COBALT successfully represented AB bankas SNORAS (bankrupt), which resulted in the Estonian Supreme Court making an important new decision concerning bankruptcy law

AB bankas SNORAS (bankrupt) filed a petition to Pärnu County Court to declare Corvus Holding OÜ bankrupt. Pärnu County Court satisfied this petition and declared Corvus Holding OÜ bankrupt.

Corvus Holding OÜ appealed the Pärnu County Court ruling to Tallinn Circuit Court which overturned the Pärnu County Court ruling, finding that Corvus Holding OÜ should not have been declared bankrupt as the claim of AB bankas SNORAS (bankrupt), who filed the bankruptcy petition, was unclear.

In the opinion of AB bankas SNORAS (bankrupt), Tallinn Circuit Court incorrectly applied Bankruptcy Act subsection 31 (1) in conjunction with subsection 31 (2) and, based on this, filed an appeal against the ruling of Tallinn Circuit Court to the Supreme Court. More specifically, AB bankas SNORAS (bankrupt) found that pursuant to subsections 31 (1) and (2) of the Bankruptcy Act which entered into force on 1 January 2010, it is not possible to refuse to declare a legal entity obligor bankrupt when the interim trustee has determined that the obligor is permanently insolvent even without taking into account the claim of the obligee who filed the bankruptcy petition.

On 10 June 2014, the Supreme Court issued a ruling by which it partially satisfied the appeal of AB bankas SNORAS (bankrupt). In doing this, the Supreme Court also noted that Tallinn Circuit Court misinterpreted subsections 31 (1) and (2) of the Bankruptcy Act. The Supreme Court agreed with the position of AB bankas SNORAS, concluding that upon determining that a legal entity obligor is permanently insolvent, they must be declared bankrupt even if the claim of the obligee who filed the bankruptcy petition is unclear. This decision carries significant meaning in terms of bankruptcy law, as according to the prior judicial practice of the Supreme Court, a legal entity obligor was not to be declared bankrupt if the claim of the obligee who filed the bankruptcy petition was unclear.

COBALT Estonia represented AB bankas SNORAS (bankrupt) in all court instances. The litigation team comprised partner Liina Linsi, senior associate Kadri Michelson and associate Lembit Tedder.