Factsheet for measure
LV-2020-14/651
–
Updated
– measures in Latvia
Measures regarding insolvency and legal protection processes
Tiesiskās aizsardzības procesa un maksātnespējas procesa jautājumi
Background information
The Ministry of Justice has prepared and the Parliament has approved changes in insolvency procedures and legal protection process procedures - a form of arrangement with creditors - to be used during state emergency period caused by spread of COVID-19.
Measures are established by the law 'On Measures for the Prevention and Suppression of Threat to the State and Its Consequences Due to the Spread of COVID-19' (adopted on 20 March 2020, valid from 22 March 2020).
Content of measure
Until 1 September 2020, creditors are prohibited from submitting an application for insolvency proceedings of a legal person if any of the characteristics of the insolvency listed in Section 57, Paragraph one, Clauses 1, 2, 3 or 4 of the Insolvency Law is in place.
Such characteristics are, for example:
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the debtor has not paid an employee the work remuneration in full within two month period;
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the debtor (company) has not paid debt larger than €4,268 and it has not responded to creditors within three weeks.
A court, during the emergency period and six months after the end of it, following a substantiated application by the debtor, will be able to decide on the transfer of the deadline of the payment to the creditor included in the rescue plan during the insolvency proceedings, thus extending the term of the procedure for extinguishing the liabilities.
The rights to participate and vote in creditors' meetings remotely using electronic means of communication, as well as to vote in writing are introduced. Time limit for the implementation of the legal protection process has been extended from 2 years to 4 years. In cases where the period for the implementation of the legal protection process has already been extended previously and because of COVID-19 crisis, and the debtor can not fulfill the measures of the plan, the period for the implementation may be extended by one year, if the creditors agree to it.
Updates
The following updates to this measure have been made after it came into effect.
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28 September 2021
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The law in place states: until 1 September 2021, creditors are prohibited from submitting an application for insolvency proceedings of a legal person if any of the features of insolvency proceedings of a legal person referred to in Section 57, Paragraph one, Clause 1, 2, 3, or 4 of the Insolvency Law exists. Therefore the deadline of the measure was extended until 1 September 2021.
Additionally the law in place sets in force that until 31 December 2021, a debtor has no obligation to submit the application for insolvency proceedings of a legal person if the feature of insolvency proceedings of a legal person referred to in Section 57, Paragraph one, Clause 5 of the Insolvency Law exists (the debtor has not honoured its obligations which are past due for more than two months), except where the debtor has not disbursed the remuneration to an employee in full, the compensation for harm in connection with an accident at work or an occupational disease, or has not made the mandatory State social insurance contributions within two months after the day specified for the payment of remuneration. Unless the day for the disbursement of remuneration is specified in the employment contract, the first working day of the following month shall be considered as this day.
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10 June 2020
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On 10 June 2020 the new umbrella law “On the Suppression of Consequences of the Spread of COVID-19 Infection” was adopted and took over functions of the initial law “On Measures for the Prevention and Suppression of Threat to the State and Its Consequences Due to the Spread of COVID-19”.
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Use of measure
No information up to date.
Target groups
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Workers
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Businesses
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Citizens
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Does not apply to workers
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Applies to all businesses
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Does not apply to citizens
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Actors and funding
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Actors
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Funding
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National government
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No special funding required
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Social partners
Social partners' role in
designing the measure
and form of involvement:
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Trade unions
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Employers' organisations
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Role
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Consulted
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Consulted
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Form
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Direct consultation outside a formal body
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Direct consultation outside a formal body
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Social partners' role in the
implementation, monitoring and assessment phase:
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Unknown
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Main level of involvement: Unknown
Involvement
No special involvement to report.
Views and reactions
As far as we know social partners participate in discussions on measures for the prevention and suppression the spread of COVID-19 and on crisis impact on economy. However specific opinions of social partners are not published.
Sources
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08 April 2020: Būtiskākās tiesiskā regulējuma izmaiņas civiltiesību jomā sakarā ar Covid-19 izplatību
(tm.gov.lv)
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09 April 2020: Law On Measures for the Prevention and Suppression of Threat to the State and Its Consequences Due to the Spread of COVID-19
(likumi.lv)
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28 September 2021: Law on the Suppression of Consequences of the Spread of COVID-19 Infection (edition 28 September 2021)
(likumi.lv)
