2020. 03. 26
1st of January 2020 the new Law on Insolvency of Legal Persons of the Republic of Lithuania (JANĮ) came into force, replacing the existing Bankruptcy Law of the Republic of Lithuania and Restructuring Law of the Republic of Lithuania. From now on, both bankruptcy and restructuring will be governed by a single law, but both restructuring and bankruptcy will remain autonomous, although often both will be referred to under one common name - insolvency.
The consequences of COVID-19 quarantine prevention and the chain reaction of a recession may be felt by the business in the long term, with the consequences of continuing solvency, which will sooner or later be addressed either through restructuring or bankruptcy.
The table below summarizes the process of initiating insolvency proceedings.
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Insolvency process
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Basis
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Obligation to initiate insolvency proceedings
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The right to initiate insolvency proceedings
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Satisfaction of employees’ requirements
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Stamp duty
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Bankruptcy
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- The legal person is insolvent (cannot fulfill its property obligations in due time or the liabilities of the legal person exceed its assets value), and
- it is not subject to restructuring proceedings.
- General manager, if the legal person is insolvent;
- liquidator.
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- general manager, if legal person is in financial difficulties but is not yet insolvent;
- the creditor (employee) to whom the legal person is indebted.
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Termination of the employment contract with 15 days’ notice and a severance pay equal to two of employee‘s average salary is payable (or severance pay of 0.5 of employee‘s average salary if work relationships lasts for less than 1 year). Payable:
- up to 6 minimum monthly salaries (EUR 3642) from the guarantee fund;
- the remaining part – from the legal person's funds following the liquidation of the legal person.
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Not applicable.
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Restructuring
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- the legal person is in financial difficulties (is insolvent or has a realistic probability of becoming insolvent within the next 3 months);
- the legal person is viable;
- it is not subject to liquidation due to bankruptcy.
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-
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- general manager, if legal person is in financial difficulties but is not yet insolvent;
- creditor (employee) to whom the company owes at least 10 minimum monthly salaries (EUR 6070).
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There are no benefits for employers - obligations are fulfilled in accordance with the Labor Code of the Republic of Lithuania.
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Not applicable.
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Corporate law team
For more detailed information please refer to atty. Džiuginta Balčiūnė, dziuginta.balciune@ilaw.legal, +37061728057
