Judicial corporate rehabilitation as an alternative to the liquidating bankruptcy procedure has been contemplated in Estonia since 2006. The need to limit the public cost of mitigating the present financial crisis has acted as a catalyst for the adoption, at the end of 2008, of a new Rehabilitation Act (Saneerimisseadus), which provides the means by which private parties can contribute to crisis resolution.
"It seems to me that Estonia is a bad word now," says one partner. Estonia, like the other Baltic countries, is struggling to attract international finance, meaning that law firms have to adapt to a new reality....
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"It seems to me that Estonia is a bad word now," says one partner. Estonia, like the other Baltic countries, is struggling to attract international finance, meaning that law firms have to adapt to a new reality.
Restructuring and insolvency work is one practice area firms are looking to fill the gap left by falling revenues from banking, finance and M&A work. This is partly because the market demands it, but also because new legislation makes it possible to conduct restructurings similar to the US Chapter 11 procedure.
Banking and finance work is dominated by performing due diligence on loan securities and looking through lease agreements. No large new deals are on the horizon, and one partner says his corporate finance peers have told him: "You might as well go on sabbatical for the year."
The predicted avalanche of distressed transactions has yet to materialise, with lawyers reporting that behind the scenes they are mandated to do due diligence by buyers looking at companies. Most of the deals disappear for any number of reasons, but price, finance and economic uncertainty are recurring explanations.
Finally, a touch of scandal hit the legal market when one key lawyer of an unranked firm faced charges of bribery. So far, the lawyer has been found guilty on first-instance charges.
[Read about law firms' performance in this practice area]
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