Highest amount of bankruptcies coming in catering and accommodation

An empty cafe in Tallinn Old Town.
An empty cafe in Tallinn Old Town. Source: Siim Lõvi /ERR

The total number of presented bankruptcy forms this year has not gone up significantly but difficulties have hit one sector in particular: Companies involved in tourism and catering, which have been hit hard by the coronavirus pandemic, have become insolvent and are awaiting state support.

Taking a look around Old Town Tallinn, plenty of closed businesses stick out. The effects of the coronavirus pandemic on tourism, hotels and catering are absolutely clear.

Vallo Palvadre, one of the owners of the Pub With No Name ("Nimeta baar"), told ETV's "Aktuaalne kaamera" on Thursday: "We have been able to keep ourselves open today but I think that there is no single entrepreneur in the sector - the restaurant and bar sector - who has a glimmer of hope on their face. The situation has gotten harder and harder with each passing day."

If this continues, Palvadre said his bar is also facing the risk of becoming insolvent.

The total number of bankruptcy statements has actually not gone up too much since spring. Last year, courts were presented with 1,092 statements of insolvency in the first nine months, this year that number stands at 1,170 with 768 coming from individual persons and 402 from legal persons.

While the numbers are similar, bankruptcy manager Martin Krupp said the most bankruptcy statements have clearly come from catering, accommodation and the related fields.

Krupp said: "Of small and micro-entrepreneurs and sectors, certainly ones related to tourism and service. Businesses providing catering and other tourism services - their situation is pretty difficult."

The insolvencies for catering establishments has created an unique phenomenon for beverage producer Saku Õlletehas as the company has had to buy back their own wares from auctions. Namely, producers give barrs and restaurants free sunshades, freezers, tables and other inventory. When the establishment becomes insolvent and has to close up shop however, all those items remain in their hands and will be up for realization.

Jaan Härms, board member of Saku Õlletehas, explained: "We have not had to buy up too much because the situation is fairly new but if I look at the cases on the table today and going forward, it seems to me that we will have to buy plenty back. /.../ Many actually understand that the items do not belong to the operator but have been given to them by the producer. We also have all property use agreements."

He noted that they see many long-term client relationships ending. "If we are having difficutlies, that means they are in a deep-deep crisis. And as a whole we hope that these times change, but we also certainly hope that the state can support them as much as possible," Härms said.

Palvadre said: "The government should concentrate on the operation of the economy, keeping it running and not sending each other cakes."


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Editor: Kristjan Kallaste

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