servant would not work more effectively or cheaply than current trustees.
