Bankruptcy of Estonian Air announced

Photo: Toomas Huik

The Harju county court on Tuesday announced the bankruptcy of Estonian Air and the first meeting of creditors is scheduled to take place on Jan. 15 next year.

In fifteen days after the bankruptcy has been announced, a debtor and the creditor who submitted the bankruptcy petition can submit an appeal against court ruling to the Tallinn circuit court through the Harju county court.

Fulfilling the bankruptcy ruling nor its procedure cannot be stopped or deferred.

The court named Toomas Saarma and Andrias Palmits as trustees in bankruptcy.

Palmits told BNS in the middle of December that the company has liabilities worth 95.8 million euros, while it would probably be possible to get nine million euros from the bankrupt airline.

According to Palmits assets of Estonian Air amount to 59.2 million euros, made up of cash in bank accounts, claims on third persons, and the cost of the aircraft in the company's balance sheet in the amount of 50.2 million euros.

The European Commission's Directorate General for Competition ruled at the beginning of November that state aid provided to Estonian Air was not legal and the airline has to pay the money back to the state. Estonian Air therefore needs to pay back the state aid already received, which according to the Commission's information amounts to about 85 million euros plus interest, and cannot receive an additional 40 million euros of restructuring aid.

The EU executive opened in February 2013 an in-depth inquiry into support measures granted to the troubled airline, having doubts about the measures being in line with EU state aid rules.

The Estonian government made repeated equity injections into Estonian Air and gave rescue aid to the company in 2008-2014 amounting to approximately 130 million euros.

The airline filed for bankruptcy, and on Nov. 25 the Harju county court appointed Toomas Saarma and Andrias Palmits as temporary trustees in the bankruptcy.