Record number of bankrupt companies are without assets

Photo: SCANPIX

The percentage of companies without assets among the businesses declared bankrupt in Estonia rose to an all time high of 70.5 percent last year compared with respectively 62 percent and 49 percent in the two preceding years, a survey by Krediidiinfo shows.

In all 495 businesses were declared insolvent in Estonia during 2012, of which 349 did not end up in bankruptcy as a result of abatement of bankruptcy proceedings. During the year one in 331 companies, or 0.30 percent of all companies in Estonia, went bankrupt. The biggest creditors of bankrupt enterprises were banks, Krediidiinfo said.

A rapid downward trend in the number of bankruptcies continued for the second successive year. Year on year, the number of companies that went bankrupt fell by 128 or 20.5 percent. In 2011 the number of companies going bankrupt was 40 percent smaller than in 2010.

Anne-Ly Ots, financial analyst at Krediidiinfo, said the bankruptcy rate of businesses in Estonia has reached the pre-crisis level and in stable economic conditions the annual number of bankruptcies should be in the range from 400-500. That this is the default bankruptcy rate for Estonia is confirmed also by figures for the first two months of this year, which show the number of bankruptcies as virtually unchanged from last year.

Similar to the whole of the European Union, accommodation and catering, and construction have been the two sectors with the highest rate of bankruptcies in Estonia for several years now. In 2012, respectively 7.21 and 5.97 companies per one thousand companies went bankrupt in the two sectors. No bankruptcies were recorded in four sectors: energy, water and waste handling, health care, mining, and public administration.

The typical company declared bankrupt in Estonia is one with annual sales of less than 0.5 million euros that has been operating with a loss for several years and has no equity capital. More than three in four such companies had had tax arrears in the past year and nearly a quarter had been constantly in arrears during the year.