Rising insolvencies could threaten Estonia's internal security, agency says

Estonia's Competition Authority has appealed to Prime Minister Kristen Michal (Reform) with a warning that insolvency is becoming a major problem and could threaten the country's internal security. Insolvency is a situation where a natural or legal person is unable to pay their debts.

Signe Viimsalu, head of the agency's insolvency service, wrote that creditors missed out on more than €50 million in the first half of the year due to 126 assetless insolvent companies. Last year, there were 192 such companies over the entire year, and creditors were owed €74 million – a 52 percent increase from 2024.

Viimsalu stated that widespread insolvency could cause economic, social and institutional uncertainty and pose a threat to Estonia's internal security. In 2025, the Unemployment Insurance Fund paid more than €1 million in compensation to employees of assetless companies. However, under current law, the fund cannot recover this money from managers who made serious management errors.

The letter noted that creditors currently lose around €400,000 per assetless insolvent company, compared to less than €100,000 three years ago. In most cases, creditors can no longer recover this money. Viimsalu added that creditors do not file bankruptcy petitions because the state fee is €420, and temporary administrators request an average of €4,700 through courts as a deposit.

Viimsalu also highlighted that 35,720 companies (12.5 percent) have still not submitted their 2024 annual reports, and nearly 82,000 companies (27 percent) have not submitted their 2025 reports. If a company does not submit its report, the state cannot know its financial situation, and a struggling company may not enter bankruptcy proceedings, leaving statistics incomplete.

According to Viimsalu, the insolvency service estimates there is nearly €18 billion worth of latent insolvency in Estonia's business landscape, not including indebted private individuals whose debts courts are cancelling on a mass scale. "Therefore, money is not being received into the state budget," she noted.

Viimsalu said there is currently no clearly designated party in Estonia responsible for preventing and managing risks in the business landscape and dealing with people's insolvency. She asked the prime minister to convene a government meeting to discuss the issue. Government Office communications adviser Lysandra Suursaar responded that the substantive processing of the letter is still ongoing.