"Statistical data do not support the view that insolvency is spreading widely and rapidly in Estonia," ministry adviser Marja Roht wrote in response to an appeal from the Insolvency Service (MJT).

According to Roht, court case statistics show that the number of bankruptcy petitions has not grown exponentially over the past three years.

"Although 33 percent more bankruptcy petitions were filed in 2024 than a year earlier, this did not lead to an increase in the number of bankruptcies declared. In 2025, 5 percent fewer bankruptcy petitions were filed than a year earlier, while the number of bankruptcies declared remained at the same level. /---/ The statistics show that the number of proceedings has remained within a range similar to previous years, meaning there is no widespread and rapidly growing insolvency," Roht said.

Roht added that Business Register statistics dating back to 2000 also confirm that the number of bankruptcies has not increased significantly, while according to the Bank of Estonia, companies' payment behavior is generally good and loan quality has improved over the past year.

The ministry criticized the service for deriving its €12.5 billion loss estimate from mathematically flawed and empirically unsubstantiated assumptions. In its response, the ministry noted that the Insolvency Service arbitrarily equates companies that are late in filing reports with large debtors that have no assets, meaning the data cannot be considered reliable.

"This is an arbitrary calculation based on the assumption that all 50,000 legal entities that fail to comply with reporting requirements have no assets and are insolvent, and that they leave behind the same average amount of debt as assetless debtors whose cases were sent by the courts to the MJT for analysis. /---/ The €12.5 billion figure must therefore be regarded as the result of a hypothetical multiplication exercise — it is neither an identified loss nor a reliable statistical estimate," Roht said.

The service's estimate that €18 billion in latent debt is hidden within Estonia's business sector also came under criticism. According to the ministry, extrapolating the averages of a specific group of large debtors to the entire economy artificially inflates the result and has no mathematical basis.

"The arithmetic mean of €400,000 does not describe a typical assetless company, and multiplying it by tens of thousands of companies inflates the result because of the impact of a small number of large debtors," the adviser said.

"It can only be regarded as a scenario based on very strong and unsubstantiated assumptions, rather than an identified or reliably estimated amount of hidden debt, and it should not be used as an indicator of the economic scale of insolvency in Estonia," she added.

The ministry also disputed the service's characterization of bankruptcy compensation paid by the Estonian Unemployment Insurance Fund as invariably resulting from malicious management failures. The ministry noted that the payments, which are intended to protect employees, constitute a sharing of social risk rather than losses deliberately inflicted on the state.

"It is wrong to assume that all entrepreneurs whose employees have received compensation from the Estonian Unemployment Insurance Fund have a) committed serious management failures and b) should personally be liable for reimbursing those payments. These are payments under an insurance and protection mechanism established by law, whose purpose is specifically to share the social risk arising from an employer's insolvency, and they do not automatically constitute losses caused to the state," Roht wrote.

The ministry also corrected the service's claim that half of Estonia's companies fail to submit their reports, noting that in reality only around one-tenth fail to do so.

Companies that are effectively dormant are considered a much greater concern, as they burden the register without contributing to the economy.

"If we look at statistics on the submission of annual reports, close to 10 percent of reports are not submitted, not 50 percent. /---/ From the perspective of the Business Register, the real concern is the large number of entities filing zero-activity reports — in other words, legal entities that are essentially inactive," Roht said.

In concluding its response, the ministry essentially dismissed the Insolvency Service's sweeping conclusions as unsubstantiated assumptions.

"The state addresses insolvency matters through the Ministry of Justice and Digital Affairs. The ministry is responsible for policymaking and overall quality in the field, while the Insolvency Service carries out its duties in support of achieving the sector's objectives. In summary, we find that the positions, calculations and conclusions presented in your appeals are to a significant extent arbitrary and do not constitute empirical conclusions directly supported by statistical and verifiable aggregate data," Roht said.

The Insolvency Service warned in an appeal to Prime Minister Kristen Michal in late July that rapidly growing insolvency is a serious problem and could pose a threat to national security.

Insolvency Service Director Signe Viimsalu wrote in the appeal to Michal that widespread insolvency could cause economic, social and institutional instability and pose a threat to Estonia's national security.

According to the letter, creditors lost out on more than €50 million in the first half of this year due to 126 insolvent companies with no assets.

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