TGS Baltic has successfully represented KredEx before Estonia’s Supreme Court in a dispute regarding COVID-19 pandemic-related extraordinary loans.
According to TGS Baltic, "the Supreme Court confirmed in its [ruling] that KredEx’s decision to grant an extraordinary loan is a forecast decision, and KredEx was able to consider a wide spectrum of different circumstances when assessing the solvency upon issuing the loan. According to the Supreme Court, KredEx correctly found that, when assessing the borrower’s solvency, in addition to the obligation to repay the working capital loan, the borrower’s other obligations, the bad debt claims of the borrower against buyers, and the notes of the annual report must be considered as well."
"The Supreme Court explained that if a loan was given while knowing that it would probably not be repaid, it would have a completely different economic meaning and effect as state aid than a refundable loan," the firm reported. "Thus, the Supreme Court found that KredEx’s views on assessing the borrower’s solvency were appropriate."
"The decision of the Supreme Court gives KredEx the certainty that KredEx is relatively free in making decisions about issuing loans, and several different criteria, which indicate that the undertaking may not, in reality, return the loan, can be taken into account," Senior Associate Vitali Sipilov commented. "As such, the Supreme Court’s decision is in line with the economic logic of granting loans and confirms that KredEx’s practice in assessing solvency has been correct and can be continued in the case of future measures as well."
The TGS Baltic team included Sipilov, Partner Helmut Pikmets, and Counsel Triinu Jarviste.
