Amendments to the Law on Bankruptcy
- Lithuania
- 09/01/2008
- Raidla Lejins & Norcous
On 7 June 2008, the Law on Bankruptcy amended by the Lithuanian Parliament (Seimas) on 22 May 2008, came into force. The main purpose of the modifications adopted was to accelerate the procedures of a bankruptcy of the companies. It is also aimed to secure the interests of the creditors of the companies, i.e. to carry out the control of the possession of the assets of the company bankrupted to the administrator as quickly as possible in order to restrain unfair directors or owners of the companies from the sale or hiding the assets of the company bankrupted, as well as to establish higher standards of responsibility for the persons executing the procedures of the bankruptcies. Implicating that, the minimal term of 3 months, which must be passed, in order for the creditors to apply to a court with a claim of entering a case of bankruptcy for an insolvent company, is eliminated from the law. In addition, the procedure of bankruptcy cases is simplified, as the court may convene only one preliminary sitting of the case. Moreover, the responsibility for persons, delaying the investigation of the case, is tightened. The law establishes fines reaching LTL 10 000 for such persons. The analogue fines are provided for the bailiff, who fails to transfer the receiving orders for the court, analyzing the bankruptcy case. Providing to the new regulation of the law, it is considered that the administrator got acquainted with the transactions, concluded before the bankruptcy of the company, after the receiving of documents proving the conclusion of those transactions. The law also revises the procedure of the sale of the assets of the company bankrupted. Moreover, the law establishes the mandatory insurance of the liability of administrators in an amount of at least LTL 200 000. Lastly, the provisions of the law reconsider the procedure of payments to the administrators when the bankrupted company is insolvent and does not have enough assets to pay for the administration services. The law establishes the obligation for the Government of the Republic of Lithuania to define the procedure for such cases.
