Text consolidated by Valsts valodas centrs (State
Language Centre) with amending laws of:
14 October 2010 [shall come
into force from 1 November 2010];
22 November 2011 (Constitutional Court Judgment) [shall
come into force from 24 November 2011];
23 February 2012 [shall come into force from 1 March
2012];
20 April 2012 (Constitutional Court Judgment) [shall come
into force from 24 April 2012];
9 July 2013 [shall come into force from 7 August
2013];
12 September 2013 [shall come into force from 1 January
2014];
9 July 2013 [shall come into force from 7 August
2013];
12 September 2013 [shall come into force from 1 January
2014];
25 September 2014 [shall come into force from 1 January
2015];
18 December 2014 [shall come into force from 1 January
2015];
19 February 2015 [shall come into force from 1 March
2015];
21 December 2015 (Constitutional Court Judgment) [shall
come into force from 23 December 2015].
If a whole or part of a section has been amended, the
date of the amending law appears in square brackets at
the end of the section. If a whole section, paragraph or
clause has been deleted, the date of the deletion appears
in square brackets beside the deleted section, paragraph
or clause.
|
The Saeima1 has adopted and
the President has proclaimed the following law:
Insolvency
Law
Division
A
General Provisions
Chapter I
The Purpose of the Law and Terms Used in the Law
Section 1. Purpose of this Law
The purpose of this Law is to promote the honouring of the
obligations of a debtor in financial difficulties and, where
possible, the renewal of solvency, applying the principles and
lawful solutions specified in the Law.
Section 2. Scope of Application of
this Law
(1) This Law shall apply to a legal person (except the
entirety of property of an estate) or to a natural person.
(2) In respect of the State, local government or other legal
person governed by public law the insolvency proceedings and
legal protection proceedings specified in this Law shall not be
applied.
(3) A separate law shall regulate the insolvency proceedings
of credit institutions.
(4) The provisions of this Law shall be applicable to the
insolvency proceedings of those financial and capital market
participants, the supervision of whose activities in accordance
with the requirements of laws and regulations is performed by the
Financial and Capital Market Commission, insofar as it is not
laid down otherwise by the special legal norms governing the
activities of the financial and capital market participants.
(5) The provisions of this Law shall be applicable to the
insolvency proceedings of the subject of a financial security
contract, observing the exceptions and additional provisions
referred to in the Financial Security Law.
Section 3. Legal Protection
Proceedings
(1) Legal protection proceedings are an aggregate of measures
of a legal nature, whose purpose is to renew the ability of a
debtor to settle their debt obligations, if a debtor has come
into financial difficulties or expects to do so.
(2) Legal protection proceedings shall commence from the day
when a matter of legal protection proceedings are initiated in
court and shall take place until the day when the court takes a
decision to terminate the legal protection proceedings.
Section 4. Insolvency Proceedings of
a Legal Person
(1) The insolvency proceedings of a legal person are an
aggregate of measures of a legal nature, within the scope of
which the claims of creditors are settled from the property of a
debtor, in order to promote the honouring of the debtor's
obligations.
(2) The insolvency proceedings of a legal person shall be
commenced from the day when the court has proclaimed insolvency
proceedings by the adjudication and shall take place until the
day when the court takes a decision to terminate the insolvency
proceedings.
Section 5. Insolvency Proceedings of
a Natural Person
(1) The insolvency proceedings of a natural person are an
aggregate of measures of a legal nature whose aim is to satisfy
the claims of creditors as much as possible from the property of
a debtor and provide the opportunity for a debtor whose property
and income is insufficient to cover the entire obligations to be
released from the obligations which have not been honoured and to
restore solvency.
(2) The insolvency proceedings of a natural person shall be
commenced from the day when the court has proclaimed insolvency
proceedings by the adjudication and take shall place until the
day when the court takes a decision to terminate the insolvency
proceedings.
Section 6. Principles of Legal
Protection Proceedings, Insolvency Proceedings of a Legal Person
and Insolvency Proceedings of a Natural Person
The general principles of legal protection proceedings, the
insolvency proceedings of a legal person and insolvency
proceedings of a natural person (hereinafter in this Section -
proceedings) shall be applied as follows:
1) principle of the preservation of rights - the rights of
creditors acquired prior to proceedings shall be observed during
the proceedings. The restriction of rights of creditors specified
within the scope of the proceedings may not be greater than is
necessary for achieving the objective of the respective
proceedings;
2) principle of creditor equality - creditors shall be given
equal opportunities to participate in proceedings and receive
satisfaction of their claims in accordance with the obligations
which they have established with the debtor prior to the
commencement of proceedings;
3) the principle of not allowing arbitrariness - a creditor
and debtor may not perform individual activities which cause harm
to the interests of the creditors in general;
4) principle of honouring of obligations - measures which
allow the obligations undertaken by a debtor to be honoured in a
greater amount shall be applicable within the scope of
proceedings;
5) principle of effectiveness of proceedings - such measures
which allow the objective of the proceedings to be achieved in a
most complete manner with the least resources shall be applicable
within the scope of proceedings;
6) principle of quick turnover - the task of the proceedings
is to maintain a commercially lawful quick turnover. The sale of
the property of a debtor shall be performed in order to ensure
the return thereof to commercially lawful circulation as quickly
as possible;
7) principle of transparency - in order to ensure credibility,
information regarding proceedings must be accessible to all
persons involved in the proceedings, thereby promoting the
observation of the interests of these persons and the achievement
of the objectives of the proceedings. An exception is information
the unrestricted disclosure of which might harm the lawful
interests of a debtor or a creditor;
8) principle of good faith - persons involved in proceedings
shall use their rights and fulfil their duties in good faith. A
debtor and creditor may not use the proceedings in order to make
a living unfairly.
Section 7. Secured Creditor
(1) A secured creditor is a creditor whose right to claim
against the debtor or a third person is secured by a commercial
pledge, or mortgage on the property of the debtor registered in
the Land Register or Ship Register.
(2) A secured creditor shall be considered to be a non-secured
creditor for the unsecured part of the claim, except the case
when the security is for a liability of a third person. A secured
creditor is entitled, during any stage of the proceedings, to
decline from the security for the right to claim in full or
partly, by making relevant amendments to public registers.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 8. Non-secured Creditor
A non-secured creditor is a creditor whose right to claim is
not secured with the means of security referred to in Section 7,
Paragraph one of this Law.
Section 9. Administrator of
Insolvency Proceedings
(1) An administrator of insolvency proceedings is a natural
person who has acquired a certificate of an administrator of
insolvency proceedings and who has the rights and duties
specified in this Law. As regards the official activities, an
administrator of insolvency proceedings shall be considered as
equivalent to public officials.
(2) A liquidator, within the meaning of Council Regulation
(EC) No 1346/2000 of 29 May 2000 on insolvency proceedings
(hereinafter - Council Regulation No 1346/2000) also has the
rights and duties of an administrator of insolvency proceedings
specified in this Law and other laws and regulations.
[25 September 2014 / Section 2 of
the Law "Amendments to the Insolvency Law" of 25 September 2014
where Paragraph one has been supplemented with a sentence in the
following wording: "As regards the official activities, an
administrator of insolvency proceedings shall be considered as
equivalent to public officials", insofar as failing to ensure
occupational guaranty to be able to retain the selected
occupation in respect of insolvency administrators who are
advocates at the same time, has been recognised as non-conforming
to the first sentence of Section 106 of the Constitution of the
Republic of Latvia by the Constitution Court judgement of 21
December 2015 which enters into effect on 23 December 2015.]
Section 10. Characteristics of the
Application of the Norms of the Law
The provisions applicable to legal persons shall be applied to
natural persons and partnerships, unless it is laid down
otherwise in this Law.
Section 11. Costs of Legal
Protection Proceedings, Insolvency Proceedings of a Legal Person
and Insolvency Proceedings of a Natural Person
The costs of legal protection proceedings, insolvency
proceedings of a legal person and insolvency proceedings of a
natural person are the remuneration of the administrator of
insolvency proceedings and expenses which arise in order to
ensure the lawful and effective course of legal protection
proceedings, the insolvency proceedings of a legal person or the
insolvency proceedings of a natural person.
Section 12. Insolvency Register
(1) In order to ensure the public awareness of legal
protection proceedings, the insolvency proceedings of a legal
person and the insolvency proceedings of a natural person, the
responsible authority shall organise an Insolvency Register, in
which the information specified in this Law shall be included.
The Insolvency Register is accessible to everyone free of charge,
and the entries therein shall be publicly reliable.
(2) Information regarding the administrator of insolvency
proceedings, the course of the legal protection proceedings, the
insolvency proceedings of a legal person and the insolvency
proceedings of a natural person shall be entered into the
Insolvency Register.
Chapter
II
Administrator of Insolvency Proceedings
Section 13. Requirements and
Restrictions Set Out for the Administrator of Insolvency
Proceedings
(1) A natural person with the capacity to act may be the
administrator of insolvency proceedings (hereinafter -
administrator):
1) who has attained the age of 25 years;
2) who has received a State-recognised education document
concerning the acquisition of a second level higher vocational
education in jurisprudence and acquired the qualification of a
lawyer or has received a State-recognised education document
concerning the acquisition of a higher academic education in
jurisprudence and acquired an academic degree;
3) who is fluent in the official language at the highest
level;
4) who has at least three years work experience in the
profession of a lawyer or profession comparable thereto after
acquisition of the education and qualification referred to in
Paragraph one, Clause 2 of this Section.
(2) An administrator may not be a person:
1) who does not conform with the requirements laid down in
Paragraph one of this Section;
2) if from the day of the expiry of this person's certificate
in accordance with Section 17, Paragraph one, Clause 6 or
Paragraph two of this Law, five years have not passed;
3) who has had their administrator certificate annulled;
4) who has been found guilty of committing an intentional
criminal offence or for whom criminal proceedings for committing
an intentional criminal offence have been terminated for reasons
other than exoneration of the person;
5) who has had insolvency proceedings of a natural person
proclaimed within the last five years;
6) who has been a member of the administrative body of a legal
person and has caused the insolvency proceedings of this legal
person due to the neglect thereof or deliberately;
7) who, based on the decision in a disciplinary matter, has
been excluded from the number of sworn advocates or the
assistants thereto, released from the office of the public
prosecutor or discharged from the office of a sworn bailiff, the
office of the assistant thereto or the office of a judge, until
five years have passed from the day when the decision of the
disciplinary matter has entered into effect.
Section 14. Professional
Organisation of Administrators
(1) The functions of the professional organisation of
administrators shall be implemented by the Association of the
Certified Administrators of Insolvency Proceedings of Latvia
(hereinafter - Association of Administrators).
(2) The Association of Administrators shall perform the
following State administrative tasks in accordance with the
procedures laid down in this Law:
1) train administrator applicants;
2) certify administrators;
3) organise the improvement of the professional qualifications
of administrators;
4) perform the re-certification of administrators;
5) administer the registers of issued, extended, annulled and
terminated certificates and duplicate certificates;
6) terminate the operation of administrator certificates and
annul them;
7) suspend the operation of the administrator's
certificate.
(3) When performing State administrative tasks, the
Association of Administrators has the following rights:
1) to request from the administrator and receive from him or
her the necessary information and appropriate documents;
2) to request from the institutions and persons involved in
the legal protection proceedings and insolvency proceedings and
receive from them information and documents related to the
activities of an administrator;
3) to request from State and local government institutions and
receive from them free of charge the information necessary for
the performance of the functions of the Association of
Administrators related to the activities of administrators.
(4) The Cabinet shall determine the price list for paid
services provided within the scope of the State administrative
tasks of the Association of Administrators.
(5) The Association of Administrators, when performing the
tasks referred to in Paragraph two of this Section, is entitled
to issue administrative provisions.
(6) The Association of Administrators, when performing the
tasks referred to in Paragraph two of this Section, is
functionally subordinate to the Insolvency Administration.
(7) The Association of Administrators shall draw up and
approve a professional code of ethics for administrators.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 15. Training of
Administrator Applicants
(1) Attendance at the training course of administrator
applicants is a pre-condition for taking the examination of
administrators.
(2) The training of administrator applicants and issuance of
certificates shall be performed by the Association of
Administrators.
(3) The Cabinet shall determine the training programme for
administrator applicants and the procedures by which a
certificate shall be issued for attending the training course, as
well as the term of validity of this certificate.
Section 16. Certification and
Re-Certification of an Administrator
(1) An administrator's certificate is a document which
certifies the professional qualification of an administrator and
gives a person the right to undertake and fulfil the duties of an
administrator.
(2) A person who complies with the requirements of Section 13,
Paragraph one of this Law and who has attended the training
course of administrator applicants, has the right to undergo the
certification of an administrator.
(3) The Association of Administrators shall issue an
administrator's certificate to a person who has successfully
fulfilled all the requirements of the certification. The term of
validity of an administrator's certificate shall be two years.
The term of validity of an administrator's certificate may be
extended by performing re-certification.
(4) An administrator has a duty to regularly improve his or
her qualification and perform professional activities in
accordance with the procedures and to the extent laid down in
laws and regulations. The Association of Administrators shall
evaluate the professional activity and qualification of an
administrator once every two years, performing
re-certification.
(5) The Cabinet shall determine the procedures for certifying
administrators and the procedures for improving the qualification
of an administrator and for re-certification.
Section 17. Suspension and
Termination of the Operation of an Administrator's Certificate
and Its Annulment
(1) The operation of an administrator's certificate shall
terminate on the expiry of its validity or by taking a decision
to terminate it in the following cases:
1) the administrator has been convicted of an intentional
criminal offence;
2) the administrator's capacity to act has been restricted by
a court judgement;
3) the administrator has submitted a submission regarding
termination of the operation of the administrator's
certificate;
4) insolvency proceedings of a natural person have been
proclaimed for the administrator;
5) the administrator has not been re-certified in accordance
with specified procedures;
6) the court has removed the administrator on the grounds of
Section 22, Paragraph two, Clause 7 of this Law;
7) in the event of death of the administrator.
(11) The operation of an administrator's
certificate shall be suspended by taking a decision on its
temporary suspension for the time period when the administrator
is in the service of a State institution of direct or indirect
administration, a derived public entity, another State
institution or State (local government) capital company, or for
the time period of long-time absence of the administrator due to
illness, pregnancy, maternity leave or child-care leave.
(2) A decision to terminate the operation of an
administrator's certificate may be taken if the court has removed
the administrator from the fulfilment of his or her duties for
violations of laws and regulations twice during the last two
years of the operation of the administrator's certificate.
(21) The decision to terminate the operation of an
administrator's certificate may be taken if the administrator has
severely violated the provisions of the professional code of
ethics for administrators.
(3) A decision to annul an administrator's certificate shall
be taken if the administrator has provided false information
during the process of certification.
(31) The decision to terminate the operation of an
administrator's certificate shall be taken if during the past two
years of operation of the administrator's certificate the
Insolvency Administration has established violations of laws and
regulations in the administrator's activity on two occasions.
(4) The Association of Administrators shall perform the
suspension and termination of the operation of an administrator's
certificate and its annulment.
(5) The Cabinet shall determine the procedures for suspending
and terminating the operation of an administrator's certificate
and for annulling it.
[25 September 2014; 18 December 2014 / See Paragraph
34 of Transitional Provisions]
Section 18. Publicity of the
Activity of an Administrator
(1) The responsible authority shall enter the following
information regarding an administrator in the Insolvency
Register:
1) the given name and surname of the administrator;
2) the number of the administrator's certificate;
3) the date of issue of the administrator's certificate;
4) the address of the location of the administrator's
practice;
5) the telephone number of the administrator;
6) the electronic mail address of the administrator;
7) the date of suspension, termination of the operation of an
administrator's certificate or the date of its annulment;
8) the date of the making of the entry.
(2) The Association of Administrators shall ensure access to
the information referred to in Paragraph one, Clauses 1, 2, 3, 4,
5, 6, and 7 of this Section to the responsible authority which
makes the entries in the Insolvency Register.
[18 December 2014]
Chapter
III
Appointment or Removal of an Administrator
Section 19. Appointment of an
Administrator in Legal Protection Proceedings, Insolvency
Proceedings of a Legal Person and Insolvency Proceedings of a
Natural Person
(1) An administrator shall be appointed by court in legal
protection proceedings, insolvency proceedings of a legal person
and insolvency proceedings of a natural person in accordance with
the procedures laid down in this Law and the Civil Procedure
Law.
(2) The Cabinet shall determine the procedures by which the
Insolvency Administration shall choose and recommend candidates
to the court for the office of administrator. The proposal of the
Insolvency Administration shall be of a recommendatory nature and
may not be contested or appealed in accordance with the
procedures laid down in the Administrative Procedure Law.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 20. Restrictions in
Fulfilling Administrator's Duties
(1) An administrator may not undertake and fulfil the duties
of an administrator in legal protection proceedings or in
insolvency proceedings in the following cases:
1) the period of validity of the administrator's certificate
has expired, its operation has been terminated or the certificate
has been annulled;
2) the administrator is a suspect, accused or a defendant in
criminal proceedings related to his or her actions during the
specific legal protection proceedings, the insolvency proceedings
of a legal person or the insolvency proceedings of a natural
person;
3) the administrator is recognised to be an interested party
with respect to the debtor in accordance with the provisions of
this Law;
4) the administrator is in a situation of conflict of
interests with respect to the debtor or creditor in accordance
with the provisions of this Law;
5) the administrator has been in employment legal
relationships with the debtor during the last five years prior to
the day of the proclamation of the relevant insolvency
proceedings;
6) the debtor has the right to claim against the administrator
or the administrator has the right to claim against the debtor
and the administrator or debtor has not specifically refused such
a right;
7) the administrator has a personal interest in the matter of
the legal protection proceedings, the matter of the insolvency
proceedings of a legal person or in the matter of the insolvency
proceedings of a natural person or there are other circumstances
causing justified doubts regarding the impartiality thereof.
(2) If any of the cases referred to in Paragraph one of this
Section apply to the administrator, he or she shall immediately
inform the court and the Insolvency Administration thereof.
Section 21. Restrictions in the
Fulfilment of Administrator's Duties in the Situation of a
Conflict of Interests
(1) The administrator is in the situation of a conflict of
interests if he or she fulfils activities related to
administrator's duties in specific legal protection proceedings,
the insolvency proceedings of a legal person or the insolvency
proceedings of a natural person in which he or she, his or her
relatives or counterparties are or might be personally or
financially interested, or if he or she fulfils activities
related to administrator's duties in respect of a debtor the
shareholder, stockholder, partner or the member of supervisory,
control or executive body of which is the administrator himself
or herself or a relative thereof.
(2) A person who is married to, is in relation to or affinity
to the administrator to the second degree is considered to be a
relative for the application of the restrictions specified in
Paragraph one of this Section.
(3) The administrator is not in a situation of a conflict of
interests if in business relations with the counterparty referred
to in Paragraph one of this Section the administrator is in the
capacity of a recipient of goods or services delivered by the
counterparty as part of its regular economic activity, and there
is no dispute about the transaction and the administrator does
not enjoy any specific favours from the transaction.
(4) The administrator shall notify all creditors and the
Insolvency Administration about the transaction counterparties
and provide a justification for the fact that he or she in
accordance with the provisions of Paragraph one of this Section
is not in a situation of a conflict of interests.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 22. Removal of an
Administrator
(1) An administrator shall be removed by the court upon its
own initiative, by application of the Insolvency Administration
or the administrator or at the proposal of the creditors'
meeting.
(2) An administrator shall be removed if:
1) the restrictions specified in Section 20 of this Law apply
in respect thereto;
2) he or she does not comply with the requirements of the laws
and regulations governing insolvency;
3) he or she does not execute the court adjudication;
4) he or she does not fulfil the legal obligation imposed by
the Insolvency Administration;
5) he or she has resigned from office (Section 23);
6) the creditors' meeting has proposed that the administrator
should be removed from specific insolvency proceedings of a legal
person or the insolvency proceedings of a natural person, if the
administrator has not ensured the effective course of insolvency
proceedings;
7) he or she uses his or her powers in bad faith;
8) the operation of the certificate thereof has been
terminated or the certificate has been annulled.
(3) If violations have been determined in the activity of the
administrator, the administrator shall only be removed from the
legal protection proceedings, the insolvency proceedings of a
legal person or the insolvency proceedings of a natural person,
in which the violations have been determined.
(4) If the operation of an administrator's certificate has
been terminated or if an administrator's certificate has been
annulled, the Insolvency Administration shall submit an
application to the court regarding the removal of the
administrator from all legal protection proceedings, the
insolvency proceedings of a legal person or the insolvency
proceedings of a natural person, to which he or she has been
appointed.
Section 23. Resignation of an
Administrator from Office
(1) An administrator has the right to resign from office at
any time, if due to objective circumstances he or she is unable
to fulfil the duties of an administrator.
(2) When resigning from office, an administrator shall submit
a justified application to the court regarding the resignation,
to which a review of all the activities thereof shall be
appended, as well as draft documents and property deeds of
delivery and acceptance, concurrently informing the Insolvency
Administration thereof.
(3) An administrator shall resign from office if the
restrictions specified in Section 20 of this Law apply
thereto.
(4) When resigning from office, an administrator shall observe
the provisions specified in Section 24 of this Law regarding the
change of administrators.
Section 24. Change of
Administrators
(1) If an administrator is being removed from office, another
administrator shall be appointed in accordance with the
procedures laid down in Section 19 of this Law.
(2) If the previous administrator resigns or is removed from
office, until the deadline specified by the court which shall not
exceed 10 days, the previous administrator shall compile a deed
of document and property delivery and acceptance which shall be
signed by the previous administrator and the new administrator. A
review of the activities of the previous administrator shall be
appended to the deed of property delivery and acceptance.
(3) Until the appointment of a new administrator, the previous
administrator shall continue to fulfil the duties thereof. After
appointment of a new administrator, the previous administrator,
in accordance with the procedures laid down in law is responsible
for handing over the debtor's documents and property to the new
administrator in accordance with the deed of document and
property delivery and acceptance.
(4) If the drawing up of a deed of document and property
delivery and acceptance and a review of activities is not
objectively possible, the new administrator, when commencing the
fulfilment of duties, shall draw up a report on the actual
situation and notify the creditors thereof in accordance with the
procedures laid down in this Law.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 25. Termination of the
Duties of an Administrator
The duties of an administrator shall terminate:
1) if the administrator is removed from office;
2) if the legal protection proceedings are being
terminated;
3) if the insolvency proceedings of a legal person are being
terminated, except the case referred to in Section 35, Paragraph
five of this Law;
4) if the insolvency proceedings of a natural person are being
terminated;
5) in the event of death of the administrator.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Chapter
IV
General Provisions for the Activity of an Administrator
Section 26. General Duties of an
Administrator
(1) After receipt of an administrator's certificate, an
administrator shall:
1) register with the State Revenue Service as a taxpayer;
2) declare one place of practice with the State Revenue
Service and notify the Association of Administrators about
it.
(2) An administrator shall ensure the effective and lawful
course of legal protection proceedings, insolvency proceedings of
a legal person and insolvency proceedings of a natural person,
and the achievement of objectives.
(3) An administrator has the following duties:
1) to participate in the court sittings of the matters of
legal protection proceedings, the insolvency proceedings of a
legal person and the insolvency proceedings of a natural
person;
2) to provide information regarding the course of legal
protection proceedings, the insolvency proceedings of a legal
person and the insolvency proceedings of a natural person to the
court, the creditors, the Insolvency Administration and other
persons and institutions specified in laws and regulations;
3) to notify the Association of Administrators within five
days of a change in the place of practice, electronic mail
address, given name or surname;
4) to co-operate with empowered persons and institutions who,
in accordance with the laws and regulations of other States have
the right to implement their powers in legal protection
proceedings, the insolvency proceedings of a legal person or the
insolvency proceedings of a natural person;
5) upon request of the Insolvency Administration, to provide a
review of the activities thereof, documents and information
regarding the course of the legal protection proceedings, the
insolvency proceedings of a legal person or the insolvency
proceedings of a natural person, in which the administrator has
fulfilled or is fulfilling their duties;
6) if the supervision of the activities of a financial and
capital market participant is performed by the Financial and
Capital Market Commission in accordance with the requirements of
laws and regulations, upon the request thereof to provide this
Commission with information or a report on the course of the
legal protection proceedings of the abovementioned financial and
capital market participant or the insolvency proceedings of a
legal person;
7) examine complaints about the course of specific legal
protection proceedings, the insolvency proceedings of a legal
person or the insolvency proceedings of a natural person and
provide a reply to the submitter of the complaint within two
weeks;
8) provide reports and materials to law enforcement
authorities regarding the facts uncovered in legal protection
proceedings, the insolvency proceedings of a legal person or the
insolvency proceedings of a natural person which may be the
grounds for the commencement of criminal proceedings.
(4) An administrator shall ensure that he or she may be
reached at the address of the place of practice, using the
contact information indicated, as well as the receipt of
correspondence addressed thereto (including documents signed by
secure electronic signature).
(5) During the insolvency proceedings of a legal person, an
administrator shall organise the accounting records of the debtor
in accordance with the requirements of laws and regulations. If
the Law On Annual Financial Statements is applicable to the
debtor, the administrator shall submit to the State Revenue
Service a true copy of the annual financial statements and a
sworn auditor's report (where required) only in the cases when
the administrator has taken a decision to continue the economic
activity of the debtor to full or restricted extent.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 27. General Rights of an
Administrator
An administrator has the following rights:
1) to request and receive the necessary information from a
debtor and the representatives thereof in legal protection
proceedings, the insolvency proceedings of a legal person or the
insolvency proceedings of a natural person;
2) to request and receive from State and local government
authorities, free of charge, the necessary information at the
disposal thereof, regarding debtors and the representatives of
debtors in legal protection proceedings, the insolvency
proceedings of a legal person or the insolvency proceedings of a
natural person;
3) to request and receive from other competent persons and
authorities the information at the disposal thereof which is
related to the course of the legal protection proceedings, the
insolvency proceedings of a legal person and the insolvency
proceedings of a natural person;
4) to become acquainted with the financial situation and all
the documents of a debtor, as well as to request and receive all
the documents.
Section 28. Empowerment of an
Administrator
(1) An administrator has the right to empower another
administrator to perform the duties of an administrator, within
the scope of one calendar year for a period of time not exceeding
60 days, in conformity with the restrictions specified in Section
20 of this Law.
(2) An administrator shall submit an application for the
empowerment to the responsible authority organising the
Insolvency Register, without delay, after issue of the powers
specified in Paragraph one of this Section.
Section 29. Liability of an
Administrator
(1) An administrator shall be liable for losses caused to the
State, the debtor, creditors or other persons due to the fault of
the administrator or an authorised representative thereof.
(2) An administrator shall not be liable for the actions of
the debtor and previous administrator and transactions concluded
prior to his or her commencement of fulfilling the duties of an
administrator.
Section 30. Bringing an Action
Against an Administrator
(1) An action may be brought against an administrator in court
not later than within one year after termination of legal
protection proceedings, the insolvency proceedings of a legal
person or the insolvency proceedings of a natural person.
(2) If the administrator has caused, through his or her
actions, losses to the State, debtor, creditors or other persons,
and such is determined through a court judgment in a criminal
matter, the general limitation period regarding actions is
applicable to actions brought against the administrator.
(3) A creditor or creditors who represent at least 10 per cent
of the total recognised amount of the principal debt of the
non-secured creditors may bring an action against the
administrator in favour of all debtors, if the administrator has
caused losses to the debtor through his or her actions.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 31. Security of an
Administrator
(1) An administrator shall have security as provided for by
this Law, for those cases where he or she by their actions causes
losses to creditors or other persons. The security of an
administrator is the civil liability insurance of their
activities.
(2) The Cabinet shall determine the procedures for the civil
liability insurance of the administrator, as well as the minimum
insurance amount.
Division
B
Legal Protection Proceedings
Chapter V
General Provisions of Legal Protection Proceedings
Section 32. Subjects of Legal
Protection Proceedings
(1) Legal protection proceedings shall be applicable to legal
persons, partnerships, individual merchants, persons registered
in a foreign country who perform permanent economic activity in
Latvia, and to the producers of agricultural products
(hereinafter in this Division - debtor).
(2) In legal protection proceedings, the producer of
agricultural products shall be understood to be a legal person
from whose annual income more than 50 per cent on the day of the
submission of an application for legal protection proceedings is
formed by the revenue from the production and processing of
agricultural products. Within the meaning of this Law, the
production and processing of agricultural products shall be that
which is specified in Regulation (EC) No 178/2002 of the European
Parliament and of the Council of 28 January 2002 laying down the
general principles and requirements of food law, establishing the
European Food Safety Authority and laying down procedures in
matters of food safety.
(3) Legal protection proceedings shall not be applicable to
the following financial and capital market participants: an
insurance company, an insurance brokerage company, a regulated
market organiser, an investment brokerage company, a depository,
an alternative investment asset management company, an investment
management company, a credit union, a credit institution, and a
private pension fund.
[9 July 2013]
Section 33. Application for Legal
Protection Proceedings and Initiation of a Matter of Legal
Protection Proceedings
(1) A debtor shall submit an application for legal protection
proceedings to court in accordance with the procedures laid down
in the Civil Procedure Law.
(2) A matter of legal protection proceedings shall be
initiated in accordance with the procedures laid down in the
Civil Procedure Law.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 34. Restrictions in the
Initiation of a Matter of Legal Protection Proceedings
(1) A matter of legal protection proceedings may not be
initiated, if:
1) the liquidation of the debtor has been commenced in
accordance with the procedures laid down in laws and
regulations;
2) the debtor has had legal protection proceedings
implemented, and terminated in accordance with Section 51,
Paragraph four of this Law during the preceding five years;
3) the debtor has had legal protection proceedings
implemented, and terminated in accordance with Section 51,
Paragraph one of this Law during the preceding four months.
(2) The provision of Paragraph one, Clause 2 of this Section
shall not be applicable if the debtor has had the insolvency
proceedings of a legal person proclaimed, and an application for
legal protection proceedings has been submitted.
Section 35. Appointment of an
Administrator to Legal Protection Proceedings
(1) An administrator shall be appointed to legal protection
proceedings upon recommendation of a debtor or the Insolvency
Administration.
(2) An administrator shall be appointed to legal protection
proceedings upon recommendation of a debtor, if the debtor has
agreed with the administrator and the majority of the creditors
specified in Section 42, Paragraph three of this Law and the
administrator candidate has been indicated in the plan of
measures of the legal protection proceedings.
(3) If a debtor has not reached the agreement referred to in
Paragraph two of this Section, he or she, upon submitting the
plan of measures of the legal protection, shall request that the
court appoints an administrator. The Insolvency Administration
shall recommend a candidate for the office of administrator to
the court.
(4) If an administrator is removed during the course of legal
protection proceedings, a debtor shall recommend a candidate for
the office of administrator within 15 days from the day when a
decision is taken to remove an administrator, in conformity with
that referred to in Paragraph two of this Section, except the
provision regarding the indication of an administrator in the
plan of measures of the legal protection proceedings. If an
agreement is not reached, the Insolvency Administration shall
recommend a candidate for the office of administrator.
(5) In legal protection proceedings which have been proclaimed
concurrently with the termination of the insolvency proceedings
of a legal person, the duties of an administrator shall continue
to be fulfilled by the administrator who has been appointed
during the insolvency proceedings of the legal person, if the
debtor has not agreed with the creditors on another administrator
in accordance with the procedures laid down in this Section.
Section 36. Publicity of a Matter of
Legal Protection Proceedings
(1) The responsible authority shall enter the following
information in the Insolvency Register regarding a matter of
legal protection proceedings:
1) the debtor's firm (name);
2) the debtor's registration number;
3) the debtor's legal address;
4) the date when the matter was initiated, and the name of the
court;
5) the date when the court adjudication was rendered regarding
the implementation of legal protection proceedings and the plan
of measures of the legal protection proceedings was approved, and
the name of the court;
6) the given name, surname and certificate number of the
administrator appointed to the matter;
7) the given name, surname, certificate number and period of
validity of the authorisation of the authorised
administrator;
8) the methods specified in the plan of measures of the legal
protection proceedings;
9) the time period for the implementation of legal protection
proceedings;
10) the date when the court approved amendments to the plan of
measures of the legal protection proceedings and the name of the
court;
11) the date of termination of legal protection proceedings,
the name of the court, and the grounds;
12) the date of the making of the entry.
(2) The information referred to in Paragraph one of this
Section may be published also in other registers, information
systems, or databases.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Chapter
VI
Effects of the Initiation of a Matter of Legal Protection
Proceedings
Section 37. Effects of the
Initiation of a Matter of Legal Protection Proceedings
(1) The court decision on initiation of a matter of legal
protection proceedings has the following effects:
1) a stay of the enforcement of judgments in matters regarding
that adjudged, and the recovery of the amount not yet recovered
and in matters regarding the honouring of obligations through the
court in accordance with the procedures laid down in the Civil
Procedure Law;
2) a prohibition for the secured creditor to request the sale
of the pledged property of the debtor, except the case referred
to in Paragraph two of this Section;
3) a prohibition for the creditor to submit an application for
the insolvency proceedings of a legal person;
4) a prohibition to perform the liquidation of a debtor;
5) the suspension of the penalty increment;
6) the suspension of such an interest increment which exceeds
the statutory interest, except the cases where the main
refinancing operations rate specified by the European Central
Bank is above the statutory interest rate; then the main
refinancing operations rate specified by the European Central
Bank shall apply;
7) the suspension of the late payment charge increment;
8) the suspension of the calculation of the late charges of
tax claims.
(2) A secured creditor may request the sale of the pledged
property of a debtor, if the prohibition referred to in Paragraph
one, Clause 2 of this Section causes significant harm to the
interests of this creditor (including the existence of the threat
of the destruction of the pledged property, or the value of the
pledged property has reduced significantly). The decision to
permit the sale of the pledged property of a debtor shall be
taken by the court in which the matter of the respective legal
protection proceedings has been initiated.
(3) A debtor has a duty to inform the bailiff who is managing
the matter regarding the adjudged, and regarding the recovery of
amounts not yet recovered from a debtor and matters regarding the
honouring of obligations through the court and regarding the
initiation of a matter of legal protection proceedings.
(4) A debtor has a duty, upon request of the administrator, to
provide him or her in writing with all information regarding the
drafting and co-ordination of the plan of measures of the legal
protection proceedings without delay, as well as to provide
documents supporting the validity of creditors' claims, and to
enable on-site inspecting of the economic activity and documents
of the debtor.
[12 September 2013; 25 September 2014 / See
Paragraph 34 of Transitional Provisions]
Section 38. Methods to be Applied in
Legal Protection Proceedings
(1) One or several methods shall be applied in legal
protection proceedings:
1) the postponement of the honouring of payment
obligations;
2) the alienation of movable property or immovable property or
encumbrance with rights in rem in order to achieve the extension
of the time period for meeting the creditors' claims, or
satisfying of the creditors' claims;
3) the increase of the basic capital of a debtor - capital
company (including the investing of the right of the creditor to
claim against the debtor in the equity capital);
4) reorganisation of a debtor - commercial company (Section
46);
5) other methods which comply with the objective of legal
protection proceedings.
(2) The plan of measures of legal protection proceedings
within the scope of the creditors' group and each type of the
claim of the creditors (basic debt, penalty or interest) may only
provide for proportional repayment or reduction of the basic
debt, penalty or interest.
(3) Set-off is permitted if the right to claim of the debtor
against the creditor has arisen at least three months prior to
the court decision regarding the initiation of the matter of
legal protection proceedings.
(4) The methods to be applied in the legal protection
proceedings may be applicable to the claims of an employee for
work remuneration, if the employee concerned agrees thereto. The
status of creditor shall not be applicable to an employee of a
debtor in legal protection proceedings.
(5) For tax claims, the following shall not be permitted
without the consent of the tax administration:
1) the cancellation or reduction of the basic tax debt;
2) the division of the repayment of the basic debt into time
periods, the extension of the time period or the postponement of
the time period for a period exceeding six months;
3) the reduction of late payment charges by more than 50 per
cent, or the cancellation thereof;
4) the reduction of fines by more than 65 per cent, or the
cancellation thereof;
5) the division of regular payments of debt into time periods,
the extension of time periods or the postponement for a period of
time.
(6) It is prohibited to apply in legal protection proceedings
such methods which restrict the rights of creditors more than is
necessary for the successful implementation of the plan of
measures of the legal protection proceedings and for the
achievement of the objective of the legal protection proceedings
referred to in this Law.
(7) The methods of legal protection proceedings shall not be
applied in respect of costs of legal protection proceedings, as
well as in respect of the sanctions laid down the Latvian
Administrative Violations Code and the Criminal Law.
(8) The principle of proportionality specified in Paragraph
two of this Section shall not be applicable to claims for payment
of taxes and work remuneration of employees, as well as to the
indemnification for the damage, unless a relevant consent of the
creditor or employee has been received.
[14 October 2010; 25 September 2014 / See Paragraph
34 of Transitional Provisions]
Section 39. Replacement of a Claim
with Shares or Stocks of the Equity Capital
(1) If the main claims of non-secured creditors are reduced by
more than 10 per cent or cancelled in full, these creditors have
the right to request a debtor - capital company - that the amount
of the reduced or cancelled claim is replaced by the shares or
stocks of the equity capital of the debtor (hereinafter in this
Section - shares).
(2) If, in accordance with the law, creditors have the right
to request a debtor - capital company - that the amount of the
reduced or cancelled claim is replaced by the shares of the
debtor, the debtor - capital company - shall provide for, in the
plan of measures of the legal protection proceedings, the
increase of the equity capital by the amount by which the main
claims of the non-secured creditors have been reduced or
cancelled.
(3) If, by increasing the equity capital, the increase is
equal to or greater than the existing amount of the equity
capital, the equity capital shall be increased by an amount not
exceeding the amount of the existing equity capital, considering
the difference between the increase in the equity capital and the
total amount of the reduced or cancelled main claim as the
surcharge of a share.
(4) Non-secured creditors whose main claims have been reduced
by the amount referred to in this Section or extinguished, have
the right to acquire new shares proportional to the amount by
which the claim of a non-secured creditor has been reduced or
cancelled after proclamation of the legal protection proceedings,
in conformity with the possible surcharge of the shares.
(5) When a non-secured creditor applies for new shares, they
shall be paid by the property investment of the creditor
concerned, the value of which conforms to the amount of the
reduced or cancelled claim of this creditor.
Section 40. Plan of Measures of
Legal Protection Proceedings
(1) After initiation of a matter of legal protection
proceedings a debtor shall draw up a plan of measures of the
legal protection proceedings which shall be co-ordinated with the
creditors in accordance with the procedures laid down in this Law
and submitted for approval to court not later than the day after
expiry of the deadline for the co-ordination specified in
Paragraph two of this Section.
(2) The time period for the drawing up and co-ordination of
the plan of measures of legal protection proceedings is two
months from the day when the court has initiated the matter of
the legal protection proceedings. The time period for the drawing
up and co-ordination of the plan of measures of legal protection
proceedings may be extended by one month if the majority of the
creditors specified in Section 42, Paragraph three of this Law
agree thereto, and the court is informed thereof without delay.
If the debtor requires the consent of the tax administration for
the implementation of the plan of measures of legal protection
proceedings, the plan of the legal protection proceedings shall
be co-ordinated with the tax administration in accordance with
the procedures laid down in laws and regulations related to
taxes.
(3) The task of the plan of measures of legal protection
proceedings is to ensure that the gain of the creditors not
having co-ordinated the plan, by implementing the legal
protection proceedings, is at least as large as that if the
insolvency proceedings of a debtor were proclaimed at the moment
of the approval of such a plan.
(4) The following shall be indicated in the plan of measures
of legal protection proceedings:
1) all the payment obligations of the debtor and the grounds
thereof, indicating separately the payment obligations of the
debtor against the affiliated undertakings within the meaning of
the Law On Enterprise Income Tax, as well as the payment
obligations of the debtor against the secured creditors;
2) such payment obligations of the debtor the repayment or
honouring deadline of which has taken effect prior to the
commencement of the legal protection proceedings or will take
effect during the legal protection proceedings, separately
indicating the obligations of the debtor for the performance of
which the creditors have brought an action in court, and payment
obligations for which the debtor has provided guarantees;
3) the obligations of the debtor, which are not payment
obligations, but as a result of which the composition of the
debtor's assets change;
4) the timetable for the honouring of the payment obligations
of the debtor in respect of each creditor, the repayment or
honouring deadline of which has taken effect prior to the
commencement of legal protection proceedings or will take effect
during the legal protection proceedings;
5) the total amount of the planned revenue of the debtor
during the legal protection proceedings and grounds for the
forecast of the planned revenue, describing the assumptions on
which the planned revenue is based, as well as the planned
activities for the reduction of the debtor's payments;
6) the total amount of the planned expenses of the debtor
during the legal protection proceedings and grounds for the
forecast of the planned expenses, describing the assumptions on
which the planned expenses is based, as well as the planned
activities for the reduction of the debtor's expenses;
7) the methods to be applied in the legal protection
proceedings, as well as the grounds for the need of the methods
chosen, in order to achieve the implementation of the plan of the
legal protection proceedings;
8) the existing and planned types of the basic operation of
the debtor;
9) the time period for the implementation of legal protection
proceedings;
10) the types of transactions which a debtor may perform,
without co-ordination with the administrator, and the amount of
such transactions;
11) the procedures by which creditors shall be informed
regarding the results of the activities of the debtor during the
time period of the implementation of the plan of the legal
protection proceedings;
12) information regarding the candidate for an administrator,
if the agreement referred to in Section 35, Paragraph two of this
Law has been reached, as well as information regarding whether
the candidate to the office of administrator has participated in
the drawing up of the plan;
13) a list of the pledged property of a debtor which is
necessary for the implementation of the plan of measures of the
legal protection proceedings and to which restrictions are
applicable, in accordance with which the secured creditors may
not execute their right in respect of the property of the debtor,
which serves as security for the claims thereof until termination
of the legal protection proceedings;
14) compensation for a secured creditor for the restriction of
his or her rights during the legal protection proceedings and
payments to cover the claims of a secured creditor, as well as
the procedures for payment of such a type of compensation;
15) justification for the fact that the gain of the creditors
not having co-ordinated the plan of measures of the legal
protection proceedings, by implementing the legal protection
proceedings, is at least as large as that if the insolvency
proceedings of a debtor were proclaimed at the moment of the
approval of such a plan;
16) a representation that the information in the plan of
measures of the legal protection proceedings is true and correct,
and the derivatives of the appended documents correspond to their
respective originals.
(5) In the plan of measures of legal protection proceedings,
preference for persons allocating funds for the implementation of
such a plan may be provided for, according to the amount of the
funds allocated thereby. If legal protection proceedings are
terminated and the insolvency proceedings of a legal person are
proclaimed concurrently, the advantages acquired shall remain in
effect and claims against the debtor arising from the funds
allocated for the implementation of the plan referred to shall be
considered to be expenses of the insolvency proceedings. The
advantages granted may not affect the interests of the secured
creditors.
(6) The following shall be appended to the plan of measures of
legal protection proceedings:
1) a report on the forecast of proposed cash flow during the
first year of the proceedings, explaining the items of the report
in the interval of one month, while for the subsequent years, in
the interval of three months;
2) the objections that have been submitted by creditors with
regard to the plan of measures of the legal protection
proceedings, yet ignored, as well as an evidence that the plan of
measures of the legal protection proceedings has been delivered
to all creditors;
3) the opinion of the administrator, if the agreement
specified in Section 35, Paragraph two of this Law has been
reached.
(7) In comparison with other creditors, significantly
unfavourable provisions in the plan of measures of legal
protection proceedings, in respect of a separate creditor, may
only be provided for with the consent of the respective
creditor.
(8) The debtor has a duty to deliver to those creditors whose
claims prima facie have been recognised as invalid, the
administrator's opinion on the plan of measures of the legal
protection proceedings concurrently with submitting the plan of
measures of the legal protection proceedings to the court, as
well as promptly inform the creditors of the date when the
application for legal protection proceedings will be
examined.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 41. Protection of the
Interests of Secured Creditors During Legal Protection
Proceedings
(1) Unless a secured creditor has refused, the following shall
be provided for in the plan of measures of legal protection
proceedings relating thereto:
1) the procedures by which the obligations of the debtor
against the secured creditor arising from the contract, which the
debtor has not fulfilled prior to the commencement of the legal
protection proceedings, shall be honoured;
2) the regular payments arising from the contract.
(2) Expenses arising if the pledged property included in the
plan of measures of legal protection proceedings is damaged or
the value thereof is reduced, are the expenses of insolvency
proceedings in the amount of the value of the pledged property of
the claim of the secured creditor or the reduction thereof.
Section 42. Co-ordination of the
Plan of Measures of Legal Protection Proceedings
(1) A debtor shall transfer the plan of legal protection
proceedings to all creditors, inviting them to give consent for
this plan and indicating the time period for the co-ordination
thereof.
(2) Voting in regard to the plan of measures of legal
protection proceedings shall take place separately within the
following groups of creditors:
1) secured creditors in the secured part of their claims;
2) non-secured creditors, and secured creditors in the
unsecured part of their claims.
(3) A plan of measures of legal protection proceedings is
co-ordinated if it is supported:
1) in a group of secured creditors - by the secured creditors
whose main claims in aggregate form two-thirds of the total
amount of the main claims of secured creditors, certifying their
consent by signature;
2) in a group of non-secured creditors - by the non-secured
creditors whose main claims in aggregate form more than half of
the total amount of the main claims of non-secured creditors,
certifying their consent by signature.
(4) If a creditor has not provided a written response during
the time period for the co-ordination of the plan of measures of
legal protection proceedings, it shall be considered that the
creditor in question has not given consent for the implementation
of the legal protection proceedings.
(5) A creditor has the right to submit written objections to
the debtor in respect of the plan of measures of legal protection
proceedings within five days after receipt thereof. If the
submitted objections are acknowledged as justified, the debtor
shall amend the plan of measures of legal protection proceedings
accordingly. The debtor shall inform the administrator without
delay regarding any objections not taken into account, if the
agreement referred to in Section 35, Paragraph two of this Law
has been reached, and shall append them to the co-ordinated plan
of measures of legal protection proceedings.
(6) The following persons are not entitled to implement the
right of a creditor in respect of the co-ordination of the plan
of measures of legal protection proceedings:
1) persons who are incorporated in one group of companies with
the debtor;
2) natural persons who, as participants, have a decisive
influence on the debtor - capital company;
3) persons who have acquired the right to claim against a
debtor from the persons referred to in Clauses 1 and 2 of this
Paragraph within the last two years prior to the co-ordination of
the plan of measures of the legal protection proceedings.
(61) The claims of the creditors referred to in
Paragraph six of this Section are not included in the total
principal amount claimed by creditors which is the basis for
calculating the number of votes required for co-ordinating the
plan of measures of legal protection proceedings.
(7) If the insolvency proceedings specified in Article 3(2) of
Council Regulation No 1346/2000 have been opened against a debtor
in Latvia, the plan of measures of legal protection proceedings
shall be co-ordinated in writing with the liquidator involved in
the insolvency proceedings specified in Article 3(2) of Council
Regulation No 1346/2000.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 43. Opinion of an
Administrator Regarding the Plan of Measures of Legal Protection
Proceedings
(1) Prior to the approval of a plan of measures of legal
protection proceedings in court, the administrator shall prepare
an opinion on such a plan.
(11) In the case referred to in Section 35,
Paragraph three of this Law the administrator shall hand over the
plan of measures of legal protection proceedings to the debtor
concurrently with submitting it to the court.
(2) The administrator shall provide in the opinion an
evaluation regarding the compliance of the plan of measures of
legal protection proceedings with the requirements of Sections
38, 40, and 42 of this Law, as well as express an opinion on the
objections expressed by the creditors which have not been taken
into account in the co-ordinated plan of measures of legal
protection proceedings.
(3) The administrator shall, upon his or her own initiative if
the respective information is at his or her disposal, or upon a
creditor's request, issue an opinion supported with arguments
whether the creditor's claim in the plan of measures of legal
protection proceedings and appended documents is prima
facie justified. If the administrator has evidence at the
disposal thereof that the claim prima facie is
unjustified, the administrator shall append the opinion
thereto.
(4) If the administrator in his or her opinion recognises any
of the claims as prima facie unjustified, he or she shall
hand over the opinion to the debtor, and the latter shall notify
the creditor thereof without delay.
(5) The debtor or the creditor whose claim has been recognised
to be prima facie unjustified has the right, not later
that three days prior to the examination date of the application
for legal protection proceedings, to submit evidence to the court
in proof of the creditor's claims being justified.
(6) If the administrator detects that the plan of measures of
legal protection proceedings contains any obligations that raise
reasonable doubt, or the administrator suspects that the
documents appended to the plan might be forged, he or she shall
notify the competent authorities accordingly.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Chapter
VII
Implementation of Legal Protection Proceedings
Section 44. Pre-Conditions for the
Implementation of Legal Protection Proceedings
Legal protection proceedings shall be implemented in respect
of a debtor, if:
1) the plan of measures of the legal protection proceedings
has been co-ordinated in accordance with the procedures and time
period laid down in this Law;
2) the court has approved the plan of measures of the legal
protection proceedings and has adjudicated that the legal
protection proceedings of the debtor shall be implemented.
Section 45. Effects of the
Implementation of Legal Protection Proceedings
(1) A plan of measures of legal protection proceedings is in
effect from the day when it has been approved by court. A plan of
measures of legal protection proceedings shall be mandatory and
shall also be binding to creditors who have not given their
consent.
(2) After proclamation of the implementation of legal
protection proceedings, secured creditors may not exercise their
right in respect of the pledged property of a debtor provided for
in the plan of measures of the legal protection proceedings until
termination of the legal protection proceedings.
(3) After proclamation of the implementation of legal
protection proceedings, secured creditors may exercise their
right in respect of the pledged property of a debtor which has
not been provided for in the plan of measures of the legal
protection proceedings.
Section 46. Reorganisation Within
the Scope of Legal Protection Proceedings
(1) The reorganisation of a debtor - commercial company,
within the scope of legal protection proceedings is only possible
if it is provided for in the plan of measures of the legal
protection proceedings.
(2) Reorganisation of a debtor - commercial company, shall
take place in accordance with the requirements laid down in the
law governing the activity of commercial companies, insofar as it
is not laid down otherwise in this Section.
(3) Creditors do not have the right to request security during
the process of reorganisation of a debtor - commercial
company.
(4) An administrator, creditor and participant of a debtor -
commercial company (shareholder) may submit an application to
court for the recognition of the decision of a meeting of the
participants (shareholders) of a debtor - commercial company -
regarding reorganisation as invalid, if it has been taken by
violating this Law, or does not conform to the plan of measures
of the legal protection proceedings.
(5) The court which has approved the plan of measures of legal
protection proceedings shall examine the application referred to
in Paragraph four of this Section.
(6) Such a type of reorganisation, as a result of the
implementation of which the debtor ceases to exist, except the
transformation of a debtor, may not be applied within the scope
of legal protection proceedings.
Section 47. Amendment of the Plan of
Measures of Legal Protection Proceedings
A debtor shall co-ordinate amendments to the plan of measures
of legal protection proceedings with creditors in accordance with
the procedures provided for in Section 42 of this Law and,
together with the opinion of the administrator, submit it to
court for approval.
Section 48. Time Period for the
Implementation of Legal Protection Proceedings
(1) The time period for implementation of legal protection
proceedings shall be determined as not exceeding two years from
the day of entering into effect of the court adjudication
regarding the implementation of the legal protection
proceedings.
(2) The time period referred to in Paragraph one of this
Section may be extended by additional two years, if the majority
of the creditors specified in Section 42, Paragraph three of this
Law agree thereto. In such a case, the provisions of Section 47
of this Law regarding the amendment of the plan of measures of
legal protection proceedings shall be applicable to the
debtor
Section 49. Restrictions and Duties
of a Debtor's Action
(1) A debtor is prohibited from the following during the time
period of implementation of legal protection proceedings:
1) entering into any transactions or performing activities
which may deteriorate the financial situation thereof or harm the
overall interests of the creditors;
2) issuing loans (credits), except cases when the issuance of
loans (credits) is the basic activity of the debtor and this has
been entered in the plan of measures of the legal protection
proceedings;
3) giving guarantees, giving presents or donating, awarding
bonuses to members of the board and council of the debtor or
other type of additional financial remuneration;
4) alienating or encumbering an immovable property with rights
in rem, except cases where this is provided for in the plan of
measures of the legal protection proceedings;
5) dividing and paying dividend profits;
6) performing financial obligations which are not included in
the plan of measures of the legal protection proceedings.
(2) A debtor, by co-ordinating in writing with the
administrator and without making amendments to the plan of
measures of the legal protection proceedings, may perform the
honouring of the payment obligations (payment of invoices), which
are not included in the plan of measures of the legal protection
proceedings, if these payments in total during the period of
implementation of the legal protection proceedings do not exceed
two per cent of the total amount of the creditors' claims at the
moment of the approval of the plan of measures of the legal
protection proceedings.
(3) A debtor shall have the following duties during legal
protection proceedings:
1) to implement the plan of measures of the legal protection
proceedings;
2) to shift all profits towards the implementation of the
legal protection proceedings;
3) to cover the costs of the legal protection proceedings;
4) to notify the administrator in writing, at least once a
month, of the implementation of the plan of measures of the legal
protection proceedings;
5) upon request of the administrator, to provide him or her in
writing with all information regarding the implementation of the
plan of measures of the legal protection proceedings without
delay, and to ensure the opportunity of inspecting the economic
activity and documents of the debtor in person;
6) to notify the administrator without delay of any
circumstances due to which the debtor may not be able to
implement the plan of measures of the legal protection
proceedings;
7) to notify the administrator of a change in the legal
address thereof and any other changes which are to be entered in
the public registers;
8) to notify the administrator of any significant events in
the activities of the debtor.
Section 50. Activities of an
Administrator During Legal Protection Proceedings
(1) In order to ensure lawful and effective course of legal
protection proceedings, the administrator shall perform the
supervision of the activities of a debtor in conformity with the
aim of the legal protection proceedings, the plan of the legal
protection proceedings and the requirements of laws and
regulations.
(2) After proclamation of a court adjudication regarding the
implementation of legal protection proceedings, an
administrator:
1) if necessary for ensuring the performance of obligations,
shall submit to the relevant public registers an application
regarding the entry of a notation of insolvency;
2) within five days after proclamation of the adjudication
regarding the implementation of legal protection proceedings,
shall submit an approved plan of measures of the legal protection
proceedings to the responsible authority which organises the
Insolvency Register;
3) within five days after taking of a court decision regarding
approval of amendments to the plan of measures of the legal
protection proceedings, shall submit amendments to the plan of
measures of the legal protection proceedings approved by court to
the responsible authority which organises the Insolvency
Register;
4) shall supervise the implementation of the plan of measures
of the legal protection proceedings;
5) shall request and receive from the debtor all the
information regarding the course of the legal protection
proceedings;
6) shall inform the creditors, upon their request, regarding
the implementation of the plan of measures of the legal
protection proceedings and examine the complaints submitted;
7) in the cases referred to in this Law, shall submit to court
without delay an application regarding termination of the legal
protection proceedings, appending the necessary information
thereto.
(3) The decision of an administrator on the complaints
submitted by creditors which affect the content of the plan of
measures of the legal protection proceedings and the
implementation thereof, may be contested in the court in which
the matter of the legal protection proceedings concerned was
initiated.
Section 51. Termination of Legal
Protection Proceedings
(1) A court shall terminate legal protection proceedings,
if:
1) the majority of creditors specified in Section 42,
Paragraph three of this Law have not supported the plan of
measures of the legal protection proceedings in accordance with
the procedures laid down in this Law;
2) the plan of measures of the legal protection proceedings
does not conform to the requirements of this Law.
(2) The court shall terminate legal protection proceedings and
proclaim the insolvency proceedings of a legal person, if a
matter of legal protection proceedings has been initiated in
respect of a debtor for the second time in a year, but the
implementation of the legal protection proceedings has not been
proclaimed.
(3) An administrator has the duty to submit an application to
court for the insolvency proceedings of a legal person,
concurrently requesting termination of legal protection
proceedings, if:
1) when implementing the legal protection proceedings, a
debtor has not performed the activities specified in this Law or
has provided false information;
2) a debtor has not implemented the plan of measures of the
legal protection proceedings for more than 30 days and has not
submitted the amendments to this plan to court;
3) the debtor violates the restrictions of action specified in
this Law.
(4) A debtor shall submit an application to court regarding
the termination of legal protection proceedings, if he or she has
implemented the plan of measures of the legal protection
proceedings.
(5) A debtor shall submit an application for insolvency
proceedings to the court, concurrently requesting termination of
the legal protection proceedings if he or she is unable to honour
the obligations specified in the plan of measures of the legal
protection proceedings (Section 57, Paragraph one, Clause 9).
(6) The administrator shall send a copy of the decision to
terminate legal protection proceedings not later than five days
after the court has taken the abovementioned decision, to the
following:
1) the relevant public register, appending an application for
the making of an entry regarding the deletion of the notation of
insolvency;
2) the bailiff who is managing the execution files regarding
the recovery of the amounts adjudged but not yet recovered from
the debtor and matters regarding the honouring of the debtor's
obligations through the court.
(7) Paragraph six of this Section shall not be applied if the
legal protection proceedings have been terminated, by proclaiming
the insolvency proceedings of a legal person.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 52. Effects of the
Termination of Legal Protection Proceedings
(1) The termination of legal protection proceedings after
implementation of the plan of measures of the legal protection
proceedings is justification for the termination of the
restriction of action of the debtor specified in the legal
protection proceedings and of the use of the methods applied in
these proceedings.
(2) If the majority of creditors specified in Section 42,
Paragraph three of this Law have not supported the plan of
measures of legal protection proceedings in accordance with the
procedures and within the time period laid down in this Law and
the legal protection proceedings are terminated, the restrictions
referred to in Section 37 of this Law shall be terminated and the
suspended amount of the penalty, interest and late payment
charges for non-honoured obligations shall be calculated in the
full amount.
Chapter
VIII
Extrajudicial Legal Protection Proceedings
Section 53. Extrajudicial Legal
Protection Proceedings
(1) A debtor has the right to concurrently submit an
application for the initiation of a matter of legal protection
proceedings and request the court to proclaim the implementation
of legal protection proceedings, if the following conditions
exist:
1) the debtor has drawn up a plan of measures of the legal
protection proceedings in conformity with the provisions of
Sections 38 and 40 of this Law;
2) the majority of creditors specified in Section 42,
Paragraph three of this Law have co-ordinated the plan of
measures of the legal protection proceedings;
3) the debtor has agreed with the administrator and creditors
on the administrator for the extrajudicial legal protection
proceedings;
4) the debtor has received the opinion of the administrator
(Section 43);
5) the debtor has sent the co-ordinated plan of measures of
the legal protection proceedings to those creditors who have not
co-ordinated this plan, concurrently with the submission thereof
for approval to court.
(2) The norms of this Law shall be applied to extrajudicial
legal protection proceedings, unless otherwise laid down in this
Chapter.
(3) The plan of legal protection proceedings in extrajudicial
legal protection proceedings shall not affect the interests of
the tax administration, if the consent of the tax administration
is necessary for the implementation of this plan (Section
38).
Section 54. Administrator in
Extrajudicial Legal Protection Proceedings
(1) An administrator shall be appointed to extrajudicial legal
protection proceedings upon recommendation of the debtor.
(2) The agreement of a debtor and his or her creditors
regarding the choice of an administrator (Section 53, Paragraph
one, Clause 3) shall be considered to have been reached, if the
plan of measures of extrajudicial legal protection proceedings
has been co-ordinated by the majority of creditors referred to in
Section 42, Paragraph three of this Law.
Section 55. Effects of the Approval
of a Plan of Measures of Extrajudicial Legal Protection
Proceedings
The effects referred to in Sections 37 and 45 of this Law
shall take effect after the court having approved the plan of
measures of extrajudicial legal protection proceedings.
Division
C
Insolvency Proceedings of a Legal Person
Chapter
IX
General Provisions of Insolvency Proceedings of a Legal
Person
Section 56. Subjects of Insolvency
Proceedings of a Legal Person
Insolvency proceedings of a legal person shall be applied in
respect of a legal person, partnership, individual merchant or a
person registered in a foreign country, who performs permanent
economic activities in Latvia and the special subjects specified
in this Law (hereinafter in this Division - debtor).
Section 57. Features of Insolvency
Proceedings of a Legal Person
(1) Insolvency proceedings of a legal person shall be applied
to a debtor if any of the following features of the insolvency
proceedings of a legal person exists:
1) when applying compulsory execution means it has not been
possible to execute the court adjudication regarding the recovery
of debt from the debtor;
2) the debtor - a limited liability company or a joint stock
company - has not honoured one or more debt obligations from
which the principal debt amount separately or in total exceeds
4268 euros and which are past due, and the creditor or creditors
have issued or sent a warning at the sender's own expense to the
legal address of the debtor regarding the intention to submit an
application for the insolvency proceedings of a legal person, and
the debtor has not settled the debt or raised justified
objections to the claim within three weeks after handing over of
the warning to the postal merchant;
3) the debtor - another subject referred to in Section 56 of
this Law - has not honoured one or more debt obligations from
which the principal debt amount separately or in total exceeds
2134 euros and which are past due, and the creditor or creditors
have issued or sent a warning at the sender's own expense to the
legal address of the debtor regarding the intention to submit an
application for the insolvency proceedings of a legal person, and
the debtor has not settled the debt or raised justified
objections to the claim within three weeks after handing over of
the warning to the postal merchant;
4) the debtor has not paid an employee the work remuneration
in full, compensation for damages in connection with an accident
at work or an occupational disease or has not made the mandatory
social insurance payments within two months after the day
specified for payment. Unless the day of payment of work
remuneration is specified in the employment contract, this day
shall be considered to be the first working day of the following
month;
5) the debtor has not honoured its obligations which are past
due for more than two months;
6) according to the initial financial report of liquidation
the debtor has insufficient assets to satisfy all the justified
claims of the creditors, or this condition is discovered during
the course of liquidation;
7) the condition referred to in Section 51, Paragraph two of
this Law has taken effect;
8) one of the cases referred to in Section 51, Paragraph three
of this Law has taken effect;
9) the condition referred to in Section 51, Paragraph five of
this Law has taken effect.
(2) The handing over of the warning referred to in Paragraph
one, Clauses 2 and 3 of this Section may be proved also with a
statement drawn up by a sworn bailiff stating a refusal to
receive the warning.
[12 September 2013; 25 September 2014 / See
Paragraph 34 of Transitional Provisions]
Section 58. Publicity of a Matter of
Insolvency Proceedings of a Legal Person
(1) The responsible authority shall enter the following
information in the Insolvency Register regarding a matter of
insolvency proceedings of a legal person:
1) the debtor's firm (name);
2) the debtor's registration number;
3) the debtor's legal address;
4) the date when the insolvency proceedings of the legal
person were proclaimed in court and the name of the court;
5) the given name, surname and certificate number of the
administrator appointed to the matter;
6) the given name, surname, certificate number and term of
validity of the authorisation of the authorised
administrator;
7) the given name, surname, address of the place of practice
and telephone number of the liquidator involved in the insolvency
proceedings specified in Article 3(1) of Council Regulation No
1346/2000;
8) the time period for the application by creditors;
9) the address, date and time of the creditors' meeting;
10) the type of insolvency proceedings in accordance with
Article 3(1) or 3(2) of Council Regulation No 1346/2000;
11) the date of the termination of the legal protection
proceedings of a legal person, the name of the court, and the
justification;
12) the date of submitting the plan for the sale of a debtor's
property;
13) the date of the making of the entry.
(2) The information referred to in Paragraph one of this
Section may be published also in other registers, information
systems, or databases.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 59. Appointment of an
Administrator to Insolvency Proceedings of a Legal Person
(1) The Insolvency Administration shall select and recommend
to court a candidate for the office of administrator for the
specific insolvency proceedings of a legal person.
(2) The Insolvency Administration shall send the proposal for
the candidate to the office of administrator for the insolvency
proceedings of a legal person to the Finance and Capital Market
Commission, if this candidate is being recommended to a
participant of the finance and capital market, the supervision of
which is performed by the Finance and Capital Market Commission
in accordance with the requirements of laws and regulations.
(3) [25 September 2014].
(4) If the creditors' meeting has proposed to revoke the
administrator recommended by the Insolvency Administration and
appointed by the court, the Insolvency Administration shall
select and recommend to the court a new candidate for the office
of administrator for the particular insolvency proceedings of a
legal person.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Chapter X
Application for Insolvency Proceedings of a Legal Person
Section 60. Persons who may Submit
an Application for Insolvency Proceedings of a Legal Person
(1) An application for the insolvency proceedings of a legal
person may be submitted in the cases provided for in this Law
by:
1) a creditor or creditors, if any of the features of the
insolvency proceedings of a legal person referred to in Section
57, Paragraph one, Clause 1, 2, 3, or 4 of this Law exists;
2) a debtor, if any of the features of the insolvency
proceedings of a legal person referred to in Section 57,
Paragraph one, Clause 5, 6, or 9 of this Law exists;
3) the person indicated in Article 29(a) of Council Regulation
No 1346/2000, in order to initiate the insolvency proceedings
specified in Article 3(2) of this Regulation against a
debtor;
4) an administrator, if the feature referred to in Section 57,
Paragraph one, Clause 8 of this Law exists.
(2) An employee who has or who has had employment legal
relationships with the debtor may submit an application for the
insolvency proceedings of a legal person in accordance with the
feature of insolvency proceedings referred to in Section 57,
Clause 4 of this Law.
(3) A debtor has a duty to submit an application for the
insolvency proceedings of a legal person without delay, if any of
the features of the insolvency proceedings of a legal person
referred to in Section 57, Paragraph one, Clause 5, 6, or 9 of
this Law exists. If the feature referred to in Section 57,
Paragraph one, Clause 5 of this Law exists, the debtor has a duty
to submit an application for the insolvency proceedings of a
legal person in cases when no agreement has been reached with the
creditors or a matter of legal protection proceedings has not
been initiated.
(4) An application for the insolvency proceedings of a legal
person shall be submitted to court in accordance with the
procedures laid down in the Civil Procedure Law.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 61. Restrictions to the
Submission of an Application for Insolvency Proceedings of a
Legal Person
(1) A secured creditor may not submit an application for
insolvency proceedings of a legal person.
(2) If a claim is not secured in full, an application for
insolvency proceedings of a legal person may be submitted by a
secured creditor only to the extent of the non-secured part of
the claim.
(3) A non-secured creditor is not entitled to submit an
application for insolvency proceedings of a legal person, if
legal protection proceedings have been initiated or are being
initiated in respect of the debtor.
Section 62. Deposit for Insolvency
Proceedings of a Legal Person
(1) The pre-condition for the submission of an application for
insolvency proceedings of a legal person is the payment of a
deposit in the amount of two minimum monthly salaries into an
account specially created by the Insolvency Administration.
(2) The objective of the deposit for insolvency proceedings of
a legal person is to meet the costs of the insolvency proceedings
of a legal person if the debtor has no property or its value is
lower than the deposit amount, and the creditors have not decided
to use another source of financing.
(3) The deposit may be used, if the debtor has no property or
its value is lower than the deposit amount and the insolvency
proceedings of a legal person are terminated, based on the
creditors having not decided on using another source of
financing.
(4) If insolvency proceedings of a legal person are not
proclaimed or are financed from the debtor's funds, or creditors
decide to continue the insolvency proceedings of a legal person,
the deposit shall be repayable to the submitter of the
application for the insolvency proceedings of a legal person.
(5) The deposit for insolvency proceedings of a legal person
shall not be repaid to the submitter of an application for the
insolvency proceedings of a legal person in the following
cases:
1) the application for the insolvency proceedings of a legal
person has been unjustified or deliberately false;
2) the creditor, on receiving the settlement of the claim
thereof, does not revoke the application for the insolvency
proceedings of a legal person and the court holds a sitting for
the examination of the matter of the insolvency proceedings of a
legal person.
(6) In the cases specified in Paragraph five of this Section,
the deposit paid shall be transferred to the Treasury.
(7) An administrator who submits an application for insolvency
proceedings of a legal person in accordance with Section 57,
Paragraph one, Clause 8 of this Law shall be exempt from the
payment of the deposit.
(71) The court may fully or partly exempt an
employee from payment of the insolvency proceedings deposit, if
he or she submits an application for insolvency proceedings after
that when, by applying enforcement measures, it was not possible
to fulfil a court adjudication regarding recovery of debt from
the debtor, and the employee, taking into account his or her
financial situation, is not able to pay in the insolvency
proceedings deposit.
(72) If in the case referred to in Paragraph
7.1 of this Section it is not possible to cover the
costs of the insolvency proceedings of a legal person from the
debtor's funds and the creditors have not decided to use another
source of financing, the costs of the insolvency proceedings of a
legal person shall be covered from the State budget and the State
entrepreneurial risk fee funds that have been allotted to the
Insolvency Administration for meeting the costs of insolvency
proceedings of a legal person on relevant occasions.
(73) The Cabinet shall determine what part of the
funds collected as part of the State entrepreneurial risk fee is
to be allocated for covering the costs of insolvency proceedings
of a legal person in the case referred to in Paragraph
7.2 of this Section.
(74) In the case referred to in Paragraph
7.1 of this Section, the costs of insolvency
proceedings of a legal person shall be covered in accordance with
the procedures and in the amounts equal to the payment of the
deposit for insolvency proceedings of a legal person.
(8) The Cabinet shall determine the procedures by which the
deposit for insolvency proceedings of a legal person shall be
paid into the account specially created by the Insolvency
Administration and disbursed to the submitter of the application
for the insolvency proceedings of a legal person, the
administrator, or to the Treasury.
[The norm of Paragraph one regarding payment of insolvency
proceedings deposit insofar as applicable to employees whose sole
means of legal protection are proclamation of the employer as
insolvent has been recognised as non-conforming to the first
sentence of Section 92 of the Constitution of the Republic of
Latvia by the Constitution Court judgment of 20 April 2012 which
shall enter into effect on 24 April 2012. 25 September
2014 / See Paragraph 34 of Transitional
Provisions]
Chapter
XI
Effects of the Proclamation of Insolvency Proceedings of a Legal
Person
Section 63. Effects of the
Proclamation of Insolvency Proceedings of a Legal Person
(1) After proclamation of insolvency proceedings of a legal
person:
1) the debtor shall lose the right to act with all his or her
property, as well as with the property of third persons that is
possessed or held by the debtor, and such a right shall be
acquired by the administrator;
2) the activity of the administrative institutions of the
debtor shall be suspended, and the administration of the debtor
shall be performed by the administrator;
3) the increase in interest for the use of the loan (credit),
the lawful increase in interest, the increase in the penalty
(including the penalty increment expressed in per cent), the
increase in the late payment charges (the calculation of the late
payment money which is determined as an interest payment for
missing the deadline for the payment of tax, duty and fine
payments shall be suspended for tax claims) ceases;
4) two months from the day after proclamation of the
insolvency proceedings of a legal person, a secured creditor is
prohibited from requesting the sale of the pledged property of
the debtor.
(2) If the enforcement of a judgment is commenced prior to the
proclamation of the insolvency proceedings of a legal person, it
shall be terminated in accordance with the procedures laid down
in the Civil Procedure Law. After proclamation of the insolvency
proceedings of a legal person, the creditors shall submit claims
to the administrator in accordance with the procedures laid down
in this Law.
(3) The obligations of the debtor whose period of honouring
has taken effect after the day when the insolvency proceedings of
a legal person have been proclaimed, shall be considered to be
such whose period of honouring has taken effect on the day of the
proclamation of the insolvency proceedings of the legal
person.
(4) The judgement of the court proclaiming the insolvency
proceedings of a legal person is the grounds for a stay of
proceedings in claims that have been raised against the debtor
and which are financial in nature.
(5) The judgement of the court proclaiming the insolvency
proceedings of a legal person is the grounds for revoking the
securing of claims in accordance with the procedures laid down in
the Civil Procedure Law.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 64. Powers of an
Administrator after Proclamation of Insolvency Proceedings of a
Legal Person
(1) After proclamation of insolvency proceedings of a legal
person:
1) the administrator has all the rights, duties and
responsibilities of administrative bodies provided for in laws
and regulations, the articles of association of the debtor or in
contracts;
2) the administrator shall decide on the continuation of the
economic activity of the debtor to a full or restricted extent,
if the continuation of this activity is economically justified,
or on the termination thereof;
3) the administrator shall make regular tax and duty payments
in accordance with the procedures laid down in laws and
regulations;
4) the administrator, if necessary, submits an application to
the relevant public registers for the entry or deletion of a
notation of insolvency, appending a copy of the court decision
regarding the appointment of an administrator.
(2) If the insolvency proceedings specified in Article 3(1) of
Council Regulation No 1346/2000 have been initiated against a
debtor in another Member State and the liquidator involved
therein is operating in Latvia, without commencing the insolvency
proceedings specified in Article 3(2) of this Regulation, the
liquidator involved in the insolvency proceedings specified in
Article 3(1) of Council Regulation No 1346/2000 shall ensure that
the appropriately certified copy of the adjudication regarding
the proclamation of the insolvency proceedings of a legal person
and the appointment of a liquidator, as well as the translation
of this adjudication into the official language certified
according to the specified procedures, are submitted to the
relevant competent persons and authorities of the insolvency
proceedings of a legal person.
Section 65. Duties of an
Administrator after Proclamation of Insolvency Proceedings of a
Legal Person
After proclamation of insolvency proceedings of a legal person
an administrator shall:
1) without delay take a decision to determine a representative
or representatives of the debtor in the matter of the insolvency
proceedings of a legal person and submit this decision to court,
as well as send it to the representative or representatives of
the debtor;
2) without delay commence full inventory of the documents and
property of the debtor and draw up the balance of the debtor;
3) accept, register and check creditors' claims;
4) without delay take into their administration all the
property of the debtor, as well as the property possessed or held
by the debtor that belongs to third persons;
5) in accordance with the procedures laid down in this Law and
within the time periods specified, provide the creditors and
Insolvency Administration with a report of the activities
thereof;
6) recover the debts of debtors and perform legal activities
for the recovery of other property of the debtor;
7) in the cases and in accordance with the procedures laid
down in laws and regulations, address the Insolvency
Administration with a submission regarding the settling of the
claims of employees from the resources of the guarantee fund for
employee claims. The Cabinet shall determine the amount of
remuneration of the administrator for the submission of
employees' claims and the procedures by which this shall be
paid;
8) evaluate and bring an action in court against the members
of the administrative bodies of a legal person and the
participants (shareholders) of a capital company for the
compensation of the losses caused thereby, as well as against the
personally responsible members of a partnership in connection
with their responsibility for the liabilities of the partnership
with their property;
9) request that the participants (shareholders) of the debtor
honour their obligations in respect of the basic capital or other
property of the debtor, and submit claims to court for the
honouring of such obligations;
10) if the Finance and Capital Market Commission performs the
supervision of the activities of the participants of the
financial and capital market in accordance with the requirements
of laws and regulations, at least once a year inform specific
creditors of the course of the insolvency proceedings of a legal
person, by sending an individual report to those creditors whose
place of residence or legal address is in a foreign country, as
well as a report to the Insolvency Administration;
11) ensure the evaluation of the property included in the plan
for selling the property of the debtor;
12) submit an application to the bailiff for the termination
of the execution proceedings in the matters regarding the
recovery of the amounts adjudged but not yet recovered from the
debtor and matters regarding the honouring of the debtor's
obligations through the court; and
13) hand over the debtor's documents to the State archives for
storage, including:
a) the debtor's instructions regarding the personnel (the
employment of persons, the transfer to other employment and the
dismissal from employment),
b) the debtor's registration journal (register) of personnel
instructions,
c) the employment contracts of the debtor's employees with
whom employment legal relationships have been terminated (unless
they are in the relevant personal files) and work-record books
(unless they are with the relevant employees),
d) the debtor's documents regarding social tax payments until
1 January 1997,
e) investigative statements or opinions and investigative
material in respect of accidents at work;
14) perform other duties laid down in this Law.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 66. Duties of an
Administrator in Insolvency Proceedings which have been Initiated
in Accordance with Council Regulation No 1346/2000
(1) If the insolvency proceedings specified in Article 3(1) of
Council Regulation No 1346/2000 have been initiated in another
Member State, the person referred to in Article 22(2) of this
Regulation, when performing activities in Latvia which are
connected to the recovery and alienation of the property of a
debtor, shall inform the relevant public registers of the
initiation of insolvency proceedings against the debtor. An
appropriately certified copy of the adjudication regarding the
initiation of insolvency proceedings against the debtor and the
appointment of the liquidator involved in the insolvency
proceedings specified in Article 3(1) of Council Regulation No
1346/2000, as well as a translation of this adjudication into the
official language certified in accordance with the specified
procedures, shall be appended to the information.
(2) If the insolvency proceedings specified in Article 3(1) of
Council Regulation No 1346/2000 are initiated against the debtor
in another Member State and the debtor owns an establishment
within the meaning of Article 2(h) of this Regulation, the person
referred to in Article 21(2) of Council Regulation No 1346/2000
shall submit an application for the insolvency proceedings of a
debtor - legal person to the responsible authority that makes the
entries in the Insolvency Register, within five working days
after the day when the liquidator involved in the insolvency
proceedings specified in Article 3(1) of this Regulation has
commenced operations which are connected to the recovery and
alienation of the property of the debtor's establishment. The
following shall be indicated in the application:
1) the firm name and registration number of the debtor;
2) the name of the court and the day when the adjudication was
rendered;
3) the given name, surname, address of the place of practice
and telephone number of the liquidator involved in the insolvency
proceedings specified in Article 3(1) of Council Regulation No
1346/2000;
4) the fact that the insolvency proceedings specified in
Article 3(1) of Council Regulation No 1346/2000 have been
initiated against the debtor;
5) the Member State whose laws and regulations are applicable
to the opening, conduct and termination of the insolvency
proceedings.
(3) If the insolvency proceedings specified in Article 3(1) of
Council Regulation No 1346/2000 have been initiated in another
Member State, the person referred to in Article 21(1) of this
Regulation, when performing activities in Latvia which are
related to the recovery and alienation of the property of a
debtor, is entitled to submit an application to the responsible
authority for the making of an entry in the Insolvency Register,
indicating the information referred to in Paragraph two of this
Section.
(4) If the insolvency proceedings specified in Article 3(1) or
3(2) of Council Regulation No 1346/2000 have been initiated
against a debtor in Latvia, the administrator, within five days
after proclamation of the insolvency of the debtor, shall send
the creditors, whose place of residence or legal address is in
another Member State, a notification regarding the insolvency of
the debtor and the submission of the claims of creditors in
accordance with the procedures laid down in the abovementioned
Regulation. The following shall also be indicated in the
notification:
1) the firm name and registration number of the debtor;
2) the name of the court and the day when the judgment was
proclaimed;
3) the given name, surname, address of the place of practice
and telephone number of the administrator;
4) the type of insolvency proceedings initiated in accordance
with Article 3(1) or 3(2) of Council Regulation No 1346/2000;
5) the Member State whose laws and regulations are applicable
to the opening, conduct and termination of the insolvency
proceedings;
6) that information is to be included in the claim of the
creditor, regarding whether the claim is secured with rights in
rem.
(5) If the insolvency proceedings specified in Article 3(2) of
Council Regulation No 1346/2000 have been initiated against a
debtor in Latvia, the administrator shall co-operate with the
liquidator involved in the insolvency proceedings specified in
Article 3(1) of this Regulation, shall provide the information
necessary for the administration of the insolvency proceedings
upon request of the liquidator, as well as information regarding
the property of the debtor which is located in Latvia, regarding
the measures planned or to be carried out for the recovery and
alienation of property, regarding the claims of creditors
submitted, recognised and non-recognised claims and complaints in
connection with claims, regarding the grouping of creditors, the
settled claims of creditors, creditor meetings, regarding the
course, solutions and measures of the insolvency proceedings
specified in Article 3(2) of Council Regulation No 1346/2000, the
division of property and money remaining.
(6) If the insolvency proceedings specified in Article 3(1) of
Council Regulation No 1346/2000 have been initiated against a
debtor in Latvia, the administrator shall follow the course of
the insolvency proceedings specified in Article 3(2) of this
Regulation initiated against the debtor in another Member State
and, if necessary, request information from the liquidator
involved in the insolvency proceedings specified in Article 3(2)
of the Regulation referred to, inform the liquidator of other
insolvency proceedings specified in Article 3(2) of this
Regulation initiated against the debtor, and the important
aspects of the course of these proceedings.
Section 67. Rights of an
Administrator after Proclamation of Insolvency Proceedings of a
Legal Person
In addition to the general rights of an administrator
specified in this Law, an administrator has the following rights
after proclamation of the insolvency proceedings of a legal
person:
1) to alienate the property of the debtor in accordance with
the procedures laid down in this Law;
2) to liquidate branches or representation offices of the
debtor;
3) to hand over any claim of the debtor to the court for
examination;
4) to insure the transactions of the debtor and the property
owned by the debtor;
5) without special authorisation to compile and sign any
document on behalf of the debtor;
6) to appoint officials for the performance of the
administrative work of the debtor and determine their competence,
and to hire and dismiss from work employees, including those who
were employed before the day of the proclamation of the
insolvency proceedings of a legal person;
7) to cover the costs of the insolvency proceedings of a legal
person (Section 168, Paragraph three);
8) to lease (rent) out any property of the debtor, as well as
to lease (rent) any property, if such is in the interests of the
creditors as a whole;
9) to renounce any claim, or to enter into any settlement in
the name of the debtor with respect to claims of the debtor
against third persons;
10) to submit an application regarding the proclamation of the
insolvency proceedings of a legal person of any such third person
as has debt obligations against the debtor, and to represent the
claims of the debtor, if the insolvency proceedings of a legal
person are proclaimed on the basis of such an application;
11) to change the registered legal address of the debtor;
12) to request that the creditor submits the translation of
the claim and justifying documents thereof into the official
language, certified in accordance with the specified
procedures;
13) to invite specialists in order to ensure the effective and
lawful insolvency proceedings of a legal person, and to cover the
costs related thereto by consent of the creditors meeting, from
the resources of the insolvency proceedings of the debtor or
another legal person;
14) to request the bailiff to suspend advertised auctions, if
it is planned to sell the property of the debtor in its
entirety;
15) within three months after the submission date of the
creditor's claim, to raise a reversed claim against the creditor,
by requesting the court to impose a temporary protective measure
against this creditor - removing its voting rights, in order to
contest the claim based on a court adjudication regarding
undisputed enforcement of obligations or compulsory enforcement
of obligations according to the warning procedures, if there is
reasonable doubt that the creditor's claim is based on a court
adjudication that has taken effect within the three years
preceding the date of proclaiming the insolvency proceedings of a
legal person.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Chapter
XII
Representative of the Debtor and Interested Persons with Respect
to the Debtor
Section 68. Representative of the
Debtor
(1) The administrator shall appoint a representative of the
debtor, whose participation at the insolvency proceedings is
mandatory, observing the following order:
1) a member of an executive authority who is entitled to
represent the debtor separately;
2) another member of an executive authority;
3) the head of a supervisory body;
4) another member of a supervisory body;
5) a participant (shareholder), who has the greatest number of
votes.
(2) The member who has representative rights shall be
appointed as the representative of a debtor in a partnership, but
if there is no such a member, the member with administrative
rights shall be appointed.
(3) The administrator may appoint another person as the
representative of a debtor, if he or she can provide the
information specified in this Law regarding the debtor and his or
her activities and if the persons specified in Paragraphs one and
two of this Section are unable to provide the abovementioned
information, due to objective reasons.
(4) If the representative of a debtor is unable to fulfil his
or her duties due to objective circumstances, another person
referred to in this Section shall be appointed as the
representative of the debtor.
(5) The administrator shall send the decision to appoint a
representative of the debtor to the court, without delay.
(6) The administrator may not take a decision to appoint a new
representative of the debtor, if the representative of the debtor
is deceased and it is impossible to appoint a another
representative of the debtor.
(7) A decision to appoint a representative of the debtor may
be appealed to a court by the person who has been appointed as
the representative of the debtor. The complaint shall be
submitted within three weeks from the day when the relevant
person has found out the decision.
Section 69. Rights of the
Representative of a Debtor
The representative of a debtor has the following rights:
1) to become acquainted with the claims submitted by creditors
and to express the objections against them to the
administrator;
2) to request and receive information regarding the sale of
the property of the debtor;
3) to participate in the creditors' meeting and become
acquainted with the minutes thereof;
4) to request that the administrator convenes a creditors'
meeting in accordance with the procedures laid down in this
Law;
5) to draw up the plan of measures of the legal protection
proceedings;
6) to submit a complaint regarding the decision of the
creditors' meeting or the administrator or bring an action to
court in accordance with the procedures laid down in this
Law.
Section 70. Duties of the
Representative of a Debtor
(1) The duties of the representative of a debtor are to attend
all the creditors' meetings and court sittings to which they have
been invited, as well as to provide all information at the
disposal thereof regarding the debtor.
(2) By a deed of acceptance and delivery, the representative
of a debtor shall transfer to the administrator the entire
property of the debtor and its organisational, personal and
accounting documents, orders, statements, reports and lists, as
well as the stamp and seal of the debtor, within the time period
specified by the administrator, which shall be not less than
three days and not longer than 10 days after the day of
proclamation of the insolvency proceedings of a legal person. The
duty of the representative of a debtor is to prepare a list of
the property and documents of the debtor to be handed over.
(3) If the representative of a debtor changes his or her place
of residence during the period of the insolvency proceedings of a
legal person, his or her duty is to notify the administrator and
the court of the address of the new place of residence without
delay.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 71. Duty of the
Representative of a Debtor to Provide Information to the
Administrator and the Court
(1) The representative of a debtor has the duty to provide the
information requested by the court or administrator regarding the
debtor without delay, but not later than within 10 days after the
day of sending the request.
(2) If the information requested is not at the disposal of the
debtor, he or she shall inform the administrator or court
accordingly without delay, indicating the reasons why this
information is not at the disposal thereof.
(3) The representative of the debtor shall submit the
requested information or the appropriate notification that he or
she is unable to submit in writing the information requested,
certifying this with his or her signature.
(4) If the administrator has sent a request to provide
information, to the address of the place of residence of the
debtor's representative by registered mail, it shall be
considered that the debtor's representative has received this
request on the seventh day after sending and that the content
thereof is known to him or her.
Section 72. Interested Persons in
Relation to a Debtor
(1) The following persons shall be considered as interested
persons in relation to a debtor:
1) the participants (shareholders) of a debtor or members of a
partnership, members of an administrative body;
2) the proctor and person with a commercial power of
attorney;
3) the person who is married to or is in relation or affinity
to the second degree with the founder, participant (shareholder)
of the debtor, or member of a partnership or member of an
administrative body;
4) a creditor who is in one group of companies with the
debtor.
(2) The persons referred to in this Paragraph shall be
recognised as interested persons in relation to a debtor, if they
have been in this status for the preceding five years prior to
the day of proclamation of the insolvency proceedings of the
debtor.
Chapter
XII.1
Liability of the Members of Board of
Directors
[25 September 2014 / See
Paragraph 34 of Transitional Provisions]
Section 72.1 Liability of
the Members of Board of Directors for Failing to Provide
Documents
(1) Members of the board of directors of the debtor - a
capital company - shall be jointly liable for the losses incurred
by the debtor if they have failed to provide the debtor's
accounting documents to the administrator of the insolvency
proceedings, or the documents are in a state, which does not
allow obtaining a true and fair view of the debtor's transactions
and the state of property within the last three years preceding
the proclamation of the insolvency proceedings.
(2) In the cases referred to in Paragraph one of this Section,
the amount of losses incurred by the debtor shall be the
creditors' claims in the amount of principal debt that have been
recognised in the debtor's insolvency proceedings and that cannot
be satisfied within the scope of the debtor's insolvency
proceedings.
(3) In the insolvency proceedings, the administrator of the
insolvency proceedings shall raise a claim against a member of
the board of directors on behalf of the debtor. The creditor has
the right to enter into the matter in the capacity of a third
person in accordance with the procedures laid down in the Civil
Procedure Law. If the administrator has raised no such claim, the
creditor is entitled to raise it within one year after completion
of the insolvency proceedings in the amount of the claim that has
not been satisfied.
(4) The court may reduce the indemnification amount for which
a member of the board of directors is liable, taking into
consideration his or her influence on the circumstances referred
to in Paragraph one of this Section.
(5) The provisions of this Section shall also apply to legal
representatives of the subjects of insolvency proceedings of
other legal persons who are responsible for the accounting
records of the legal person and the storage of all documents
certifying all economic transactions.
Chapter
XIII
Creditors' Claims
Section 73. Submission of Creditors'
Claims
(1) Creditors' claims against a debtor shall be submitted to
the administrator within one month from the day when the entry
has been made in the register regarding proclamation of the
insolvency proceedings of the debtor.
(2) If a creditor has missed the deadline for submitting a
claim referred to in Paragraph one of this Section, he may submit
his or her claim against the debtor within a deadline not
exceeding six months from the day when the entry has been made in
the Insolvency Register regarding proclamation of the insolvency
proceedings of the debtor, but not later than until the day when
the plan for settling the creditors' claims has been drawn up in
accordance with the procedures laid down in this Law. After this
deadline a limitation period sets in, thereby the creditor shall
lose his or her creditor status and his or her rights to claim
against the debtor.
(3) If a creditor has missed the deadline for submitting a
claim referred to in Paragraph one of this Section, but has
submitted his or her claim within six months from the day when
the entry has been made in the Insolvency Register regarding
proclamation of the insolvency proceedings of a debtor, but not
later than until the day when the plan for settling the
creditors' claims has been settled in accordance with the
procedures laid down in this Law, the creditor in question shall
be included in the Register of Creditors' Claims, however, this
creditor shall not be granted voting rights.
(4) In their submission the creditors shall indicate:
1) the grounds for the claim;
2) the type of claim;
3) the amount of the claim, separately referring to the amount
of the main claim and the amount of the ancillary claim;
4) the time the claim arose;
5) whether the creditor is recognised as an interested person
within the meaning of Section 72 of this Law;
51) whether the creditor is recognised as a
creditor whose right to claim against the debtor is conditional,
as well as the claim amount and the date (if any) by which the
condition should materialise;
6) the contact information, including electronic mail
address;
7) the bank account number.
(5) A secured creditor, when submitting a creditor's claim,
shall indicate the amount for which the claim is secured. A
secured creditor whose right to claim against a third person is
secured by a commercial pledge, or mortgage on the property of
the debtor registered in the Land Register or Ship Register, when
submitting the creditor's claim, shall state the value of the
debtor's property serving as a security (pledged) as on the date
of proclamation of the insolvency proceedings.
(6) Substantiating documents shall be appended to the
submission. In exceptional cases when the number of
substantiating documents significantly hinders the submission of
a claim, the creditor, by agreeing with the administrator before
submitting the claim, may not submit the derivatives of the
substantiating documents, if the documents justifying the claim
are at the disposal of the debtor and there is no dispute between
the debtor and the creditor regarding rights. The tax authority
may not submit the derivatives of the substantiating documents if
the information justifying the claim can be obtained by the
administrator from the Electronic Declaration System of the State
Revenue Service.
(61) If the creditor's claim is based on the court
adjudication regarding undisputed enforcement of obligations or
compulsory enforcement of obligations according to the warning
procedures, the creditor shall append a true copy and other
documents justifying the claim to the submission referred to in
Paragraph four of this Section.
(7) If the insolvency proceedings specified in Article 3(1) or
3(2) of Council Regulation No 1346/2000 have been initiated
against a debtor, the debtor's creditor, whose place of residence
or legal address is in another Member State, shall submit the
creditor's claim. The information specified in Articles 41 and 42
of the abovementioned Regulation shall be indicated in the claim.
The administrator shall convert a creditor's claim in foreign
currency into euros according to the exchange rate applied for
accounting purposes on the date of proclamation of the insolvency
proceedings of a legal person.
(8) If the insolvency proceedings specified in Article 3(1) or
3(2) of Council Regulation No 1346/2000 are initiated against the
debtor and the administrator in the interests of the creditors of
these proceedings lodges the claims of the creditors in the
insolvency proceedings initiated against the debtor in another
Member State, prior to submitting the claim he or she shall send
a notification to each creditor with a request to consent to the
lodging of the claims of the creditors in other proceedings. If
the creditor has not provided a written response to the
administrator within three weeks after sending of the
notification, it shall be considered that he or she has rejected
the offer to submit his or her claim to other proceedings. If the
administrator has not informed the creditor, the creditor is
entitled to revoke the claim submitted in his or her interests,
by submitting a retraction to the administrator. The
administrator shall withdraw the creditor's claim within two
weeks after receipt of the retraction.
(9) The Insolvency Administration shall exercise the right to
claim in respect of the repayment of the funds allocated thereto
which have been paid from the State budget funds for settling
employees' claims. When executing the right to claim for settling
employees' claims in the amount of the funds paid, the provisions
of this Law regarding the deadline for submission of the claims
of creditors and the recognition or non-recognition of the claims
of creditors shall not be applicable to the Insolvency
Administration.
(10) A claim by the Insolvency Administration to repay the
funds allocated by it for settling the employees' claims shall be
entered into the Register of Creditors' Claims, when the
Insolvency Administration has paid the amounts allocated for
settling employees' claims.
(11) The claims of tax authority raised after the insolvency
proceedings proclamation date and directly related to the
debtor's transactions performed up to the date when the
insolvency proceedings were proclaimed shall be filed as
creditor's claims in accordance with the procedures laid down in
this Law.
[12 September 2013; 25 September 2014 / See
Paragraph 34 of Transitional Provisions]
Section 74. Inspection of the
Creditors' Claims
(1) The administrator shall inspect the validity of the
creditors' claims and the conformity thereof with the
requirements of laws and regulations.
(2) If a creditor's claim does not conform to the requirements
of laws and regulations, including if that specified in Section
73, Paragraph four of this Law is not indicated in the creditor's
claim, the administrator shall send a request to the creditor
without delay, to rectify the deficiencies established within 10
days from sending of the request by the administrator. If that
specified in Section 73, Paragraph four, Clause 6 of this Law is
not indicated in the creditor's claim, the administrator shall,
without delay, send the creditor a request to rectify the
established deficiencies within 10 days from the day when the
consignment is handed over to the postal merchant. If the
creditor rectifies the deficiencies within this time period, it
shall be considered that the creditor's claim has been submitted
within the time period specified. If the creditor does not
rectify the deficiencies within the time period specified, the
administrator shall take a decision on non-recognition of the
creditor's claim or the partial recognition within 10 days from
expiry of the deadline given for rectifying the deficiencies.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 75. Administrator's Decision
Regarding the Creditors' Claims
(1) After inspection of the creditors' claims, the
administrator shall take a justified decision on recognition,
non-recognition or partial recognition of the creditor's claim.
The administrator shall not fully or partially recognise a
creditor's claim regarding which a dispute exists between the
debtor and creditor.
(2) The administrator may not recognise or partially recognise
a creditor's claim which has been established by a court
adjudication only if there is evidence that the debtor has
honoured his or her obligations fully or partially entering into
effect of the court adjudication.
(21) The administrator may not recognise a secured
creditor's claim against a third person that is secured by a
commercial pledge, or mortgage on the property of the debtor
registered in the Land Register or Ship Register and is
conditional, if there is reasonable doubt that the condition
would materialise.
(3) An adjudication of the Court of Arbitration, in terms of
legal outcome, shall be comparable to a court adjudication if the
writ of execution issued by the court is appended thereto.
(4) If the administrator has not recognised the creditor's
claim, the respective claim shall be excluded from the Register
of Creditors' Claims after expiry of the appeal deadline. A
creditor's claim shall not be excluded from the Register of
Creditors' Claims if the administrator's decision is appealed.
Until the moment when the court has examined a complaint, the
creditor's claim in question shall be included in the Register of
Creditors' Claims but voting rights shall not be granted to this
creditor.
(41) When the court, while handling the dispute
about the administrator's decision, has set a deadline for
brining an action and there is a dispute about rights, then, up
to the moment when the relevant creditor's claim has been
recognised by a court adjudication, it should be listed in the
register of creditors' claims, whereas this creditor shall not be
granted any voting rights.
(5) The administrator's decision on non-recognition or partial
recognition of a creditor's claim shall be sent to the relevant
creditor by post within three days after taking thereof, and the
consignment shall be processed in the form of registered mail. It
shall be considered that the addressee has received the decision
concerned on the seventh day after handing over thereof to the
postal office. If doubts arise, the administrator shall prove
when the consignment was handed over to the postal merchant.
(6) The administrator shall take the decision on recognition,
non-recognition or partial recognition of the creditor's claim
within seven days after receipt of this claim. The administrator
shall take the decision on recognition, non-recognition or
partial recognition of the creditor's claim of a debtor's
employee within 15 days after receipt of this claim.
(7) If a claim is submitted after expiry of the deadline for
the submission of the creditors' claims, the administrator shall
take a decision on recognition, non-recognition or partial
recognition of the creditor's claim concerned not later than
within 15 days after receipt of the creditor's claim.
(8) If newly discovered circumstances or documents regarding a
creditor's claim come into the disposal of the administrator, for
which a decision has already been taken, the administrator is
entitled to amend or revoke this decision, but not later than by
the day when the plan for settling the creditors' claims has been
drawn up in accordance with the procedures laid down in this Law.
When revoking the initial decision, the administrator shall take
a new decision in accordance with the procedures laid down in
this Section, in conformity with the deadline for the application
of the creditors' claims specified in Section 73 of this Law.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 76. Decision to Grant the
Status of Non-Secured Creditor to a Secured Creditor after Sale
of Pledged Property
(1) If, when selling the pledged property of a debtor, an
amount of money received does not cover the claims of the secured
creditors, after taking of the decision by the administrator the
relevant creditors shall acquire the status of non-secured
creditor for the part of the claim not covered.
(2) If a secured creditor has submitted his or her claim to
the administrator within the time period specified in Section 73,
Paragraph one of this Law the voting rights for the part of the
claim not covered shall be granted to the secured creditor in
accordance with the procedures laid down in Section 87 of this
Law.
(3) The amount of the main claim not covered and the ancillary
claim not covered shall be indicated separately in the
administrator's decision.
(4) The administrator shall take a decision and send it to the
creditor within five days from the day when the funds acquired
from the sale have been transferred to the creditor.
Section 77. Grouping of the
Creditor's Claims
The administrator shall divide the submitted claims of
creditors into the two following groups:
1) claims of secured creditors;
2) claims of non-secured creditors.
Section 78. Register of Creditors'
Claims
(1) The administrator shall organise the Register of
Creditors' Claims.
(2) The administrator shall enter the following information in
the Register of Creditors' Claims:
1) the creditor's firm (name) or the given name, surname,
registration number or personal identity number, contact
information of that creditor which has submitted the creditor's
claim;
2) a note regarding the recognition or non-recognition of the
creditor's claim;
3) the grounds for the creditor's claim;
4) the time the creditor's claim arose;
5) the type of the creditor's claim;
6) the amount of the creditor's claim (the amount of the main
claim and ancillary claim);
7) the number of votes of the creditor at a creditors'
meeting.
(3) Within seven days after expiry of the deadline specified
in Section 73, Paragraph one of this Law, the administrator shall
send the Register of Creditors' Claims to the creditors and
representative of the debtor in accordance with the procedures
laid down in this Law.
(4) Within five days, the administrator shall notify the
creditors that changes have been made to the Register of
Creditors' Claims.
Section 79. Right to Become
Acquainted with the Register of Creditors' Claims
(1) Any person who has submitted a creditor's claim, the
Insolvency Administration and a representative of the debtor,
have the right to become acquainted with the Register of
Creditors' Claims.
(2) Each creditor who has submitted a creditor's claim, and
the representative of the debtor has the right to become
acquainted with the claims submitted by the creditors and the
evidence for the grounds thereof, commencing from the eighth day
after expiry of the deadline for the submission of the creditors'
claims.
(3) The liquidator involved in the insolvency proceedings
specified in Article 3(1) of Council Regulation No 1346/2000
commenced in another Member State may use the right specified in
Paragraph two of this Section, but the liquidator involved in the
insolvency proceedings specified in Article 3(2) of this
Regulation may only do so if he or she has submitted the claims
of creditors in the interests of the creditors.
Section 80. Complaints Regarding the
Recognition, Non-Recognition or Partial Recognition of the
Creditors' Claims
(1) A creditor is entitled to appeal to a court the decision
of the administrator on non-recognition or partial recognition of
his or her claim within two weeks from the day of receipt of this
decision.
(2) The creditor is entitled to appeal to a court the decision
of the administrator on recognition of another creditor's claim
not later than three weeks after expiry of the deadline for the
submission of the creditors' claims. If the relevant creditor's
claim has been submitted before expiry of the deadline for the
submission of the creditors' claims, the creditor is entitled to
appeal to a court the decision of the administrator on
recognition of another creditor's claim not later than within one
month after the day of taking of the decision.
(3) A debtor's representative is entitled to appeal the
decision of the administrator to a court, with which the claim
arising from a transaction is approved, which the debtor's
representative does not recognise, not later than three weeks
after expiry of the deadline for the submission of the creditors'
claims. If the relevant creditor's claim has been submitted after
expiry of the deadline for the submission of the creditors'
claims, the creditor is entitled to appeal to a court the
decision of the administrator with which the claim, not
recognised by the debtor's representative, and arising from the
transaction is approved, not later than within one month after
the day of taking of the decision.
(4) Complaints in connection with the recognition,
non-recognition or partial recognition of creditors' claims may
be submitted to the court in which the respective insolvency
proceedings have been proclaimed.
(5) The creditor or debtor's representative may request that
the court restores the procedural time period for the submission
of a complaint, if it has not been possible to lodge the
complaint within the time period specified in this Law due to the
fault of the administrator.
Chapter
XIV
Duty to Inform Creditors
Section 81. Duty to Inform
Creditors
(1) For ensuring the effective and lawful course of the
insolvency proceedings of a legal person, in accordance with the
procedures laid down in this Law, the administrator shall notify
the creditors regarding:
1) the plan for the sale of the debtor's property;
2) the non-existence of property in the debtor's
establishment;
3) the amount of the remuneration of the administrator;
4) the expenses of the insolvency proceedings of a legal
person;
5) the plan for settling the claims of creditors;
6) the intention to renounce the claims;
7) the intention to enter into a settlement;
8) the intention to perform the cessation of the right to
claim;
9) the extension of the deadline for selling of non-pledged
property.
(2) The administrator shall notify the creditors of other
matters which have significance during the course of the
insolvency proceedings of a legal person.
(3) Unless it is laid down otherwise in this Law, the
administrator shall provide information to the creditors
electronically, drawing up the documents in accordance with the
requirements for drawing up electronic documents laid down in
laws and regulations.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 82. The Duty of Creditors to
Address the Administrator
If creditors have objections to the information referred to in
Section 81 of this Law, they have a duty to inform the
administrator accordingly within five days after receipt of this
information, unless it is laid down otherwise in this Law.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 83. Administrator's Actions
after Receipt of the Objections by Creditors
Unless it is laid down otherwise by this Law, after receipt of
the objections by creditors regarding the information referred to
in Section 81 of this Law, the administrator shall evaluate the
grounds for the objections and:
1) if the objections are taken into account, make the
appropriate changes and notify all the creditors thereof; and
2) if the objections are not taken into account, provide a
reasoned response to the creditor.
Section 84. Rights of Creditors
If the creditors do not agree with the decision notified by
the administrator, they have the following rights:
1) to propose the convening of a creditors' meeting in
conformity with the provisions of Section 88, Paragraph one,
Clause 2, Sub-clauses (a) and (b) of this Law, in order to decide
on the matters referred to in Section 89 of this Law;
2) to dispute the administrator's actions in accordance with
the procedures laid down in this Law;
3) to apply to the court with a claim against the
administrator for the losses caused.
Section 85. Administrator's
Operational Report
(1) After proclamation of the insolvency proceedings of a
legal person, the administrator shall prepare and send the
administrator's operational report electronically to the
creditors and Insolvency Administration, each quarter.
(2) The Cabinet shall determine the form of the
administrator's operational report and the procedures for filling
in thereof.
Chapter
XV
Creditors' Meeting
Section 86. Procedure of a
Creditors' Meeting
(1) A creditors' meeting is an organised form of creditor's
joint operations for the taking of creditors' decisions.
(2) The administrator shall lead the creditors' meeting.
(3) Representatives of the Insolvency Administration may be
present at a creditors' meeting.
(4) A creditor may participate in a creditors' meeting in
person or with the intermediation of a representative. A
creditor's representative is obliged to show a document
certifying representation to the chairperson of the creditors'
meeting.
(5) If the liquidator involved in the insolvency proceedings
specified in Article 3(1) or 3(2) of Council Regulation No
1346/2000 commenced in another Member State participates in the
creditors' meeting, he or she shall present to the chairperson of
the creditors' meeting a copy of the court adjudication regarding
the appointment of the liquidator involved in the insolvency
proceedings specified in Article 3(1) or 3(2) of the referred to
Regulation or an appropriately certified copy of another
confirmation and a translation of the adjudication or
confirmation, certified in accordance with the specified
procedures, into the official language.
(6) A creditor may authorise not more than one person to
represent such creditor at a creditors' meeting. The authorised
person shall represent the creditor to the full amount of the
creditor's claim.
(7) If more than 100 creditors are registered in the Register
of Creditors' Claims, the creditors who represent not less than
one per cent of the whole amount of the claims of all the
creditors shall participate in the creditors' meeting. In such
case one person may represent several creditors.
(8) The administrator shall provide to the creditors, whose
claims do not exceed one per cent of the whole amount of all the
recognised claims, the information necessary, as well as support,
in order that such creditors might unite and authorise a joint
representative to vote on their behalf.
(9) A creditors' meeting is entitled to take decisions
regardless of the amount of the claims of creditors represented
therein, if an entry has been made in the Insolvency Register
regarding the convening of the creditors' meeting. The creditors'
meeting shall take decisions with a simple majority vote, except
in the cases specified in this Law. The non-participation of the
debtor's representatives shall not be an obstacle to the course
of the creditors' meeting.
(10) Creditors with voting rights are entitled only to vote
"for" or "against".
(11) The creditors' meeting is entitled to take decisions only
in those matters which are indicated in the application as
matters on the agenda of the respective creditors' meeting,
except the matter regarding the convening of the creditors'
meeting. The matters to be included on the agenda of the
creditors' meeting shall be determined by the administrator upon
his or her own initiative, as well as taking into account the
matters included in the request for convening the creditors'
meeting.
(12) The course of the creditors' meeting shall be minuted.
The chairperson of the creditors' meeting shall ensure the
minute-taking. The chairperson of the creditors' meeting and a
representative of the creditors' meeting elected by the creditors
present, as well as any creditor who has participated at the
creditors' meeting and expressed a wish to sign the minutes of
the creditors' meeting, shall sign the minutes of the creditors'
meeting not later than within 10 days from the day of convening
the creditors' meeting.
(13) The creditors and the debtor's representative have the
right to become acquainted with the minutes of the creditors'
meeting. The administrator shall issue the appropriately
certified minutes of the creditors' meeting within five days
after receipt of the written request.
(14) The administrator shall submit the signed minutes and
annexes thereto to the responsible authority which makes the
entries in the Insolvency Register, within five working days
after signing thereof.
(15) A creditors' meeting may be suspended once for a period
of up to two weeks, if more than half of the creditors with
voting rights present vote for this, indicating the time of the
recommencement of the meeting, the address of the location and
the agenda. The administrator shall submit an application
regarding the suspension of a creditors' meeting, and the time
for the recommencement of the meeting, the address of the
location and the agenda, as well as the minutes of the relevant
creditors' meeting, to the responsible authority which makes the
entries in the Insolvency Register.
Section 87. Determination of the
Number of Creditors' Votes in a Creditors' Meeting
(1) The administrator shall determine the number of votes for
each creditor at a creditors' meeting.
(2) Votes shall be granted in a creditors' meeting to such
non-secured creditor, as well as to such secured creditor in a
non-secured and secured part of the claim in the case referred to
in Section 90 of this Law, whose claim is submitted within the
time period for the submission of the creditors' claims referred
to in Section 73, Paragraph one of this Law and whose claim has
been recognised by the administrator. If the administrator has
taken a decision to partially recognise a creditor's claim, votes
shall be granted to the creditor according to the amount of the
recognised main claim.
(3) The number of votes in a creditors' meeting shall be
determined according to the amount of a creditor's principal
claim, granting one vote for each whole euro.
(4) If the liquidator involved in the insolvency proceedings
specified in Article 3(1) or 3(2) of Council Regulation No
1346/2000 initiated in another Member State against a debtor has
submitted the creditors' claims against a debtor in insolvency
proceedings initiated in Latvia, then the liquidator involved in
the insolvency proceedings specified in Article 3(1) or 3(2) of
this Regulation shall acquire the rights of creditors in the
amount of the submitted creditors' claims in accordance with the
procedures laid down in laws and regulations.
(5) The creditors who are recognised as interested persons in
accordance with Section 72 of this Law and persons who have
acquired the right to claim against the debtor from interested
persons within one year prior to the proclamation of the
insolvency proceedings of a legal person, shall not have voting
rights at the creditors' meeting.
(6) The creditors in whose creditors' claim the requirement
referred to in Section 73, Paragraph four, Clause 6 of this Law
is not indicated, and the creditor has not rectified the relevant
deficiency, shall not have voting rights at the creditors'
meeting.
[12 September 2013]
Section 88. Convening of a
Creditors' Meeting
(1) The administrator shall convene a creditors' meeting:
1) upon his or her own initiative;
2) if it is requested by:
a) a creditor with voting rights whose claim is not less than
one-tenth of the total amount of the claims of non-secured
creditors with voting rights,
b) a secured creditor, in order to initiate the procedure
referred to in Section 90 of this Law,
c) not less than three creditors regardless of the amount of
the claim,
d) the debtor's representative,
e) the Insolvency Administration,
f) the liquidator involved in the insolvency proceedings
specified in Article 3(1) of Council Regulation No 1346/2000
initiated against the debtor in another Member State.
(2) In the cases referred to in Paragraph one, Clause 2 of
this Section, a list of the claimants, the amount of their
claims, the meeting agenda and the reasons for the convening
thereof, shall be included in the request.
(3) The administrator shall convene a creditors' meeting based
on the request referred to in Paragraph two of this Section
within three weeks after the day of receipt of the request.
(4) Not later than two weeks prior to the date of the
specified creditors' meeting, the administrator shall submit an
application to the responsible authority, which makes the entries
in the Insolvency Register, and indicate the date, time and
address of the location of the creditors' meeting in the
application. The notification referred to in Paragraph five of
this Section shall be appended to the application.
(5) The administrator shall indicate the debtor's firm (name),
the registration number, the total amount of the submitted and
recognised creditors' claims, the amount of claims by secured and
non-secured creditors and the agenda, in the notification of the
creditors' meeting. If more than 100 creditors are registered in
the Register of Creditors' Claims, in the notification of a
creditors' meeting the administrator shall invite the creditors
whose claims do not exceed one per cent of the entire amount of
the recognised claims to unite and authorise one
representative.
(6) Any other information which has significance for the
course of the creditors' meeting may also be indicated in the
notification.
Section 89. Competence of the
Creditors' Meeting
In the cases specified in this Law, a creditors' meeting shall
take a decision on the following:
1) remuneration of the administrator;
2) proposal for the removal of the administrator;
3) approval of the expenses of insolvency proceedings;
4) the manner of selling the debtor's property (Section 115,
Paragraph 2.1), or the extension of deadline for the
sale thereof;
5) further handling of the property that has been excluded
from the plan for the sale of the property (Section 111,
Paragraph seven).
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 90. Proposal for the Removal
of an Administrator
(1) A decision on the proposal for the removal of an
administrator may be taken if the administrator has not ensured
the effective course of the insolvency proceedings. A decision on
the proposal for the removal of an administrator shall be taken
if two-thirds of the creditors with voting rights present vote in
favour thereof.
(2) Secured creditors shall also participate in the voting
regarding the proposal for the removal of an administrator.
(3) [25 September 2014].
(4) A representative appointed by the creditors' meeting shall
submit to court the decision of a creditors' meeting on the
proposal for the removal of an administrator.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 91. Complaints Regarding
Decisions of the Creditors' Meeting
(1) The decision of a creditors' meeting may be appealed to a
court which proclaimed the relevant insolvency proceedings of a
legal person.
(2) The creditor or representative of a debtor may appeal the
decision of a creditors' meeting if this is illegal or in
contradiction with the overall interests of the creditors. A
complaint may be lodged within two weeks after the creditors'
meeting.
(3) The administrator may lodge a complaint regarding any
decision of a creditors' meeting. A complaint may be lodged
within two weeks after the creditors' meeting.
Chapter
XVI
Property of a Debtor and Its Administration
Section 92. Concept of the Property
of a Debtor
(1) Within the meaning of this Law, the property of a debtor
is:
1) the immovable property and moveable property of a debtor,
including funds;
2) funds acquired by alienating the property of a debtor;
3) the property recovered in accordance with Section 93 of
this Law;
4) fruits that have been acquired from the property of the
debtor during the insolvency proceedings of a legal person;
5) other property legally acquired during the insolvency
proceedings of a legal person.
(2) If the insolvency proceedings specified in Article 3(2) of
Council Regulation No 1346/2000 have been initiated against a
debtor, the property indicated in Paragraph one of this Section
shall be located in Latvia.
(3) Property which may not be recovered shall not be included
in the list of debtor's property to which creditors' claims are
to be addressed.
Section 93. Recovered Property
(1) Within the meaning of this Law, recovered property is
funds, as well as other property which:
1) has been included in the property of the debtor during the
insolvency proceedings of a legal person on the basis of rights
to claim against third persons;
2) has been recovered, recognising the transactions as
invalid;
3) has been recovered by reclaiming the debts covered (Section
99);
4) has been recovered by reclaiming the subject of a
possessory pledge.
(2) The following shall be equated to recovered property:
1) funds and property which has been acquired from members of
the administrative institutions of a legal person, based on the
duty thereof to be liable for losses caused;
2) funds and property which has been acquired from the
personally responsible members of a partnership, based on the
duty thereof to be liable for the partnership's obligations;
3) funds which have been acquired from participants
(shareholders) and the members of other administrative
institutions in the criminal insolvency proceedings of a legal
person and in other cases provided for by law.
Section 94. Property Belonging to
Third Persons
(1) The list of property of a debtor, against which the claims
of creditors are made, shall not include property in the
possession of or held by the debtor, belonging to third
persons.
(2) The administrator shall ensure the maintenance of property
belonging to third persons until it is transferred to these
persons. The third persons have the duty to cover expenses which
has arisen in connection with the maintenance of property owned
thereby, if these persons do not reclaim their property upon
request of the administrator.
(3) If property belonging to third persons is alienated during
the insolvency proceedings, the value of this property shall be
reimbursed by the person due to whose fault the property owned by
third persons has been alienated.
(4) This Section shall also be applicable in respect of funds
or financial instruments which, based on the financial security
agreement, have been used as security financing for the execution
of obligations.
Section 95. Management of the
Property of a Debtor
(1) After the proclamation of the insolvency proceedings of a
debtor, the rights to manage the property of the debtor shall be
acquired by the administrator.
(2) The administrator shall manage the property of the debtor,
take measures for the recovery thereof and act with this property
within the scope of the empowerment specified in this Law.
(3) The administrator shall manage property as an honest and
careful proprietor.
(4) Monetary funds which are received during the course of
managing the property of a debtor shall be deposited to a
separate current account of the debtor.
Chapter
XVII
Appeal of Transactions
Section 96. Recognition of
Transactions as Invalid
(1) The administrator has the duty to evaluate the debtor's
transactions and bring an action to court regarding the
recognition of the respective transaction as invalid regardless
of the type of transaction, if it has been concluded:
1) after the day of the proclamation of the insolvency
proceedings of a legal person or four months prior to the day of
the proclamation of the insolvency proceedings of a legal person
and thereby losses have been caused to the debtor regardless of
whether the person with whom or for whose benefit the transaction
has been concluded, knew or did not know of the losses caused to
the creditors;
2) within three years prior to the day of the proclamation of
the insolvency proceedings of a legal person and thereby losses
have been caused to the debtor, moreover the person with whom or
for whose benefit the transaction has been concluded, knew or
should have known of the causing of such losses.
(2) If the transaction through which losses have been caused
to the debtor has been concluded with interested persons with
respect to the debtor or for the benefit of such persons, it
shall be considered that such persons have known of the causing
of losses, unless they prove otherwise.
(3) A secured creditor may request that a transaction
concluded by the administrator be declared invalid, if such a
transaction is related to property pledged for security of a
claim and the interests of the secured creditor have been
injured.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 97. Appeal of Transactions
Without Compensation
(1) The administrator has a duty to evaluate and bring an
action to court regarding the transfer of the debtor's property
or a part thereof given as a gift in accordance with the
provisions of Section 1927 of the Civil Law.
(2) Paragraph one of this Section shall not apply to
societies, foundations and similar organisations which perform
donations or other type of gift within the scope of the usual
activities thereof, if such a transaction does not differ
significantly from the transactions concluded in the previous
year prior to the day of the proclamation of the insolvency
proceedings of a legal person.
(3) Regulations regarding transactions without compensation
shall be applicable to a transaction which has been concluded in
the three years prior to the day of the proclamation of the
insolvency proceedings of a legal person, or thereafter, and in
which the inequality of the mutual obligations of the parties
indicate that a donation has actually been made.
(4) A donation may be appealed and the return requested if it
has been illegal or has not been used for the purposes provided
for.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 98. Recognition of Pledge
Contracts as Invalid
(1) A pledge contract shall be recognised as invalid if the
pledge rights have been founded after making of the entry in the
Insolvency Register regarding proclamation of the insolvency
proceedings of the debtor.
(2) The administrator has a duty to bring an action to court
regarding the recognition of a pledge contract as invalid, if the
circumstances referred to in Paragraph one of this Section are
established.
Section 99. Return of Amounts Paid
for the Settlement of Debts
(1) The amounts of money which the debtor has paid for
covering the debt within the six months prior to the day of
proclamation of the insolvency proceedings of a legal person, as
well as after the day of proclamation of the insolvency
proceedings of a legal person (except the amounts of money which
the administrator has paid during the insolvency proceedings of a
legal person), shall be repayable if at least one of the
following conditions is established:
1) the payment has been made prior to the coming into effect
of the time period for the honouring of obligations, if other
payment obligations have not been honoured for which the time
period for honouring has come into effect, and it is possible to
renew the obligations and rights of the parties referred to in
Paragraph three of this Section;
2) the debt has been paid to interested persons in respect of
the debtor, and other obligations, whose time period for
honouring has come into effect prior to the time period for the
honouring of the obligations of interested persons, have not been
honoured. This provision shall also apply to debts collected by
bailiffs, from which the expenses necessary for the enforcement
of a judgment have been deducted.
(2) The creditor shall repay the amount of money to the debtor
which the debtor has paid within the last three months prior to
the day of the proclamation of the insolvency proceedings of a
legal person, in order to prevent the proclamation of the
insolvency proceedings of the debtor after the application by the
creditor of the recipient of the amount of money.
(3) If the amounts paid regarding settlement of debts are
returned in the cases provided for in Paragraphs one and two of
this Section, the obligations of parties (including reinforcement
of obligations) and the respective rights that were in effect
until the settlement of the debts shall be renewed.
Section 100. Requirements for Appeal
or Cancellation of Transactions against the Successors to Rights
and Obligations
(1) The administrator has the duty to bring an action to court
regarding the appeal or discharge of a transaction also against
the heirs of the transaction participants.
(2) The administrator has the duty to bring an action to court
against other successors to rights and obligations, if:
1) at the moment of the takeover of rights, the successor to
rights was an interested person in relation to the debtor;
2) the rights were acquired without compensation.
Chapter
XVIII
Execution and Termination of Contracts
Section 101. Administrator's Right
to Choose
(1) If the contract entered into by the debtor has not been
executed or has been partially executed on the day of the
proclamation of the insolvency proceedings of a legal person, the
administrator is entitled to request the execution from the other
contracting party or to unilaterally withdraw from the contract.
The administrator has the right to execute the contract if such
action does not reduce the debtor's assets.
(2) If the administrator unilaterally withdraws from the
execution of the contract, the other contracting party has the
right to submit his or her creditor's claim.
(3) The continuation of the execution of contracts which have
not been terminated in the cases provided for by law, as well as
the execution of the contracts which have been entered into by
the administrator on behalf of the debtor with third persons
during the insolvency proceedings of a legal person, shall be
financed from the debtor's funds.
(4) If the debtor is an insurer, then the administrator,
assessing the interests of the policy-holder, shall evaluate the
need for the transfer, termination or continuation of the
insurance contracts entered into, and perform all the lawful
activities in order to transfer, terminate or continue the
insurance contracts entered into.
Section 102. Termination of an
Authorisation Contract and the Termination of Procure and
Ordinary Franchises
(1) The task given by the debtor to his or her authorised
representative (including the proctor and person with a
commercial power of attorney) in respect of his or her property,
to which creditor claims are addressed, shall lose effect from
the day of the proclamation of the insolvency proceedings of a
legal person.
(2) If the execution of the task is connected to the risk of
losses, the authorised representative (including the proctor and
person with a commercial power of attorney) may execute this
until the day when the administrator takes over the debtor's
property. In respect of expenses which have been incurred by the
authorised representative (including the proctor and person with
a commercial power of attorney) in connection with the execution
of tasks, he or she may submit his or her creditor's claim to the
administrator.
Section 103. Termination of an
Employment Contract
(1) After the proclamation of the insolvency proceedings of a
debtor, the administrator has the right to terminate the
employment contract with the employee of the debtor. In such case
the provisions of Section 101, Paragraph one, Clauses 9 and 10 of
the Labour Law shall be considered to be lawful grounds for the
termination of the employment contract, and the provisions of
Section 103, Paragraph one, Clause 3 of the Labour Law regarding
the time period for the termination of an employment contract
shall not be applied. If an employee has entered into a
collective agreement, the administrator has the right not to
apply the norms thereof regarding the termination of an
employment contract, including the costs related to the
termination.
(2) The norms of the Labour Law regarding collective
redundancy shall not be applied to the insolvency proceedings of
a legal person.
Section 104. Restrictions on a
Set-off
A set-off in the insolvency proceedings of a legal person
shall be permissible if the mutual claims of the debtor and
creditor have arisen at least six months prior to the
proclamation of the insolvency proceedings of a legal person.
Section 105. Cession of Claims
The administrator may cede the debtor's claims against third
persons if the recovery of debts may be hindered or extended.
Chapter
XIX
Transition from Insolvency Proceedings of a Legal Person to Legal
Protection Proceedings
Section 106. Admissibility of Legal
Protection Proceedings
The transition from insolvency proceedings of a legal person
to legal protection proceedings shall not be permissible if the
insolvency proceedings of a legal person have been proclaimed for
a debtor on the basis of Section 57, Paragraph one, Clause 7, 8,
or 9 of this Law.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 107. Transition to Legal
Protection Proceedings
(1) The legal protection proceedings shall be applicable to a
debtor, in conformity with the regulations of the extrajudicial
legal protection proceedings. In such case the following persons
are entitled to submit an application for the termination of the
insolvency proceedings of a legal person, the proclamation of
legal protection proceedings, as well as to draw up a plan for
the legal protection proceedings:
1) the debtor's representative;
2) the administrator;
3) the liquidator involved in the insolvency proceedings
specified in Article 3(1) of Council Regulation No 1346/2000
initiated against the debtor in another Member State;
4) a creditor or group of creditors.
(2) When drawing up and co-ordinating a plan of measures of
the legal protection proceedings, the provisions of this Law
shall not be applicable regarding the agreement of the debtor
with the administrator and creditors regarding the candidate for
the office of administrator in extrajudicial legal protection
proceedings, nor is the opinion of the administrator required, if
the plan of measures of the legal protection proceedings has been
drawn up by the administrator. The plan of measures of the legal
protection proceedings shall be considered to be supported if it
has been co-ordinated by the majority of the creditors specified
in Section 42, Paragraph three of this Law.
(3) The costs of the insolvency proceedings of a legal person
and the remuneration for the drawing up of the plan of measures
of the legal protection proceedings shall be included in the plan
of measures of the legal protection proceedings, and they shall
be covered in the full amount prior to the honouring of the
creditor's claim.
(4) Employees' claims which are covered by the resources of
the guarantee fund for employees' claims shall be included in the
plan of measures of the legal protection proceedings and be
covered in the full amount prior to covering the costs of the
insolvency proceedings of a legal person.
(5) If the insolvency proceedings specified in Article 3(2) of
Council Regulation No 1346/2000 are initiated against a debtor in
Latvia, prior to the submission of an application for the legal
protection proceedings to court, the written consent for the plan
of measures of the legal protection proceedings from the
liquidator involved in the insolvency proceedings specified in
Article 3(1) of this Regulation shall be received.
Section 108. Informing Creditors of
the Application of Legal Protection Proceedings
Prior to submitting the relevant application to court the
person who has drawn up and co-ordinated the plan of measures of
the legal protection proceedings has a duty to inform the
administrator and creditors, as well as the debtor accordingly,
if the plan has not been drawn up by the debtor's
representative.
Section 109. Effects of the
Proclamation of Legal Protection Proceedings and Termination of
Insolvency Proceedings of a Legal Person
(1) After the court has rendered an adjudication regarding the
implementation of legal protection proceedings, the effects of
the proclamation of the insolvency proceedings of a legal person
shall be terminated and the effects of the implementation of
legal protection proceedings shall take effect, and the
operations of the debtor's administrative body shall also be
restored.
(2) After the court has rendered an adjudication regarding the
implementation of legal protection proceedings, the administrator
shall hand over all his or her property into the ownership of the
debtor, within seven days.
Chapter
XX
Sale of Property in Insolvency Proceedings of a Legal Person
Section 110. Property to be Sold
The debtor's property indicated in Section 92 of this Law
shall be sold in insolvency proceedings of a legal person, except
for money.
Section 111. Sale of a Debtor's
Property
(1) Within two months after the day of the proclamation of the
insolvency proceedings of a legal person, the administrator shall
draw up a plan for the sale of the debtor's property or a report
regarding the non-existence of the debtor's property.
(2) The sale of the debtor's property shall take place for the
highest price possible, in order to ensure the covering of the
claims of creditors.
(3) The property of a debtor serving as security (pledged
property) shall be sold in accordance with the provisions of
Section 116 of this Law.
(4) The administrator shall take the decision on the method of
sale of the non-pledged property of a debtor (with or without an
auction).
(5) Funds which are connected to the sale of the debtor's
property shall be transferred into the debtor's account.
(6) All the debtor's property is to be sold within six months
after the proclamation of the insolvency proceedings of a legal
person. The administrator may extend the term for selling the
non-pledged property of the debtor for up to six months,
notifying the creditors thereof in accordance with the procedures
laid down in Section 81 of this Law, and substantiating the
reason for extending the deadline. If the creditors do not agree
to extended term for selling the non-pledged property of the
debtor, they have the right to propose the convening of a
creditors' meeting in accordance with the provisions of Section
84, Clause 1 of this Law.
(7) If it is impossible to sell the debtor's property or the
property sales costs exceed the projected revenues, the
administrator shall exclude it from the plan for the sale of the
property and shall, without delay, notify all creditors thereof
in accordance with the procedures laid down in Section 81 of this
Law, inviting them to retain the property to themselves at its
initial price. A creditor, who agrees to decrease the debt by the
value of the property the administrator was unable to sell, shall
notify the administrator thereof within two weeks after sending
of the administrator's invitation. If there is more than one
creditor wishing to retain the same property, the administrator
shall organise an auction between these creditors in accordance
with the procedures laid down in the Civil Procedure Law. If
creditors do not agree to exclusion of the property from the plan
for the sale of the property, they have the right to propose the
convening of a creditors' meeting in accordance with the
provisions of Section 84, Clause 1 of this Law.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 112. Report on the
Non-Existence of a Debtor's Property
(1) If the administrator establishes that the debtor has no
property or its value is lower than the deposit amount, he or she
shall draw up a report on the fact of non-existence of the
debtor's property, indicating:
1) the debtor's financial status;
2) an evaluation of the possibility of recovering the debtor's
property indicated in Section 93 of this Law;
3) the costs of the planned insolvency proceedings of a legal
person, if these are to be continued;
4) a proposal to ensure the financing for the insolvency
proceedings of a legal person;
5) a proposal for the further solution of the insolvency
proceedings of a legal person - to terminate or to continue the
insolvency proceedings of a legal person;
6) information regarding the intent to recourse against the
debtor's board of directors in accordance with Section
72.1 of this Law.
(2) The administrator shall send the report to all creditors
on the non-existence of the debtor's property without delay,
after expiry of the time period referred to in Section 111,
Paragraph one of this Law, in accordance with the procedures laid
down in this Law.
(3) If a proposal regarding the financing of the insolvency
proceedings of a legal person is received within 15 days from the
day when the report is sent on the non-existence of the debtor's
property, the administrator shall enter into the agreement
specified in Section 168, Paragraph three of this Law and
continue the insolvency proceedings of a legal person.
(4) If no objections by the creditors are received within 15
days from the day when the report is sent on the non-existence of
the debtor's property, the administrator shall implement the
proposal for the further solutions of the proceedings indicated
in the report on the non-existence of the debtor's property.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 113. Plan for the Sale of a
Debtor's Property
(1) The administrator shall include the following information
in the plan for the sale of the debtor's property:
1) a list of the non-pledged property of the debtor;
2) an evaluation of the non-pledged property of the
debtor;
3) the estimated amount of funds which are planned to be
acquired by selling the non-pledged property of a debtor,
indicating separately the amount of funds which are planned to be
acquired with or without an auction, additionally indicating the
amount of funds which are planned to be acquired by selling the
debtor's property as a whole with or without an auction;
4) the method of sale of the non-pledged property of a debtor
(with or without an auction);
5) a list of the pledged property of the debtor;
6) an evaluation of the pledged property of the debtor;
7) the method of sale of the pledged property of a debtor
co-ordinated with the secured debtor (with or without an
auction);
8) the amount of funds planned to be acquired by selling the
pledged property of a debtor;
9) information regarding the cession of claims, if such is
provided for;
10) the source of financing for the insolvency proceedings of
a legal person;
11) the planned costs of the insolvency proceedings of a legal
person - the remuneration of the administrator and expenses of
the proceedings;
12) the deadline for the sale of the debtor's property;
13) information regarding the intent to recourse against the
debtor's board of directors in accordance with Section
72.1 of this Law.
(2) The administrator shall send the plan for the sale of the
debtor's property to all creditors, the debtor's representative
and the guarantor without delay, after expiry of the time period
referred to in Section 111, Paragraph one of this Law, in
accordance with the procedures laid down in this Law.
(3) Within 15 days from sending of the plan for the sale of
the debtor's property the creditor and debtor's representative
have the right to submit to the administrator a proposal for
selling of the debtor's property as a whole. Each creditor has
the right to object to the administrator's proposal for the
method of sale of the non-pledged property of the debtor, the
cession of the claims offered and the planned costs of the
insolvency proceedings of a legal person.
(4) If the administrator, when evaluating the objections
received, recognises them as justified, he or she shall update
the plan accordingly and notify the parties involved thereof. If
the administrator does not recognised the objections received as
justified, he shall provide a reasoned response to the
submitter.
(5) The administrator shall commence the sale of the debtor's
property in accordance with the method of sale proposed in the
plan for the sale of the debtor's property not sooner than two
weeks after sending of the plan to the creditors, the debtor's
representative and the guarantor, but not later than one week
after the plan being considered as harmonised.
(6) If it is intended to sell the debtor's property without
auction in the plan for the sale of the debtor's property and
execution proceedings have been commenced in respect of this
property, the administrator, when commencing the sale of the
property, shall inform the bailiff who is organising the specific
execution proceedings accordingly.
(7) If the implementation of the plan for the sale of the
debtor's property is not possible, the administrator shall inform
the creditors thereof without delay, sending an updated plan for
the sale of the debtor's property. The updated plan for the sale
of the debtor's property shall be harmonised in accordance with
the procedures laid down in Paragraphs three and four of this
Section.
(8) If, prior to the preparation of the plan for the sale of
the debtor's property, the administrator establishes movable
property in the debtor's property which is perishing or becoming
significantly worthless, he or she shall sell it without delay
for as favourable a price as possible, informing the creditors of
this and of the funds acquired after sale.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 114. Sale of the Debtor's
Establishment
(1) When preparing the plan for the sale of the debtor's
property, the administrator shall evaluate the option of selling
the debtor's establishment as a whole.
(2) If the pledged property of the debtor is also contained in
the establishment, the administrator shall receive the secured
creditor's consent for the sale of the establishment.
(3) When selling an establishment as a whole, the creditor's
gain from the sale of the establishment must be greater than if
the debtor's property was sold separately.
(4) If the administrator has taken a decision to sell the
establishment at auction, then the auction shall take place in
accordance with the procedures by which the sale of immovable
property is intended, and this shall be performed by the
administrator.
(5) When taking a decision to sell the establishment, the
administrator shall draw up a list in which the tangible and
intangible items contained in the establishment to be sold and
the economic gain belonging to the establishment shall be
included.
(6) In case of the sale of the establishment, all the rights
and liabilities of the debtor shall be transferred to the
beneficiary, except the debtor's obligations which have arisen
prior to the proclamation of the insolvency proceedings of a
legal person.
(7) The decision to approve the statement of auction shall be
taken by the court examining the matter of the debtor's
insolvency proceedings.
Section 115. Auction of a Debtor's
Property
(1) If the debtor's property is sold at auction, the auction
thereof shall be carried out and the ownership rights recorded in
the beneficiary's name in accordance with the provisions of the
Civil Procedure Law regarding the sale of property in a
compulsory auction, unless otherwise laid down in this Law.
(2) If the first auction of immovable property within the
scope of the insolvency proceedings of a legal person is
recognised as not having taken place, the second auction shall be
organised according to the regulations of the first auction by
descending step.
(21) If the second auction of immovable property
within the scope of the insolvency proceedings of a legal person
is recognised as not having taken place, the administrator shall,
without delay, send to the creditor the adjusted plan for the
sale of the debtor's property, with a proposal for further
handling of the property.
(22) If a creditors' request to organise the third
auction has been received within 15 days after sending of the
adjusted plan for the sale of the debtor's property, the costs of
the auction shall be covered by the creditors who have requested
it, by arranging this in writing with the administrator. The
rules for the third auction shall be the same as for the second
auction. If the amount of money necessary for organising the
auction has not been paid by the deadline specified in the
agreement, the administrator shall decline the request to
organise the third auction.
(23) If no objections have been received from the
creditors within 15 days after sending of the adjusted plan for
the sale of the debtor's property, the administrator shall
proceed with the solution he or she has proposed.
(3) The administrator shall perform the activities of the
bailiff in connection with the auction of the debtor's property
specified in the Civil Procedure Law.
(4) After the court has approved the statement of the auction
or has taken a decision to register the title to the property in
that creditor's name who has expressed the wish to retain the
property, the administrator shall draw up calculations stating
the expenses of the auction, the remuneration for organising the
auction, value added tax if applicable to the auction price, the
current tax payments for the immovable property for a time period
starting from the proclamation of the insolvency proceedings to
the last day of the month when a court adjudication approving the
immovable property auction has entered into effect, and the
amount payable to the creditors. Within 10 days after receipt of
the calculation, the winning bidder, debtor or creditors may
appeal the calculation of the administrator to the court where
the respective insolvency proceedings matter of the legal person
has been initiated.
(5) If none of the participants of the auction are bidding at
the auction, the security deposit shall not be reimbursed and
shall be included in the debtor's property instead.
(6) The administrator is entitled to set a participation fee
for the second auction up to 0.1 per cent of the valuation of the
immovable property, however not less than 50 euro.
(7) If the administrator has set a participation fee for the
auction, the persons willing to participate in the second auction
of immovable property shall transfer the participation fee to the
debtor's account specified by the administrator. Before the
auction, the administrator shall check whether the participation
fee has been transferred to this account.
(8) The participation fee contributed by the participants of
the auction shall not be reimbursed and shall be included in the
debtor's property instead.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 116. Sale of the Property of
the Debtor Serving as Security (Pledged Property)
(1) A secured creditor has the right to request the sale of
the property of a debtor serving as security (pledged property)
after expiry of the deadline specified in Section 63, Paragraph
one, Clause 4 of this Law.
(2) The property of the debtor serving as security (pledged
property) shall be sold in auctions in accordance with the
procedures laid down in the Civil Procedure Law and in accordance
with the provisions of Section 115 of this Law, if the secured
creditor has not agreed with the administrator on selling the
property without an auction. The administrator shall perform the
activities of the bailiff specified in the Civil Procedure Law in
respect of the auction of the debtor's property. By agreeing with
the secured creditor on the sale of pledged property, the
administrator shall ensure that this property is sold for as high
a price as possible, taking into account the interests of
non-secured creditors.
(3) If the property of a debtor serving as security (pledged
property) is sold at an auction, then in cases when the auction
is considered not to have taken place in accordance with the
provisions of Sections 615 and 616 of the Civil Procedure Law,
and the secured creditor wishes to keep the property for himself
or herself, such creditor has a duty to cover all the expenses of
the auction, including the costs for evaluation of the property
of the debtor serving as security (pledged property),
remuneration for organising the auction and other expenses
related to organising the auction, as well as the immovable
property tax payments due from the insolvency proceedings
proclamation day up to the immovable property auction day.
(31) If the property of a debtor serving as
security (pledged property) is sold at an auction, then in cases
when the auction is considered not to have taken place in
accordance with the provisions of Section 614 of the Civil
Procedure Law, and the secured creditor does not wish to keep the
property for himself or herself, the administrator shall agree
with the secured creditor on further handling of the property. If
the secured creditor requests the third auction, it shall be
organised in accordance with the procedures laid down in Section
115, Paragraph 2.2 of this Law. If the administrator
fails to reach an agreement with the secured creditor on further
handling of the property, including on selling of the property
without an auction, or establishes the fact of the circumstances
referred to in Section 111, Paragraph seven of this Law, the
administrator shall take a decision on further handling of the
property and shall notify the secured creditor thereof in
accordance with the procedures laid down in Section 81 of this
Law. If the secured creditor has any objections in respect of the
received notification, it shall express them in accordance with
the procedures laid down in Section 82 of this Law.
(4) If by selling the pledged property of a debtor, an amount
of money is received which exceeds the secured creditor's claims
and auction expenses, these funds shall be transferred to the
debtor's property with which other claims of creditors shall be
settled.
(5) If, by selling the pledged property of a debtor, an amount
of money is received which does not cover the claims of the
secured creditors, after taking of the decision by the
administrator the relevant creditors shall acquire the rights of
a non-secured creditor for the part of the claim not covered. The
amount of the main claim not covered and the ancillary claim not
covered shall be indicated separately in the administrator's
decision. If a secured creditor has submitted his or her claims
to the administrator within the deadline specified in Section 73,
Paragraph one of this Law, the voting rights for the part of the
claim not covered shall be granted to the secured creditor in
accordance with the procedures laid down in Section 87 of this
Law.
(6) When settling the secured creditor's claim from funds
received by selling the pledged property, the main claim of this
claim shall be covered first, followed by the interest and
finally the penalties.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Chapter
XXI
Settling the Claims of Creditors in the Insolvency Proceedings of
a Legal Person
Section 117. List of the Costs of
the Insolvency Proceedings of a Legal Person and the Plan for
Settling the Claims of Creditors
(1) Within 15 days after implementation of the plan for the
sale of the debtor's property, the administrator shall draw up a
list of the costs of the insolvency proceedings of a legal person
and a plan for settling the claims of creditors in accordance
with the procedures laid down in Section 118 of this Law.
(2) The administrator shall send all the creditors the list of
the costs of the insolvency proceedings of a legal person and the
plan for covering the claims of creditors without delay after
expiry of the deadline specified in Paragraph one of this
Section, in accordance with the procedures laid down in this
Law.
(3) The administrator shall commence the settling of the
claims of creditors in accordance with the list of the costs of
the insolvency proceedings of a legal person and the plan for
covering the claims of creditors, if no objections by the
creditors are received within 15 days after sending of the list
of the costs of the insolvency proceedings of a legal person and
the plan for covering the creditors' claims.
(4) If objections are received in respect of the plan for
settling the claims of creditors within 15 days after sending of
the list of the costs of the insolvency proceedings of a legal
person and the plan for settling the creditors' claims and the
administrator, when evaluating the objections received recognises
them as substantiated, he or she shall update the plan
accordingly and notify the creditors thereof. If the
administrator does not recognise the objections received as
substantiated, he shall provide a reasoned response to the
submitter thereof.
(5) If objections are received in respect of the costs of the
insolvency proceedings of a legal person within 15 days after
sending of the list of the costs of the insolvency proceedings of
a legal person and the plan for settling the claims of creditors,
the decision to approve the costs of the insolvency proceedings
of a legal person shall be taken by the creditors' meeting.
(6) Within 15 days after implementation of the plan for
settling the claims of creditors, the administrator shall notify
the creditors accordingly.
(7) If at the time of drawing up a list of the expenses of the
insolvency proceedings of a legal person and the plan for
settling the claims of creditors legal proceedings are in
progress which have been initiated or resumed by the deadline set
forth by the court, because it has been established that a
dispute about the rights exists, then, when examining the
complaint on the administrator's decision in respect of
recognition, non-recognition or partial recognition of creditor's
claims, the terms referred to in this Section shall commence on
the day when the court decision in the abovementioned court
proceedings enters into effect.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 118. Procedures for Settling
the Creditors' Claims in Insolvency Proceedings of a Legal
Person
(1) The costs of the insolvency proceedings of a legal person
shall be covered in full in the first place, from the debtor's
funds, including funds acquired by alienating the debtor's
property, or from other sources of financing of the insolvency
proceedings of a legal person (the funds of creditors, other
natural persons or legal persons), except funds which have been
acquired in the case specified in Section 116 of this Law.
(2) After settling in full of the costs of the insolvency
proceedings of a legal person specified in Paragraph one of this
Section, the claim of the Insolvency Administration shall be
settled, if the claims of the debtor's employees are settled from
the resources of the guarantee fund for employees' claims in
accordance with the Law On Protection of Employees in Case of
Insolvency of Employer.
(3) After settling of the claims specified in Paragraph two of
this Section in full, the following employees' claims shall be
settled:
1) work remuneration for the last three months of employment
legal relationships in the 12 month period prior to the
proclamation of the employer's insolvency proceedings of a legal
person;
2) reimbursement for the annual paid leave, the right to which
is based on the 12 month period prior to the proclamation of the
employer's insolvency proceedings;
3) reimbursement for other type of paid leave in the last
three months of employment legal relationships within the 12
month period prior to the proclamation of the employer's
insolvency proceedings of a legal person;
4) severance pay in connection with the termination of
employment legal relationships in the minimum amount specified in
the law, the right to which was acquired not sooner than in the
12 month period prior to the proclamation of the employer's
insolvency proceedings of a legal person;
5) compensation for harm in connection with an accident at
work or an occupational disease for the full unpaid time period
until the proclamation of the employer's insolvency proceedings
of a legal person and the amount of compensation for harm for
four years in advance, if the accident at work has taken place or
the occupational disease acquired until 1 January 1997, as well
as where an employee who is not considered as an insured person
in accordance with the Law On Mandatory Social Insurance Against
Accidents and Work and Occupational Diseases whose occupational
disease, which has arisen due to the employee performing work in
hazardous work conditions until 1 January 1997, has been
determined after 1 January 1997;
6) payments of State social insurance mandatory contributions
and personal income tax which are related to the claims referred
to in this Paragraph.
(4) Tax claims of the tax administration (creditor) which are
submitted within the deadline for submission of the creditors'
claims referred to in Section 73, Paragraph one of this Law,
shall be settled in the amount of the basic debt after payment of
the insolvency proceedings of a legal person and the settling of
the claims of creditors specified in Paragraph two of this
Section.
(5) After covering of the expenses of the insolvency
proceedings of a legal person referred to in Paragraph one of
this Section and the settlement of the creditors' claims
specified in Paragraphs two, three, and four of this Section, the
remaining funds of the debtor shall be divided for the settlement
of the remaining claims of those non-secured creditors in the
amount of the principal debt (without interest) who have
submitted their claims by the deadline for the submission of the
creditors' claims referred to in Section 73 of this Law. At this
round, the claims of secured creditors shall also be settled for
the non-secured part thereof and the part not covered in the
claims of secured creditors in accordance with Section 76 of this
Law, if the claims of secured creditors have been submitted by
the deadline referred to in Section 73 of this Law.
(6) If there are insufficient debtor's funds to settle in full
all the claims of creditors referred to in Paragraph five of this
Section, the respective claims shall be settled in proportion to
the amount due to each creditor.
(7) [25 September 2014].
(8) [25 September 2014].
(9) From the debtor's funds remaining after settling the
claims of non-secured creditors in the amount of the basic debt,
the ancillary claims of non-secured creditors shall be settled
(in proportion to the amount due to each creditor).
(10) The debtor's funds remaining after settling the costs of
the insolvency proceedings of a legal person indicated in this
Section and settling the creditors' claims shall be divided to
the participants of the debtor (shareholders) or members in
proportion to the size of each investment, the debtor (natural
person), the heir (in respect of an inheritance) or persons
yielding the property of an association or foundation in
accordance with laws and regulations or the articles of
association of the respective association or foundation.
(11) If the insolvency proceedings specified in Article 3(2)
of Council Regulation No 1346/2000 have been initiated against a
debtor in Latvia, the administrator shall transfer the
appropriate funds remaining after settlement of the costs of the
insolvency proceedings of a legal person specified in Paragraph
one of this Section and the settlement of the creditors' claims
specified in Paragraphs two, three, four, five, and nine of this
Law, to the liquidator involved in the insolvency proceedings
specified in Article 3(1) of the Regulation referred.
(12) From the funds acquired by selling the debtor's
establishment, the costs connected to the sale of the property
and the claims of secured creditors shall be covered in the first
place in the amount of the pledged property, but not exceeding
the amount of the security. The remaining funds shall be divided
in accordance with the procedures laid down in this Section.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 118.1 Procedures
for Settling the Creditors' Claims in Case when a Secured
Creditor's Claim has been Filed where the Right to Claim is
Conditional
(1) Any funds raised from selling a debtor's property serving
as security for a secured creditor's claim where the right to
claim is conditional shall be deposited by the administrator in
an escrow account opened by the Insolvency Administration with
the Treasury until the moment when the secured creditor has
submitted to the Insolvency Administration a notification
regarding the materialisation of the condition.
(2) The funds referred to in Paragraph one of this Section
shall be kept not longer than for three years after selling of
the pledged property in favour of the secured creditor whose
right to claim was conditional, or five years after proclamation
of the insolvency proceedings of the debtor, whichever occurs
earlier.
(3) If the secured creditor whose right to claim was
conditional has specified the date by which the condition should
materialise in the application, and has failed to submit a
notification to the Insolvency Administration regarding the
materialisation of the condition, then the funds referred to in
Paragraph one of this Section shall be kept until the date
specified in the application.
(4) If the secured creditor whose right to claim was
conditional has failed to notify the Insolvency Administration
regarding the materialisation of the condition by the deadline
laid down in Paragraph two or three of this Section, then the
funds referred to in Paragraph one of this Section shall be
disbursed in accordance with the provisions of Section 118 of
this Law. If the condition has materialised which is contingent
to the secured creditor's right to claim and the amount of the
claim is lower than the cash amount referred to in Paragraph one
of this Section, the remaining funds shall be disbursed in
accordance with the provisions of Section 118 of this Law.
(5) The Cabinet shall determine the procedures for depositing
the cash in the escrow account opened by the Insolvency
Administration with the Treasury and disbursing it to the
creditors that has been raised by selling the debtor's property
serving as security for a secured creditor's claim where the
right to claim is conditional.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 119. Termination of
Insolvency Proceedings of a Legal Person
(1) If no objections from creditors have been received within
15 days after sending of the notification regarding the
implementation of the plan for settling the claims of creditors,
the administrator shall submit an application to court for the
termination of the insolvency proceedings of a legal person,
appending the notification regarding the implementation of the
plan for settling the claims of creditors.
(2) If objections from creditors are received within 15 days
after sending of the notification regarding the implementation of
the plan for settling the claims of creditors, the administrator
shall:
1) rectify the deficiencies in the implementation of the plan
for settling the claims of creditors within five days, if the
objections are taken into account, and submit an application to
court for termination of the insolvency proceedings of a legal
person, appending thereto an updated notification regarding the
implementation of the plan for settling the claims of
creditors;
2) if the objections are not taken into account, submit an
application to court for the termination of the insolvency
proceedings of a legal person, appending thereto a notification
regarding the implementation of the plan for settling the claims
of creditors and inform the court of the objections received.
(3) The application referred to in Paragraphs one and two of
this Section shall be submitted to court within 10 days after
expiry of the deadline specified in Paragraphs one and two of
this Section.
(4) If the administrator has included a proposal to terminate
the insolvency proceedings of a legal person in the report on the
non-existence of the debtor's property, and no objections are
received from creditors, the administrator shall submit to court
an application regarding termination of the insolvency
proceedings of a legal person after expiry of the deadline
specified in Section 112, Paragraph four of this Law.
Section 120. Effects of the
Termination of Insolvency Proceedings of a Legal Person
(1) If the insolvency proceedings of a legal person are
terminated concurrently with the court adjudication for the
implementation of the debtor's legal protection proceedings, the
powers of the administrator as an administrative body in the
respective insolvency proceedings of a legal person shall expire
and the debtor's rights to manage his or her property, as well as
the activity of the debtor's administrative body, shall be
restored.
(2) If the insolvency proceedings of a legal person are
terminated in connection with the completion of the debtor's
insolvency proceedings of a legal person, the administrator shall
destroy the debtor's stamps and unused debtor's forms within one
day after receipt of the court adjudication and draw up a
statement regarding the destruction of the stamp and debtor's
forms, and destroy the unused strict accountability receipt forms
in accordance with the procedures laid down in laws and
regulations.
(3) [25 September 2014].
(4) Within five days after receipt of the court decision to
complete the proceedings, the administrator shall submit to the
Register of Enterprises an application requesting to delete the
debtor from the relevant register, together with a statement from
the State Archives that the debtor's documents have been handed
over for storage.
(5) If the legal proceedings of a legal person are terminated
in connection with the completion of the debtor's legal
proceedings of a legal person, the administrator's powers shall
be terminated upon exclusion of the debtor from the relevant
public register.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Chapter
XXII
Features of Insolvency Proceedings of Individual Merchants and
Partnerships
Section 121. Rights of the Creditors
whose Claims do not Arise from the Debtor's Commercial
Activities
(1) Insolvency proceedings shall be implemented for an
individual merchant in conformity with the provisions of
insolvency proceedings of a legal person, unless it is laid down
otherwise in this Chapter.
(2) If the insolvency proceedings of a legal person are
proclaimed for an individual merchant, the persons whose right to
claim against the individual merchant have arisen apart from the
commercial activities performed by the individual merchant also
have the right of the creditors specified in this Chapter.
(3) If the insolvency proceedings of a legal person are
proclaimed for a partnership, the complementary creditors of the
partnership also have the creditor's rights specified in this
Chapter.
(4) If the creditors referred to in Paragraphs one and two of
this Section do not file their claims in conformity with the
requirements of Section 73 of this Law, the provisions of Section
122 of this Law shall not apply thereto.
Section 122. Limitation Period of
the Right to Claim
(1) After completion of the insolvency proceedings of an
individual merchant or partnership in accordance with the
procedures laid down in Chapter XXI of this Law, the non-covered
creditor's right to claim shall have the limitation period
specified in the Commercial Law.
(2) The right of creditors to claim referred to in Section
121, Paragraphs two and three of this Law shall also have the
limitation period referred to in Paragraph one of this Section,
if these creditors have submitted their claims to the insolvency
proceedings of an individual merchant or partnership.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 123. Right to Use the
Insolvency Proceedings of a Natural Person
(1) A natural person whose insolvency proceedings of a legal
person have been terminated as for an individual merchant, has
the right to address the court with an application for the
insolvency proceedings of a natural person.
(2) The right referred to Paragraph one of this Section shall
be enjoyed also by a natural person who has been a general
partner in a partnership in respect of which the insolvency
proceedings of a legal person have been terminated, as well as by
a natural person who has been a founding member or a shareholder
in an agricultural holding or a fishery in respect of which the
insolvency proceedings of a legal person have been
terminated.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Chapter
XXIII
Features of the Insolvency Proceedings of the Producer of
Agricultural Products
Section 124. Initiation of
Insolvency Proceedings and Sale of the Property of a Producer of
Agricultural Products
(1) The insolvency proceedings of the producer of agricultural
products shall be implemented in accordance with the provisions
of the insolvency proceedings of a legal person, unless it is
laid down otherwise in this Chapter.
(2) In the insolvency proceedings a producer of agricultural
products shall be understood to be the subject of the insolvency
proceedings of a legal person from whose annual income more than
50 per cent on the day of the proclamation of the insolvency
proceedings of a legal person is formed by revenue from the
production and processing of agricultural products.
(3) When deciding on the sale of the property of a producer of
agricultural products, the seasonal nature of agricultural
products and dependence on nature and climatic conditions, as
well as the opportunity for settling the claims of creditors from
income which the producer of agricultural products may acquire at
the end of the respective period of agricultural activities,
shall be taken into account.
(4) In order to obtain income from manufactured or processed
agricultural products, the sale of the property of a producer of
agricultural products shall be commenced not before the end of
the respective period of agricultural activities, observing the
period necessary in order to sell the manufactured or processed
agricultural products. This time period shall not exceed one
year. This may be extended by six months by consent of the
creditors' meeting.
Section 125. Sale of the Property of
a Producer of Agricultural Products
(1) When selling the property of a producer of agricultural
products, the property as a whole shall be offered for sale in
the first place.
(2) A person who is engaged in the production or processing of
agricultural products and whose property is a plot of land
bordering the plot of land belonging to the debtor, shall have
pre-emptive rights to purchase the property of the producer of
agricultural products as a whole, for its evaluation price.
(3) If several persons who comply with the provisions of
Paragraph two of this Section wish to acquire the item for sale
as a whole, an auction by ascending step shall be organised
between them.
(4) If no persons complying with the provisions of Paragraph
two of this Section apply to purchase the item for sale as a
whole within one month from the day of the offer being expressed,
the item shall be sold as a whole in accordance with the general
procedures laid down in this Law.
Section 126. Provisions for the Sale
of the Property of a Producer of Agricultural Products
(1) If the property of a producer of agricultural products is
not sold as a whole in accordance with the procedures provided
for in Section 125 of this Law, the property of this producer of
agricultural products may be sold in accordance with the general
procedures provided for in this Law.
(2) When selling the immovable property owned by a producer of
agricultural products, which is used in the production or
processing of agricultural products, a producer of agricultural
products from the administrative territory of the site of the
immovable property has the pre-emptive rights to purchase this
property for the evaluation price specified by a certified
immovable property evaluator.
(3) If several persons who comply with the provisions of
Paragraph two of this Section wish to acquire the immovable
property referred to in Paragraph two of this Section, an auction
by ascending step shall be organised between them.
Division
D
Insolvency Proceedings of a Natural Person
Chapter
XXIV
General Provisions of Insolvency Proceedings of a Natural
Person
Section 127. Subjects of Insolvency
Proceedings of a Natural Person
(1) A subject of insolvency proceedings of a natural person
may be any natural person who has been a taxpayer in the Republic
of Latvia in the previous six months and who is in financial
difficulties (hereinafter in this Chapter - debtor).
(2) The debtor's guardian or trustee in the insolvency
proceedings of a natural person shall implement the debtor's
rights and duties in accordance with the requirements of the
Civil Law.
(3) Insolvency proceedings of a natural person shall not be
applicable to individual merchants.
Section 128. Basic Conditions of
Insolvency Proceedings of a Natural Person
(1) The provisions of the insolvency proceedings of a legal
person shall be applied to the insolvency proceedings of a
natural person, in conformity with the provisions of this
Chapter.
(2) The debtor has the rights and duties of a debtor's
representative specified in this Law.
(3) Insolvency proceedings of a natural person comprise the
bankruptcy procedure and the procedure of extinguishing
obligations in succession.
(4) Within the scope of the bankruptcy procedure all the
debtor's property shall be sold off, and the funds acquired from
the selling shall be transferred for settling the claims of
creditors, except the property specified in Annex 1 to the Civil
Procedure Law and the amounts referred to in Section 596.
(5) Within the scope of the procedure of extinguishing
obligations, the debtor's income shall be shifted for settling
the claims of creditors and after expiry of the time period for
the procedure of extinguishing obligations, the obligations not
covered within the scope of this procedure shall be
extinguished.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 129. Features and
Prerequisites of Insolvency Proceedings of a Natural Person
(1) Insolvency proceedings of a natural person may be applied
to a debtor if any of the following features of insolvency
proceedings of a natural person exist:
1) this person does not have the possibility of settling debt
obligations for which the due date has set it, and the debt
obligations exceed 5 000 euro in total;
2) in connection with provable circumstances, it will not be
possible for this person to settle debt obligations which will be
due within a year and the debt obligations exceed 10,000 euro in
total.
(2) The pre-condition for submitting an application for
insolvency proceedings of a natural person is the payment of a
deposit in the amount of two minimum monthly salaries into an
account specially created by the Insolvency Administration.
(3) The deposit in the insolvency proceedings of a natural
person shall be used for paying the remuneration to the
administrator laid down in Section 171, Paragraph one of this
Law.
(4) If the insolvency proceedings of a natural person are not
proclaimed, the deposit shall be reimbursed to the submitter of
the application for the insolvency proceedings of a natural
person.
(5) The Cabinet shall determine the procedures by which the
deposit for insolvency proceedings of a natural person shall be
paid into the account specially created by the Insolvency
Administration and disbursed to the administrator or to the
submitter of the application for the insolvency proceedings of a
natural person.
[12 September 2013; 25 September 2014 / See
Paragraph 34 of Transitional Provisions]
Section 130. Restrictions on the
Application of Insolvency Proceedings of a Natural Person
Insolvency proceedings of a natural person shall not be
applicable or terminable for a person:
1) who in the last three years prior to the proclamation of
the insolvency proceedings of a natural person has deliberately
provided false information to his or her creditors;
2) who has spent the granted loan for purposes other than
stated in the agreement and an adjudication of the competent
authority in criminal proceedings has entered into effect;
3) who has had the insolvency proceedings of a natural person
proclaimed, in the scope of which the obligations have been
extinguished, within the last 10 years prior to the proclamation
of the insolvency proceedings of a natural person;
4) within the last five years prior to the proclamation of the
insolvency proceedings of a natural person or during the
insolvency proceedings of a natural person, an adjudication of
the competent authority in a criminal matter has entered into
effect, with which it has been established that the debtor has
avoided tax payment.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 131. Interested Persons in
Insolvency Proceedings of a Natural Person
(1) The following persons shall be considered as interested
persons in relation to a debtor:
1) the debtor's spouse;
2) a person who is in relation or affinity to the debtor to
the second degree;
3) the debtor's guardian or trustee;
4) a commercial company in which the debtor has a decisive
influence within the meaning of the Group of Companies Law.
(2) As an interested person in relation to a debtor shall also
be considered such person as has been an interested person in
accordance with the provisions of Paragraph one of this Section,
within the last five years prior to the initiation of the matter
of insolvency proceedings of a natural person.
Section 132. Publicity of the Matter
of Insolvency Proceedings of a Natural Person
(1) The responsible authority shall enter the following
information in the Insolvency Register regarding a matter of
insolvency proceedings of a natural person:
1) the debtor's given name, surname and the personal identity
number;
2) the date when the insolvency proceedings of the natural
person were proclaimed and the name of the court;
3) the given name, surname and certificate number of the
administrator appointed to the matter;
4) the given name, surname, certificate number and term of
validity of the authorisation of the authorised
administrator;
5) the given name, surname, address of the place of practice
and telephone number of the liquidator involved in the insolvency
proceedings specified in Article 3(1) of Council Regulation No
1346/2000;
6) the type of insolvency proceedings in accordance with
Article 3(1) or 3(2) of Council Regulation No 1346/2000;
7) the type of insolvency proceedings in accordance with
Section 128, Paragraph three of this Law;
8) the date of the termination of the insolvency proceedings
of a natural person, the name of the court, and the
justification;
9) the time period for the application by creditors;
10) the address, date and time of the creditors' meeting;
11) the date of the making of the entry.
(2) The information referred to in Paragraph one of this
Section may be published also in other registers, information
systems, or databases.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Chapter
XXV
Commencement of Insolvency Proceedings of a Natural Person
Section 133. Persons who may Submit
an Application for Insolvency Proceedings of a Natural Person
(1) An application for insolvency proceedings of a natural
person may be submitted in the cases provided for in this Law
by:
1) the debtor if any of the features referred to in Section
129, Paragraph one of this Law are present;
2) the person indicated in Article 29(a) of Council Regulation
No 1346/2000;
3) the debtor jointly with the interested persons referred to
in Section 131, Paragraph one, Clauses 1 and 2 of this Law, if
any of the features referred to in Section 129, Paragraph one of
this Law exists for each of them.
(2) An application for insolvency proceedings of a natural
person shall be submitted to court in accordance with the
procedures laid down in the Civil Procedure Law.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 134. Effects of the
Proclamation of Insolvency Proceedings of a Natural Person
(1) After proclamation of the insolvency proceedings of a
natural person, the bankruptcy procedure shall be commenced.
(2) After proclamation of the insolvency proceedings of a
natural person:
1) the execution proceedings in the matters on the recovery of
the amounts adjudged but not recovered shall be suspended, and in
matters regarding the honouring of the debtor's obligations
through court;
2) the debtor shall lose the right to act with all his or her
property, as well as of the property of third persons which is
possessed or held by the debtor (except property to which
recovery may not be addressed), and such rights shall be acquired
by the administrator;
3) the increase in interest for the use of the loan (credit),
the lawful increase in interest, the increase in the penalty
(including the penalty increment expressed in per cent), the
increase in the late payment charges ceases. The calculation of
late payment charges which are specified as interest payments for
missing the deadline for the payment of taxes, duties and
penalties, shall be suspended for tax claims;
4) the debtor shall lose the rights without the
administrator's consent to conclude transactions, the amount of
which exceeds one minimum monthly wage, more often than once a
month;
5) the debtor shall lose the right to undertake new debt
obligations without the administrator's consent.
(3) The debtor's obligations whose term for execution has
taken effect after the day of the proclamation of the insolvency
proceedings of a natural person, shall be considered to be those
whose term for execution has taken effect on the day of the
proclamation of the insolvency proceedings.
(4) A court decision proclaiming the insolvency proceedings of
a natural person shall be the grounds for a stay of proceedings
against the debtor.
(5) The judgement of the court announcing the insolvency
proceedings of a natural person shall be the grounds for revoking
the securing of claims in accordance with the procedures laid
down in the Civil Procedure Law.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 135. Appointment of an
Administrator to Insolvency Proceedings of a Natural Person
Section 59, Paragraphs one and four of this Law shall be
applied to the appointment of an administrator to insolvency
proceedings of a natural person.
Section 136. Restrictions on the
Debtor's and Creditor's Actions in the Insolvency Proceedings of
a Natural Person
(1) After proclamation of the insolvency proceedings of a
natural person a debtor is prohibited from performing activities
which cause losses to the creditors.
(2) Upon proclamation of the insolvency proceedings of a
natural person, a creditor is prohibited from performing
individual activities by which losses are inflicted upon other
creditors.
(3) Financial rights which have arisen for the creditor or
third person as a result of the activities referred to in
Paragraph one or two of this Section shall be recognised as
invalid.
Chapter
XXVI
Course of the Bankruptcy Procedure
Section 137. Administrator's
Activities During the Bankruptcy Procedure
After proclamation of the insolvency proceedings of a natural
person and the commencement of the bankruptcy procedure, the
administrator shall:
1) open in his or her name an account with a credit
institution for securing the creditors' claims within the scope
of the bankruptcy procedure, if funds are transferred to the
administrator in accordance with Section 139, Clause 2 of this
Law, or the selling of property is intended as part of the
insolvency proceedings of the debtor;
2) where necessary, submit an application to the relevant
public registers for the entry or deletion of a notation of
insolvency, appending a copy of the court decision to appoint an
administrator;
3) study the debtor's property and obligations;
4) request and receive from the debtor, as well as from State
authorities and credit institutions, information necessary in
order to study the debtor's property and obligations, as well as
other information within the scope of the insolvency proceedings
of a natural person;
5) accept, register and check creditors' claims;
6) where necessary, take the debtor's property under his or
her administration, except property to which recovery may not be
addressed, and the property referred to in Section 140, Clause 2
of this Law, as well as the property possessed or held by the
debtor which is in the ownership of third persons;
7) provide creditors with a report of his or her activities
and recommendations for acquiring funds for covering the costs of
the insolvency proceedings of a natural person and for settling
the claims of creditors;
8) prepare the plan for the sale of the debtor's property;
9) recover the debts of debtors and perform legal activities
for the recovery of other property of the debtor;
10) organise the sale of the debtor's property;
11) [25 September 2014];
12) represent the debtor in matters connected to the
insolvency proceedings of a natural person;
13) upon request of the debtor and upon mutual agreement,
provide advice for drafting a plan for extinguishing
obligations.
[14 October 2010; 25 September 2014 / See Paragraph
34 of Transitional Provisions]
Section 138. Administrator's Rights
During the Bankruptcy Procedure
Within the scope of the bankruptcy procedure the
administrator, in addition to the general administrator's rights
specified in this Law, has the following rights:
1) to alienate the property of the debtor in cases specified
in this Law;
2) to cover the expenses of the insolvency proceedings of a
natural person (Section 172);
3) to invite specialists in order to ensure the effective and
lawful insolvency proceedings of a natural person, and to cover
the costs related thereto by consent of the creditors, from the
property of the debtor or the sources of financing the insolvency
proceedings of other natural persons.
Section 139. Debtor's Duties During
the Bankruptcy Procedure
A debtor has a duty to:
1) to acquire income according to his or her possibilities, in
order to satisfy the creditors' claims as fully as possible;
2) not later than within 10 days after proclamation of the
insolvency proceedings of a natural person, to transfer his or
her funds to the administrator;
3) keep and manage his or her property as an honest and
careful proprietor;
4) prepare a plan for extinguishing obligations;
5) supply the administrator with the information necessary for
the course of the insolvency proceedings;
6) cover the costs of the insolvency proceedings of a natural
person;
7) upon request of the administrator, transfer the property
under his or her administration, except property to which
recovery may not be addressed, and the property referred to in
Section 140, Clause 2 of this Law, as well as the property
possessed or held by the debtor which is in the ownership of
third persons.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 140. Debtor's Rights During
the Bankruptcy Procedure
The debtor has the following rights:
1) to receive at least two-thirds of his or her income in
order to cover the costs for the maintenance of a natural
person;
2) to keep property which is essential for the acquisition of
income.
Section 141. Creditors' Claims and
the Creditors' Meeting
(1) The creditors' claims against the debtor shall be
submitted to the administrator in accordance with the procedures
laid down in Chapter XIII of this Law. (2) If a creditor has
missed the term for submitting the claim referred to in Section
73, Paragraph one of this Law, it may submit the claim against
the debtor within a time period not exceeding six months from the
day when the entry has been made in the Insolvency Register
regarding the proclamation of the insolvency proceedings of the
debtor, however not later than until the day when the final list
of the bankruptcy procedure expenses has been drawn up in
accordance with the procedures laid down in this Law.
(11) After the term for submitting creditors'
claims referred to in Section 73, Paragraph two of this Law, a
limitation period sets in, thereby the creditor shall lose the
status of a creditor and its right of claim against the debtor
both within the scope of insolvency proceedings of a natural
personal, as well as after the debtor has been released from
obligations in the case referred to in Section 164, Paragraph one
of this Law. The obligations referred to in Section 164,
Paragraph four, Clauses 1, 2, and 4 of this Law shall have no
limitation period.
(2) The administrator shall draw up the debtor's claims of
creditors in accordance with the procedures laid down in Chapter
XIII of this Law.
(21) The administrator shall,without delay, send a
notification regarding the proclamation of insolvency proceedings
electronically to all known creditors of the debtor whose right
to claim is secured by a commercial pledge, or mortgage
registered in the Land Register or Ship Register. If the
information accessible to the general public does not contain any
information regarding the debtor's creditors or e-mail addresses
of the creditors, the administrator is entitled not to send the
notification to the abovementioned creditors.
(3) Creditors' meetings shall take place in accordance with
the provisions of Chapter XV of this Law.
(4) Any creditor has the right to request the convening of a
creditors' meeting.
[25 September 2014; 19 February 2015 / See Paragraph
34 of Transitional Provisions]
Section 142. Right of Creditors to
Notify of the Restrictions on Applying Insolvency Proceedings of
a Natural Person
(1) Within two months from the day when the entry has been
made in the Insolvency Register regarding the proclamation of the
insolvency proceedings of a debtor, creditors have the right to
submit to the administrator a proposal to terminate the
insolvency proceedings of a natural person, if information is at
the disposal of the creditors regarding the restrictions referred
to in Sections 130 and 153 of this Law.
(2) The administrator's decision not to submit to court an
application regarding termination of the bankruptcy proceedings
after receipt of the creditors' notification referred to in this
Paragraph concerning existence of the restrictions referred to in
Section 130 of this Law may be appealed to the court where the
matter of the insolvency proceedings of a natural person has been
initiated.
[14 October 2010; 25 September 2014 / See Paragraph
34 of Transitional Provisions]
Section 143. Debtor's Property
(1) The provisions contained in Chapter XVI of this Law shall
be applicable to the debtor's property and the procedures for the
management thereof, unless it is laid down otherwise in this
Law.
(2) The debtor's property is also the debtor's income which
has been acquired during the insolvency proceedings of a natural
person.
(3) The administrator shall be responsible for keeping the
debtor's property, who may transfer this property to the debtor
for keeping with or without the right to use it.
Section 144. Appeal of Transactions
During the Bankruptcy Procedure
Transactions concluded by the debtor may be appealed in
accordance with the procedures laid down in Chapter XVII of this
Law, if the restrictions for extinguishing obligations specified
in Section 153 of this Law are established.
Section 145. Sale of the Debtor's
Property during the Bankruptcy Procedure
(1) The administrator shall ensure the sale of the debtor's
property, in conformity with the plan for the sale of the
property.
(2) The administrator shall commence the sale of property not
sooner than two months after proclamation of the insolvency
proceedings of a natural person.
Section 146. Plan for the Sale of
the Debtor's Property in Insolvency Proceedings of a Natural
Person
(1) For the sale of the debtor's property the administrator
shall draw up a plan for the sale of the debtor's property
(Section 113), taking into account the provisions of Sections 111
and 148 of this Law.
(2) If the secured creditor and debtor have entered into an
agreement to keep the dwelling which is encumbered by a pledge,
and this agreement is comparable with the interests of the other
creditors, this shall be indicated in the plan for the sale of
the debtor's property.
(3) The administrator shall send the plan for the sale of the
debtor's property to the creditors in accordance with the
procedures laid down in this Law not later than two weeks after
expiry of the term for the creditor's application.
(4) The plan for the sale of the debtor's property shall be
implemented in conformity with the provisions of Chapter XX of
this Law, insofar as it is not laid down otherwise in this
Law.
Section 147. Procedures for Covering
the Costs of Insolvency Proceedings of a Natural Person and
Settling of the Creditors' Claims
(1) After implementation of the plan for the sale of the
debtor's property, the administrator shall draw up and send all
creditors a list of the final costs of the bankruptcy procedure,
determining the procedures for settling the creditors' claims, as
well as a report on the funds received and spent.
(2) The payments for the means of support shall be settled in
full from the debtor's property in the first place, including
payments to the Maintenance Guarantee Fund, as well as the costs
of the insolvency proceedings of a natural person.
(3) Funds which have been acquired by selling the debtor's
property serving as security shall be shifted for settling the
secured creditor's claim.
(4) The claims of non-secured creditors shall be amalgamated
into one group without priority. After making of the payments
referred to in Paragraphs two and three of this Section, the
claims of non-secured creditors shall be settled in proportion to
the amount of the basic debt of each creditor. From the debtor's
funds remaining after settling the claims of non-secured
creditors in the amount of the basic debt, the ancillary claims
of non-secured creditors shall be settled (in proportion to the
amount due to each creditor).
(5) The debtor's funds remaining after settling the costs of
the insolvency proceedings referred to in this Section and the
settling of the creditor's claims, shall be transferred to the
debtor.
(6) [19 February 2015].
[25 September 2014; 19 February 2015 / See Paragraph
34 of Transitional Provisions]
Section 148. Agreement on Keeping
the Debtor's Dwelling in the Debtor's Ownership
(1) A secured creditor and debtor may enter into an agreement
that the dwelling owned by the debtor which has been pledged in
favour of the secured creditor shall not be sold during the
insolvency proceedings of a natural person.
(2) In the case referred to in Paragraph one of this Section,
a payment shall be made to the secured creditor during the
insolvency proceedings of a natural person which shall not exceed
the amount which would be payable to the debtor, when hiring the
debtor's property serving as security during the insolvency
proceedings of a natural person.
(3) The administrator shall make the payments referred to in
Paragraph two of this Section from the debtor's property in
conformity with the timetable co-ordinated by the debtor and the
secured creditor. The creditor's claim shall be reduced by the
payments made to the secured creditor.
(4) If the procedure for extinguishing obligations is applied
to the debtor after completion of the bankruptcy procedure, the
agreement referred to in this Section shall remain in effect and
the secured creditor, during the procedure for extinguishing
obligations, shall receive payments which do not exceed those
referred to in Paragraph two of this Section.
(5) The secured creditor is entitled to withdraw from the
agreement entered into and request the sale of the debtor's
property serving as security, if the payments provided for in the
conditions of the agreement are not made.
(6) If in a dwelling with a cadastral value not exceeding
142,287 euro debtor's dependants are living with him or her and
the dwelling is the declared place of residence of the debtor's
dependants who are living together with him or her, there is a
possibility to postpone the selling of this dwelling in an
auction for a time period of up to one year from the proclamation
date of the insolvency proceedings of a natural person, to enable
the debtor to find another dwelling. This possibility should be
provided for in the plan for selling the property of the natural
person.
(7) Within the meaning of this Law, a dwelling is a property
in the ownership of the debtor which he or she has declared as
the place of residence in the six months preceding the day when
an application for insolvency proceedings has been submitted to
the court.
[12 September 2013; 25 September 2014 / See
Paragraphs 18 and 34 of Transitional Provisions]
Section 149. Completion of a
Bankruptcy Procedure
(1) The administrator shall send the report on the completion
of the bankruptcy procedure to the creditors and debtor not later
than 15 days after completion of the sale and recovery of the
debtor's property (Section 144). The administrator shall also
send the report on the completion of the bankruptcy procedure if
the dwelling remains in the ownership of the debtor, in respect
of which the debtor has reached an agreement with the secured
debtor.
(2) The administrator shall indicate the amount of the settled
claims of creditors and non-settled claims of creditors in the
report regarding completion of the bankruptcy procedure.
(3) When sending the creditors a report on the completion of
the bankruptcy procedure, a plan for extinguishing obligations
which has been drawn up in compliance with Sections 154 and 155
of this Law, shall be appended thereto.
(4) Within 15 days after receipt of the administrator's
report, the creditors and debtor have the right to express
objections and recommendations regarding completion of the
bankruptcy procedure thereto.
(5) The administrator, having evaluated the proposals and
objections submitted, shall take the appropriate measures within
the scope of the bankruptcy procedure. If the administrator has
not taken into account the proposals and objections expressed, he
or she shall provide a reasoned response to the submitter of the
relevant objection or proposal and notify the court accordingly,
submitting an application for approval of the completion of the
bankruptcy procedure.
(6) Not earlier than three weeks and not later than one month
after the report on the completion of the bankruptcy procedure
has been sent to the debtor and creditors, the administrator
shall submit to court an application regarding approval of the
completion of the bankruptcy procedure.
(7) The administrator, when submitting to court an application
regarding approval of the completion of the bankruptcy procedure
shall concurrently request termination of the insolvency
proceedings of a natural person, if restrictions on the
application of the procedure for extinguishing obligations are
determined for the debtor (Section 153).
[14 October 2010]
Section 150. Termination of a
Bankruptcy Procedure
(1) The court shall terminate a bankruptcy procedure
concurrently terminating the insolvency proceedings of a natural
person, if restrictions on the application of the insolvency
proceedings of a natural person are determined (Section 130).
(2) The administrator shall submit an application regarding
the termination of a bankruptcy procedure in the case referred to
in Paragraph one of this Section within three months after
proclamation of the insolvency proceedings of a natural
person.
(3) The court shall terminate a bankruptcy procedure
concurrently terminating the insolvency proceedings of a natural
person, if the creditors' claims have not been submitted in
accordance with the procedures laid down in Section 141,
Paragraph one of this Law.
(4) In the case referred to in Paragraph three of this
Section, the debtor shall submit the application on termination
of the bankruptcy procedure within one month after expiry of the
deadline for submitting creditors' claims referred to in Section
141, Paragraph one of this Law.
(5) [19 February 2015].
(6) [19 February 2015].
(7) A court shall terminate the bankruptcy procedure
concurrently with terminating the insolvency proceedings of a
natural person if the debtor has died.
(8) In the case referred to in Paragraph seven of this
Section, the application on termination of the bankruptcy
procedure shall be submitted by the administrator.
[25 September 2014; 19 February 2015 / See Paragraph
34 of Transitional Provisions]
Section 151. Effects of the
Completion or Termination of a Bankruptcy Procedure, if the
Insolvency Proceedings of a Natural Person are Terminated
Concurrently
(1) If the insolvency proceedings of a natural person are
terminated concurrently with the completion or termination of a
bankruptcy procedure, the administrator's rights provided for in
this Law and the restrictions on the debtor's actions with his or
her property provided for in this Law shall be terminated.
(2) If the insolvency proceedings of a natural person are
terminated concurrently with the completion or termination of a
bankruptcy procedure, the creditor's right to request the
honouring of the debtor's obligations in the amount for which the
debtor has not honoured his or her obligations in the insolvency
proceedings of a natural person shall be restored, and the
matters regarding the recovery of the amounts adjudged but not
recovered shall be restored, and the matters regarding the
honouring of the debtor's obligations through the court.
Chapter
XXVII
Course of the Procedure of Extinguishing Obligations
Section 152. Subjects of the
Procedure of Extinguishing Obligations
(1) A subject of the procedure of extinguishing obligations
may be a debtor whose bankruptcy procedure has been
completed.
(2) The debtor's guardian or trustee shall implement the
debtor's rights and duties in accordance with the provisions of
the Civil Law.
Section 153. Restrictions on the
Application of the Procedure of Extinguishing Obligations
The procedure for extinguishing obligations shall not be
applied or shall be suspended in the following cases:
1) the debtor has concluded transactions within the last three
years prior to the proclamation of the insolvency proceedings of
a natural person or during the insolvency proceedings, as a
result of which he or she has become insolvent or has caused
losses to creditors, moreover, he or she knew or should have
known that concluding of such transactions may lead to insolvency
or to losses being caused to the creditors;
2) the debtor has deliberately provided false information
regarding his or her financial situation and hidden his or her
actual income;
3) the debtor fails to fulfil the obligations specified by the
bankruptcy procedure or extinguishing of obligations procedure,
thus notably hindering an efficient course of the insolvency
proceedings.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 154. Plan for Extinguishing
Obligations of a Natural Person
(1) The debtor shall draw up a plan for extinguishing the
obligations of a natural person during the bankruptcy
procedure.
(2) The following shall be indicated in the plan for
extinguishing the obligations of a natural person:
1) creditors who have submitted their claims in accordance
with the procedures laid down in Section 141, Paragraph one of
this Law and whose claims have not been satisfied in the scope of
bankruptcy procedure, as well as the amount of such claims;
2) the term of validity of the plan for extinguishing
obligations;
3) the estimated amount of the debtor's monthly income;
4) the estimated amount of the debtor's monthly income, in
order to cover the debtor's maintenance costs;
5) the amount of the debtor's income necessary for the hire of
his or her dwelling or interest payments for use to a secured
creditor, if the debtor has agreed with him or her on keeping the
only dwelling;
6) the estimated amount of the debtor's monthly income, which
shall be shifted for the implementation of the plan for
extinguishing obligations;
7) amounts due to the creditors who have filed their claims in
accordance with the procedures laid down in Section 141,
Paragraph one of this Law and the settlement schedule in the
extinguishing of obligations procedure.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 155. Time Period for the
Plan for Extinguishing Obligations of a Natural Person
(1) The time period for implementation of the plan for
extinguishing the obligations of a natural person shall be
determined, taking into account the estimated income in the
procedure for extinguishing the obligations.
(2) If according to the debtor's evaluation in the procedure
for extinguishing obligations his or her income will be
sufficient to cover at least 50 per cent of the total obligations
remaining after completion of the bankruptcy procedure, the time
period for the plan for extinguishing the obligations of a
natural person shall be six months from the day of the
proclamation of the procedure for extinguishing obligations.
(3) If the debtor, during the procedure for extinguishing
obligations, is unable for reasons out of his or her control to
cover the amount of the obligations specified in Paragraph two of
this Section, the time period for the plan for extinguishing the
obligations shall be determined as follows:
1) one year from the day of the proclamation of the procedure
for extinguishing obligations, if according to the debtor's
evaluation his or her income during the procedure for
extinguishing the obligations will be sufficient to cover at
least 35 per cent of the total obligations remaining after
completion of the bankruptcy procedure;
2) one year and six months from the day of the proclamation of
the procedure for extinguishing obligations, if according to the
debtor's evaluation his or her income during the procedure for
extinguishing the obligations will be sufficient to cover at
least 20 per cent of the total obligations remaining after
completion of the bankruptcy procedure.
(4) If the debtor, during the procedure for extinguishing
obligations, is unable to settle the amount of the obligations
specified in Paragraphs two and three of this Section for reasons
out of his or her control, it shall be provided for in the plan
for extinguishing the obligations of a natural person that funds
in the amount of one-third of the debtor's income, however not
less than in the amount of one-third of one minimum monthly wage,
will be shifted for settling the claims of creditors. In the plan
for extinguishing the obligations of a natural person, the
following term shall be set:
1) one year from the day when the procedure for extinguishing
obligations is proclaimed, if the debtor's total amount of
obligations after completion of the bankruptcy procedure do not
exceed 30,000 euro;
2) two years from the day when the procedure for extinguishing
obligations is proclaimed, if the debtor's total amount of
obligations after completion of the bankruptcy procedure is from
30,001 euro to 150,000 euro;
3) three years from the day when the procedure for
extinguishing obligations is proclaimed, if the debtor's total
amount of obligations after completion of the bankruptcy
procedure exceed 150,000 euro.
(5) Only the basic debt shall be considered to be the debtor's
obligations, not including penalties, fines or late payment
interest. The settled unpaid interest for use shall be added to
the debtor's obligations until the proclamation of insolvency,
but not more than in the amount of six per cent per year.
[25 September 2014; 19 February 2015 / See
Paragraphs 17, 18 and 34 of Transitional Provisions]
Section 156. Right of Creditors to
Provide an Opinion and Proposals Regarding the Plan for
Extinguishing the Obligations of a Natural Person
(1) When drawing up the plan for extinguishing the obligations
of a natural person, the debtor shall co-operate with the
creditors, hearing their objections and proposals.
(2) The creditors have the right within 15 days after receipt
of the plan for extinguishing the obligations of a natural person
to express their objections and proposals to the debtor in
respect of this plan.
(3) The debtor shall evaluate the objections and proposals
expressed and, if necessary, update the plan for extinguishing
the obligations of a natural person.
(4) If a debtor has not taken into account the objections and
proposals expressed, he or she shall provide a reasoned response
to the submitter of the relevant objection or proposal and notify
the court accordingly.
[14 October 2010]
Section 157. Approval of the Plan
for Extinguishing Obligations of a Natural Person in Court
(1) The debtor shall submit the plan for extinguishing the
obligations of a natural person for approval in court within the
time period specified in Section 149, Paragraph six of this
Law.
(2) After the court approval of this plan, the debtor shall
send it to all the creditors included in the plan, as well as to
the authority responsible for organising the Insolvency
Register.
Section 158. Effects of the
Proclamation of the Procedure for Extinguishing Obligations
(1) The court decision on the completion of the bankruptcy
procedure and the approval of the plan for extinguishing the
obligations of a natural person is the basis for the proclamation
of the procedure for extinguishing obligations.
(2) Concurrently with the court decision on the proclamation
of the procedure for extinguishing obligations:
1) the debtor's right to act with all the property thereof
shall be restored, as well as with the property of third persons
which is possessed or held by the debtor;
2) the prohibition for the debtor to conclude such
transactions in respect of his or her property whose amount
exceeds two minimum monthly wages without the consent of the
administrator shall be retained.
Section 159. Administrator's
Activities After Proclamation of the Procedure for Extinguishing
Obligations
After proclamation of the procedure for extinguishing
obligations, in accordance with the procedures laid down in this
Law, the administrator:
1) upon request of the creditor, shall supervise the
implementation of the plan for extinguishing the obligations of a
natural person;
2) upon request of the creditor, shall supervise the debtor's
actions in the fulfilment of the duties specified in this
Chapter;
3) upon request of the debtor, shall provide him or her with
legal aid in connection with the insolvency proceedings of a
natural person (if necessary, shall also draw up amendments to
the plan for extinguishing the obligations of a natural
person).
Section 160. Debtor's Obligations in
the Procedure for Extinguishing Obligations
A debtor has the following obligations:
1) to implement the plan for extinguishing the obligations of
a natural person;
2) to acquire income according to his or her possibilities, in
order to satisfy the creditors' claims as fully as possible;
3) upon request of the administrator, to provide information
for the implementation of the plan for extinguishing the
obligations of a natural person;
4) to cover the costs of insolvency proceedings of a natural
person.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 161. Debtor's Rights in the
Procedure for Extinguishing Obligations
The debtor has the following rights:
1) to keep at least two-thirds of his or her income in order
to cover his or her maintenance costs;
2) to keep property which is essential for the acquisition of
income;
3) to request legal aid from the administrator in connection
with the insolvency proceedings of a natural person (if
necessary, also to draw up amendments to the plan for
extinguishing the obligations of a natural person).
Section 162. Amendments to the Plan
for Extinguishing Obligations of a Natural Person
(1) If the debtor's income changes during the implementation
of the plan for extinguishing obligations of a natural person, he
or she has the duty to prepare amendments to the plan for
extinguishing obligations of a natural person, changing the
deadline for the plan and the amount of the obligations to be
covered within the scope thereof, according to the method
provided for in Section 155 of this Law.
(2) The debtor shall extend the deadline for the
implementation of the plan for extinguishing obligations of a
natural person and reduce the amount of the obligations to be
covered, if the debtor's income reduces in such amount that he or
she will evidently be unable to cover the amount indicated in the
plan for extinguishing the obligations of a natural person.
(3) The debtor shall reduce the deadline for the
implementation of the plan for extinguishing the obligations of a
natural person and increase the amount of the obligations to be
covered, if the debtor's income increases by such amount that he
or she will evidently be able to cover the greater part of his or
her obligations.
(4) If the debtor has increased his or her income during the
procedure of extinguishing obligations, by making amendments to
the plan for extinguishing the obligations of a natural person,
he or she is entitled to proportionately increase not only the
part of the payment to be shifted towards extinguishing the
obligations, but also the part of the property he or she is
entitled to keep.
(5) Creditors shall be acquainted with the amendments to the
plan for extinguishing the obligations of a natural person in
accordance with the procedures laid down in Section 149 of this
Law, and the court shall approve them in accordance with the
procedures laid down in Section 157 of this Law.
(6) The debtor's payments to creditors provided for in the
plan for extinguishing the obligations of a natural person may be
reduced by half by the court decision once during the period of
the procedure for extinguishing obligations, for a time period
not exceeding one year, if he or she is unable to find paid work
or has become incapable for work during the period of
extinguishing obligations.
Section 163. Debtor Monitoring
If the creditors have information that the debtor is hiding
his or her income or is not performing the activities specified
in this Law, in order to cover as great a part as possible of his
or her obligations, the creditors are entitled to request that
the administrator performs an inspection of the debtor's
activities within the scope of the procedure for extinguishing
obligations.
Section 164. Debtor's Exemption from
Obligations
(1) If a debtor has performed the activities specified in the
plan for extinguishing obligations, at the end of the plan being
in effect, the remaining obligations of this person indicated in
the plan referred to shall be extinguished and execution
proceedings for the recovery of the extinguished obligations
shall be terminated.
(2) A debtor shall not be released from the remaining
obligations indicated in the plan for extinguishing the
obligations of a natural person, if he or she has not performed
the activities specified in this plan.
(3) The decision to release the debtor from the remaining
obligations which are indicated in the plan for extinguishing the
obligations of a natural person, shall be taken by court, when
completing the procedure for extinguishing obligations.
(4) After completion of the procedure for extinguishing
obligations, the following shall not be extinguished:
1) claims for maintenance payments;
2) claims from unauthorised activities;
3) a secured claim if the debtor has kept the dwelling serving
as security for this claim, insofar as it is not otherwise
determined in the agreement referred to in Section 148 of this
Law. Execution proceedings for the recovery of the obligations
referred to shall be restored in the amount of the remaining
debt;
4) claims for the sanctions provided for in the Latvian
Administrative Violations Code and the Criminal Law, as well as
indemnification for the damage.
(5) The extinguishing of obligations in respect of the
agreement specified in Section 148 of this Law regarding keeping
the debtor's dwelling in his or her ownership shall be determined
in accordance with the abovementioned agreement.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 165. Procedures for
Terminating the Procedure for Extinguishing Obligations
(1) The debtor shall submit to court an application regarding
termination of the procedure for extinguishing obligations, if he
or she:
1) has settled the obligations included in the plan for
extinguishing obligations of a natural person to full extent;
2) has fulfilled the plan for extinguishing obligations of a
natural person.
(2) The administrator shall submit to court an application
regarding termination of the procedure for extinguishing
obligations, if:
1) restrictions for applying the procedure for extinguishing
obligations (Section 153) are determined;
2) [25 September 2014].
(3) The creditor shall submit to court an application
regarding termination of the procedure for extinguishing
obligations, if:
1) the debtor is not implementing the plan for extinguishing
the obligations of a natural person; or
2) restrictions for applying the procedure for extinguishing
obligations (Section 153) are determined.
(4) When terminating the procedure for extinguishing
obligations, the court shall concurrently terminate the
insolvency proceedings of a natural person.
(5) If the court, when terminating the procedure for
extinguishing obligations, establishes that the debtor is exempt
from debt obligations in accordance with Section 164 of this Law,
the court shall release him or her from the obligations indicated
in the plan for extinguishing the obligations of a natural
person, concurrently with termination of the procedure.
(6) If the procedure for extinguishing obligations is
terminated, without releasing the debtor from obligations, the
claims of creditors shall be restored and calculated in full
amount, but the suspended court proceedings and execution
proceedings of the judgment shall be restored.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Division
E
Costs of Legal Protection Proceedings and Insolvency
Proceedings
Chapter
XXVIII
Costs for Ensuring Lawful and Effective Course of Legal
Protection Proceedings and Extrajudicial Legal Protection
Proceedings
Section 166. Administrator's
Remuneration in Legal Protection Proceedings and Extrajudicial
Legal Protection Proceedings
(1) The administrator who has been appointed by court upon the
debtor's proposal shall agree with the debtor in writing
regarding the amount of remuneration provided for the performance
of administrator's duties in the legal protection proceedings or
extrajudicial legal protection proceedings and the procedure for
the covering thereof.
(2) The administrator shall receive monthly remuneration for
the performance of administrator's duties in legal protection
proceedings or extrajudicial legal protection proceedings, in the
amount of one minimum monthly wage, unless the agreement referred
to in Paragraph one of this Section has been reached on another
amount of remuneration and the procedures for the covering
thereof.
(3) Remuneration for the performance of administrator's duties
in legal protection proceedings or in extrajudicial legal
protection proceedings shall be covered from the debtor's funds,
and the procedures for the covering thereof shall be provided for
in the plan of the legal protection proceedings.
(4) Value added tax shall be added to the remuneration for the
performance of administrator's duties in legal protection
proceedings or in extrajudicial legal protection proceedings, if
the administrator is registered with the State Revenue Service
Value Added Tax Taxable Persons Register.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 167. Expenses of Legal
Protection Proceedings and Extrajudicial Legal Protection
Proceedings
(1) The expenses of legal protection proceedings and
extrajudicial legal protection proceedings shall be covered from
the debtor's funds.
(2) The amount of the expenses for the legal protection
proceedings and extrajudicial legal protection proceedings and
the procedures for the covering thereof shall be provided for in
the plan of the legal protection proceedings.
(3) The following shall be included in the expenses of legal
protection proceedings:
1) the remuneration of the administrator;
2) the regular tax and duty payments;
3) the salaries of the debtor's employees;
4) the expenses necessary for the maintenance and upkeep of
the property;
5) costs related to ensuring the debtor's economic
activities.
Chapter
XXIX
Costs for Ensuring the Lawful and Effective Course of Insolvency
Proceedings of a Legal Person and the Sources of Financing These
Costs
Section 168. Sources of Financing
the Costs of Insolvency Proceedings of a Legal Person
(1) The costs of insolvency proceedings of a legal person
shall be covered from the debtor's property.
(2) If it is impossible to cover the costs of insolvency
proceedings of a legal person and the insolvency proceedings of a
legal person are terminated in accordance with Section 119,
Paragraph four of this Law, the costs of the insolvency
proceedings of a legal person shall be covered from the deposit
for the insolvency proceedings of a legal person indicated in
Section 62 of this Law, which shall be paid to the administrator
as the costs of the insolvency proceedings of a legal person,
from which he or she shall cover the expenses and remuneration of
the insolvency proceedings of a legal person. If the deposit for
insolvency proceedings of a legal person has not been paid or has
been paid partly (Section 62, Paragraph 7.1), the
expenses of the insolvency proceedings of a legal person shall be
covered from the State budget and State entrepreneurial risk fee
funds that have been allotted to the Insolvency Administration
for covering the costs of insolvency proceedings of a legal
person on relevant occasions.
(3) If it is impossible to cover the costs of the insolvency
proceedings of a legal person from the debtor's property, they
may be financed from the funds of the debtor's representative,
the administrator, creditor, creditor groups or other natural
person or legal person and upon initiative thereof, by the
abovementioned persons agreeing thereto in writing with the
administrator, if such agreement conforms to the creditors'
interests.
(4) If property is sold or recovered in the insolvency
proceedings of a legal person, then the property granted to the
persons referred to in Paragraph three of this Section for
financing the costs of the insolvency proceedings of a legal
person shall be comparable to the costs of the insolvency
proceedings of a legal person and shall be repayable in
accordance with the procedures indicated in Section 118,
Paragraph one of this Law, repaying the property granted to the
persons referred to in Paragraph three of this Section, in the
first place.
(5) If property is recovered in the insolvency proceedings of
a legal person which has been acquired from the persons referred
to in Sections 166, 167, 168, and 169 of the Commercial Law,
based on the obligation thereof to be responsible for the losses
caused to the debtor, then, based on the claims raised by the
creditor in favour of the debtor in accordance with Section 170
of the Commercial Law, the expenses of the creditor, who has
raised the claim for the benefit of the debtor, which has arisen
in connection with raising this claim shall be comparable to the
costs of insolvency proceedings and be repayable in accordance
with the procedures indicated in Section 118, Paragraph one of
this Law, repaying the expenses incurred by him or her in
connection with raising the claim, in the first place.
[14 October 2010; 25 September 2014 / See Paragraph
34 of Transitional Provisions]
Section 169. Remuneration of an
Administrator in Insolvency Proceedings of a Legal Person
(1) The administrator shall receive remuneration from the
debtor's property for performing the administrator's duties in
the insolvency proceedings of a legal person, except the cases
referred to in this Law.
(2) The remuneration of the administrator shall be specified
in the following amount:
1) in the amount of two minimum monthly wages for the work
from the day of appointment until drawing up of the plan for the
sale of the debtor's property (Section 113) or the report on
non-existence of the debtor's property (Section 112) and 10 per
cent of funds from the recovered property (Section 93) which have
been recovered until drawing up of the plan for the sale of the
debtor's property or the report on non-existence of the debtor's
property;
2) if after drawing up of the plan for the sale of the
debtor's property, the insolvency proceedings are continued
because it is possible to finance these proceedings from the
debtor's funds, the administrator's remuneration from the sale of
the debtor's non-pledged property, as well as from the debtor's
recovered property, shall be 10 per cent of the amount intended
for paying to the creditors. The administrator may also agree
with the creditors' meeting or other sponsor of the costs of the
insolvency proceedings on another amount of remuneration and the
procedures for covering thereof;
3) if after drawing up of a report on non-existence of
debtor's property, the insolvency proceedings are continued
because an agreement has been reached on financing the costs of
these proceedings in accordance with Section 168, Paragraph three
of this Law, the administrator shall agree with the sponsor of
the costs of the insolvency proceedings on the amount of the
administrator's remuneration and the procedures for covering
thereof.
(3) The remuneration for the sale of the pledged property of a
debtor, if this has been performed by the administrator, shall be
specified in the following amounts:
1) up to 4268 euro - 15 per cent of the amount payable to the
creditor;
2) from 4268 euro to 14,228 euros - 640.20 euro plus 10 per
cent of the amount exceeding 4268 euro payable to the
creditor;
3) from 14,228 euro to 142,287 euros - 1636.20 euro plus 5 per
cent of the amount exceeding 14,228 euro payable to the
creditor;
4) from 142,287 euro to 711,435 euro - 8039.15 euro plus 3 per
cent of the amount exceeding 142,287 euro payable to the
creditor;
5) from 711,435 euro to 1,422,871 euro - 25,113.59 euro plus 2
per cent of the amount exceeding 711,435 euro payable to the
creditor;
6) if the amount recovered exceeds 1,422,871 euro - 39,342.29
euro plus 1 per cent of the amount exceeding 1,422,871 euro
payable to the creditor.
(4) In cases when an auction of pledged property is considered
not to have taken place and the secured creditor wishes to keep
the property for himself or herself, a coefficient of 0.3 shall
be applied to the remuneration specified in Paragraph three of
this Section.
(5) In cases when the administrator is removed from office in
accordance with the procedures laid down in Section 90 of this
Law, the administrator's remuneration shall be one minimum
monthly wage from the moment of the administrator's appointment.
In such case the administrator's remuneration shall be paid by
the creditors who have voted for the proposal for his or her
revoking, in proportion to the number of votes belonging thereto
in the creditors' meeting.
(6) Remuneration shall not be specified for the administrator
if he or she is removed from office due to the reasons referred
to in Section 22, Paragraph two, Clauses 1, 2, 3, 4 or 7 of this
Law.
(7) Value added tax shall be added to remuneration for the
performance of administrator's obligations in the insolvency
proceedings of a legal person, if the administrator is registered
with the State Revenue Service Value Added Tax Taxable Persons
Register.
[14 October 2010; 12 September 2013; 25 September 2014
/ See Paragraph 34 of Transitional Provisions]
Section 170. Expenses of Insolvency
Proceedings of a Legal Person
(1) The expenses related to ensuring insolvency proceedings of
a legal person (except expenses related to property which is
serving as security) shall not exceed an amount of five per cent
of the total amount of the revenue from the alienation of assets,
if these assets do not serve as security and if the creditors'
meeting has not decided otherwise.
(2) The following shall be included in the expenses of
insolvency proceedings of a legal person:
1) remuneration for the invited specialists during the
provision of services according to the significance, extent and
value of the services they have provided, but not exceeding the
remuneration for analogous services in similar areas;
2) expenses for the upkeep of the debtor's property in the
insolvency proceedings;
3) expenses for placing advertisements, organising auctions,
opening, serving and closing a settlement account, expenses for
the notary and postal services;
4) expenses related to the transfer of the matter to the
archives;
5) business travel expenses, which shall be calculated in
accordance with the laws and regulations regarding expenses
related to business travels and business trips;
6) expenses for continuing the implementation of contracts
which have not been terminated in the cases specified in the law,
as well as for implementation of those contracts which the
administrator has entered into with third persons during the
insolvency proceedings of a legal person;
7) expenses that are related to the liquidation of the debtor,
including removal, processing and burial of hazardous waste;
8) regular tax and duty payments for the time period from the
day when the insolvency proceedings of a legal person are
proclaimed;
9) expenses related to the maintenance of property belonging
to third persons until it is transferred to these persons;
10) expenses which are justified and related to ensuring the
specific insolvency proceedings of a legal person;
11) expenses which have arisen for a creditor, when bringing
an action on behalf of the debtor against the Board members of
this debtor, if the claim is satisfied and the property recovered
is at least in the amount of the court expenses;
12) expenses for the execution of a judgment, if the
administrator in accordance with Section 65, Clause 12 and
Section 67, Clause 14 of this Law has requested termination of
the execution proceedings of the judgment.
Chapter
XXX
Costs for Ensuring Lawful and Effective Course of Insolvency
Proceedings of a Natural Person
Section 171. Remuneration of an
Administrator in Insolvency Proceedings of a Natural Person
(1) The administrator shall receive remuneration from the day
of the appointment thereof until completion of the bankruptcy
procedure, after performance of administrator's duties - a
one-off remuneration in the amount of two minimum monthly
wages.
(2) In addition to the remuneration referred to in Paragraph
one of this Section, the administrator shall receive remuneration
for recovering and selling the property within the scope of the
bankruptcy procedure, in the amount provided for in the
insolvency proceedings of a legal person.
(3) The administrator shall receive a remuneration for the
legal aid provided by the administrator in the procedure for
extinguishing the debtor's obligations after approval of the plan
for extinguishing the obligations of a natural person and for
giving advice for drawing up a plan for extinguishing obligations
of a natural person in a bankruptcy procedure, which shall not
exceed the payment for the provision of State ensured legal aid -
legal consultations.
(4) The amount of the administrator's remuneration for
performing the inspection referred to in Section 163 of this Law,
shall be determined by the administrator agreeing with the
relevant creditor in writing. If an agreement is not reached, the
administrator shall receive remuneration at a fixed rate - a
one-off remuneration in the amount of one minimum monthly
wage.
(5) In case of insolvency proceedings of a natural person the
administrator's remuneration shall be covered from the debtor's
property and the deposit for the insolvency proceedings of a
natural person, except the case referred to in Paragraph four of
this Section, when expenses are covered by the relevant
creditor.
(6) Value added tax shall be added to remuneration for the
performance of administrator's obligations in the insolvency
proceedings of a natural person, if the administrator is
registered with the State Revenue Service Value Added Tax Taxable
Persons Register.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 172. Costs of Insolvency
Proceedings of a Natural Person
(1) Any costs incurred by the debtor after proclamation of
insolvency proceedings of a natural person shall be divided into
direct costs and indirect costs of insolvency proceedings of a
natural person.
(2) Direct costs of insolvency proceedings of a natural person
are the costs related to ensuring the insolvency proceedings of a
natural person:
1) expenses for placing the advertisement, organising the
auction, the opening, servicing and closure of a settlement
account;
2) expenses for postal services for dispatching correspondence
by mail;
3) expenses related to the evaluation of the property of a
natural person;
4) expenses for notary services;
5) expenses related to the maintenance of the natural person's
property if it has been transferred to the administrator, and
inspection of transactions, as well as the property and
transaction insurance.
(3) Direct costs of insolvency proceedings of a natural person
shall be covered from the funds raised as a result of selling the
debtor's property.
(4) Indirect costs of insolvency proceedings of a natural
person are the costs related to support the debtor after
proclamation of the insolvency proceedings of a natural
person:
1) subsistence costs;
2) the regular tax and duty payments;
3) current payments of means of support;
4) statutory payments and payments arising from agreements
that are carried on or have been signed after proclamation of
insolvency proceedings of a natural person in accordance with the
procedures laid down in this Law (e.g. administrative fines,
rental payments, payments for utilities, etc.);
5) expenses related to the maintenance of property belonging
to third persons until it is transferred to these persons.
(5) Indirect costs of insolvency proceedings of a natural
person shall be covered from the debtor's funds which he or she
is entitled to retain to cover own subsistence costs.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Division
F
Supervision of Legal Protection Proceedings and Insolvency
Proceedings
Chapter
XXXI
Insolvency Administration in Legal Protection Proceedings and
Insolvency Proceedings
Section 173. Competence of the
Insolvency Administration
(1) The Insolvency Administration is an institution of direct
administration under the supervision of the Minister for Justice
which, within the scope of the competence specified in laws and
regulations, implements the State policy in issues of legal
protection proceedings and insolvency proceedings, protects the
interests of employees in case of insolvency of their employer,
and implements the protection of State and public interests in
issues of legal protection proceedings and insolvency proceedings
in accordance with the procedures laid down in the law.
(2) The following funds shall be used for implementation of
the competence of the Insolvency Administration:
1) the part of the State entrepreneurial risk fee;
2) subsidies from general revenue of the State budget;
3) revenue from paid services provided;
4) foreign financial assistance funding.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 174. Rights of the
Insolvency Administration in Supervision of Legal Protection
Proceedings and Insolvency Proceedings
(1) In order to ensure the supervision of legal protection
proceedings and insolvency proceedings, the Insolvency
Administration shall control the administrator's activities in
legal protection proceedings and insolvency proceedings, as well
as examine complaints about the administrator's actions, except
the cases specified in the law when complaints about the
administrator's decisions shall be examined by the court in which
the respective matter of insolvency proceedings was
initiated.
(2) The Insolvency Administration is entitled when ensuring
the supervision of legal protection proceedings and insolvency
proceedings, to:
1) request from State and local government institutions, and
receive from them free of charge, any information related to the
legal protection proceedings and insolvency proceedings necessary
for the implementation of the functions of the Insolvency
Administration;
2) request from the institutions and persons involved in the
legal protection proceedings and insolvency proceedings, and
receive from them necessary information and documents regarding
the course of the legal protection proceedings and insolvency
proceedings;
3) request from the administrator and receive from him or her
the necessary information and relevant documents regarding the
course of the legal protection proceedings and insolvency
proceedings;
4) request that the administrator presents the originals of
the documents and receive copies of the documents to inspect the
legality of the administrator's actions;
5) request and receive from the administrator explanations
about his or her actions in the legal protection proceedings and
insolvency proceedings;
6) invite the administrator to visit the Insolvency
Administration, in order to provide explanations about the course
of the legal protection proceedings and insolvency
proceedings;
7) impose legal obligations on the administrator;
8) submit an application to court regarding the removal of the
administrator from fulfilling the administrator's duties of the
legal protection proceedings and insolvency proceedings;
9) propose a matter regarding expiry of the validity of the
administrator's certificate or revocation in the cases referred
to in this Law.
Chapter
XXXII
Procedures for Contesting and Appealing a Decision of the
Insolvency Administration
Section 175. Decisions of the
Insolvency Administration, Contesting and Appealing thereof
(1) The Insolvency Administration shall take decisions:
1) to settle the claims from employees of insolvent
employers;
2) on the administrator's actions in legal protection
proceedings or insolvency proceedings, as well as to impose legal
obligations in case of determining a violation;
3) on contested administrative acts and actual action in
matters regarding certification of an administrator, including
issuance of a certificate, termination or revocation of the
validity of the certificate, as well as re-certification of the
administrator;
4) to pay the deposit referred to in Sections 62 and 129 of
this Law;
5) to disburse the funds referred to in Section
118.1 of this Law.
(2) The decision of the Insolvency Administration referred to
in Paragraph one, Clause 1 of this Section may be contested with
a higher authority. The decision of the higher authority on the
relevant decision of the Insolvency Administration may be
appealed to court.
(3) The actual action of the Association of Administrators and
the administrative acts relating to the administrator's
certification, including issuance of a certificate, termination
or revocation of the validity of the certificate or
re-certification of the administrator may be contested with the
Insolvency Administration. The decision of the Insolvency
Administration referred to in Paragraph one, Clause 3 of this
Section may be appealed to court.
(4) The decisions referred to in Paragraphs two and three of
this Section may be contested and appealed in accordance with the
procedures laid down in the Administrative Procedure Law.
Contesting or appeal of the abovementioned decisions shall not
suspend the execution thereof.
(5) The decision of the Insolvency Administration referred to
in Paragraph one, Clauses 2, 4, and 5 of this Section may be
appealed within one month after receipt of the decision to court
where the relevant matter of the legal protection proceedings or
the matter of insolvency proceedings is or has been initiated.
Submission of a complaint to court shall suspend the operation of
the decision of the Insolvency Administration, except the
decision referred to in Paragraph one, Clause 2 of this
Section.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 176. Submission of
Complaints Regarding the Administrator's Action and Examination
by the Insolvency Administration
(1) A creditor, commercial company (in legal protection
proceedings), a natural person (in the insolvency proceedings
thereof), the debtor's representative (in the insolvency
proceedings of a legal person) or a third person, whose lawful
rights have been infringed upon, may submit a complaint to the
Insolvency Administration regarding the administrator's
action.
(2) A creditor, commercial company (in legal protection
proceedings), a natural person (in the insolvency proceedings
thereof), the debtor's representative (in the insolvency
proceedings of a legal person) or a third person, whose lawful
rights have been infringed upon, may submit a complaint within
three months from the day when the action with which the rights
of the creditor, natural person, debtor's representative or third
person have been infringed upon has been determined. If the legal
protection proceedings or insolvency proceedings are terminated,
a complaint may be submitted not later than within a year from
the day of termination of the relevant proceedings.
(3) The Insolvency Administration shall not examine complaints
regarding the administrator's decisions which are based on a
dispute regarding rights.
(4) The Insolvency Administration, when examining complaints
regarding the administrator's actions, is entitled to request the
information and documents necessary thereto.
(5) The Insolvency Administration shall examine complaints
regarding the administrator's actions within one month from the
day of receipt of the complaint.
(6) If for objective reasons, it is impossible to conform to
the time period referred to in Paragraph five of this Section,
the Insolvency Administration may extend it, but not longer than
by three months from the day of receipt of the complaint,
notifying the submitter of the complaint accordingly.
Section 177. Complaint Regarding the
Decision of the Insolvency Administration
[25 September 2014 / See Paragraph 34 of Transitional
Provisions]
Transitional
Provisions
1. With the coming into force of this Law the Insolvency Law
(Latvijas Vestnesis, 2007, No. 188; 2009, No. 97), is
repealed.
2. The norms of the Law On the Insolvency of Undertakings and
Companies shall be applied to insolvency proceedings which have
been initiated until 31 December 2007.
3. When deciding on covering the costs of the administration
of insolvency proceedings which have been initiated in compliance
with the Law On the Insolvency of Undertakings and Companies, the
Insolvency Administration shall apply Cabinet Regulation No. 201
of 14 March 2006, Procedures for Covering the Remuneration of the
Administrator of Insolvency Proceedings and the Costs of
Administration, except the provisions on the amount of the
administrator's remuneration (not including additional
remuneration for each employee whose claim is satisfied from the
resources of the guarantee fund for employees' claims), which
shall be determined in accordance with the Insolvency Law which
was in force from 1 January 2008 to 31 October 2010.
4. The administrator is not entitled to receive remuneration
for insolvency proceedings which have been initiated in
accordance with the Law On the Insolvency of Undertakings and
Companies from the funds granted to the Insolvency Administration
for this purpose, if:
1) the administrator has not submitted a request to the
Insolvency Administration to cover the remuneration thereof
within two months after the debtor's exclusion from the relevant
public register;
2) the debtor has been excluded in these proceedings from the
relevant public register by 2 July 2009 and the administrator has
not submitted a request to the Insolvency Administration to cover
the remuneration thereof by 30 November 2009;
3) by a court decision the administrator has been removed from
fulfilling the administrator's duties in the case provided for in
Section 28, Paragraph one, Clauses 2 or 3 of the Law On the
Insolvency of Undertakings and Companies, or the administrator's
certificate has been annulled because the administrator has
provided false information in order to receive the
certificate.
5. The norms of the Insolvency Law and the laws and
regulations issued on the grounds thereof which are in force
between 1 January 2008 and 31 October 2010 shall be applied to
the legal protection proceedings and insolvency proceedings which
were initiated during the abovementioned time period.
6. If insolvency proceedings of a natural person have been
initiated by 31 October 2010 and have not been terminated, this
person has the right to request that the court commences the
procedure for extinguishing obligations in accordance with the
provisions of this Law, after all the property of the natural
person and the property provided for in the plan for satisfying
creditors has been sold. In such case the debtor shall draw up a
report on termination of the bankruptcy procedure and the plan
for extinguishing obligations, in accordance with the provisions
of this Law and send it to the creditors in accordance with the
procedures laid down in Sections 149 and 157 of this Law. The
report on termination of the bankruptcy procedure and the plan
for extinguishing obligations shall be submitted to court not
earlier than two months after sending of this document to the
creditors. Within this time period the creditors have the right
to notify also regarding the restrictions referred to in Sections
130 and 153 of this Law. The debtor shall inform the court of the
abovementioned reports. From the moment when the court has
approved the plan for extinguishing obligations, the procedure
for extinguishing the obligations of a natural person shall be
commenced in accordance with the provisions of this Law.
7. For administrators whose certificates have been issued in
accordance with the requirements of Section 13 of the Law On the
Insolvency of Undertakings and Companies for at least thee years
practical experience in the supervisory institutions of
undertakings or companies and executive bodies, but who do not
have higher education in jurisprudence, the requirement referred
to in Section 13, Paragraph one, Clause 2 of this Law regarding
higher education in jurisprudence shall be applicable as of 1
January 2022. For administrators whose certificates have been
issued before 31 October 2010, but who do not have higher
education in jurisprudence, the requirement referred to in
Section 13, Paragraph one, Clause 2 of this Law regarding higher
education in jurisprudence shall be applicable as of 1 January
2022. If the administrator referred to in the first and second
sentence of this Paragraph has not commenced studies in an
educational institution for acquisition of higher education, he
or she shall commence them by 1 January 2014 and submit a
statement issued by the institution of higher education to the
Association of Administrators. The administrators referred to in
the first and second sentence of this Paragraph who are studying
at an institution of higher education, when applying for
re-certification, shall submit a statement issued by the
institution of higher education to the Association of
Administrators on successful continuation of the studies. If the
administrator has not commenced studies at an institution of
higher education within the time period specified in the third
sentence of this Paragraph or, when applying for
re-certification, has not submitted a statement on successful
continuation of the studies, his or her certificate shall be
recognised as valid within the time period indicated therein and
this administrator shall not be re-certified.
[Amended by the Constitutional
Court decision of 22 November 2011; 23 February 2012]
8. The right of the administrator referred to in Section 28,
Paragraph one of this Law to empower another administrator for a
time period not exceeding 60 days per year shall enter into
effect on 1 January 2011. Until 31 December 2010, the
administrator has the right to empower another administrator for
performance of the duties specified in this Law for a time period
not exceeding 10 days.
9. Within the scope of the funds for the State entrepreneurial
risk fee the Cabinet shall determine which part of these funds
shall be transferred into the relevant State budget
sub-programme, from which the costs for the insolvency
proceedings shall be covered in the insolvency proceedings of a
legal person in accordance with the Insolvency Law which was in
force from 1 January 2008 to 31 October 2010 (Section 182,
Paragraph eight and Section 183, Paragraph five).
10. The remaining funds which are granted to the Insolvency
Administration until 31 October 2010 for covering the
remuneration and expenses of insolvency proceedings initiated
within the scope of the State budget and State entrepreneurial
risk fee, shall be spent by 31 October 2010 for covering the
remuneration and expenses of the initiated insolvency proceedings
during the subsequent financial years.
11. All amendments to this Law which come into force on 1
March 2015 shall be applicable to all proceedings initiated until
28 February 2015, except the cases referred to in Paragraphs 12,
13, 14, 15, 16, and 17 of the Transitional Provisions.
[18 December 2014]
12. The amendments coming into force on 1 March 2015 in
respect of the status of a secured creditor for persons whose
right to claim against a third person is secured by a commercial
pledge, or mortgage on the property of the debtor registered in
the Land Register or Ship Register, as well as for persons whose
right to claim is conditional, shall be applied to insolvency
proceedings that have been proclaimed as of 1 March 2015, and to
the matters of legal protection proceedings that have been
initiated as of 1 March 2015.
[18 December 2014]
13. In respect of legal protection proceedings that have been
initiated yet not proclaimed by 28 February 2015, the
administrator shall provide a reasoned opinion on the fact
whether the creditors' claims in the plan of measures of legal
protection proceedings and documents appended thereto are
justified prima facie, if requested by a creditor.
[18 December 2014]
14. Amendments to Sections 38, 40, and 42 of this Law, coming
into force on 1 March 2015, shall not be applicable to legal
protection proceedings proclaimed until 28 February 2015.
[18 December 2014]
15. Auctions that have been announced until 1 March 2015 shall
be completed in accordance with the regulation in this Law in
force by 28 February 2015.
[18 December 2014]
16. Amendments to Chapter XVII "Appeal of Transactions" of
this Law shall be applicable to insolvency proceedings proclaimed
as of 1 March 2015.
[18 December 2014]
17. Amendments to Division D and Chapter XXX of Division E
which come into force on 1 March 2015, shall be applicable to
insolvency proceedings of a natural person proclaimed as of 1
March 2015. Amendments to this Law in Section 155 in respect of
the terms in the plan for extinguishing obligations which come
into force on 1 March 2015, shall be applicable also to
insolvency proceedings that have been initiated until 28 February
2015.
[18 December 2014; 19 February
2015]
18. If the procedure for extinguishing of obligations in the
insolvency proceedings of a natural person has been proclaimed by
the date when amendments to Section 148, Paragraph six and
Section 155, Paragraphs two, three, and four of this Law come
into force, and has not been terminated, the natural person has
the right, within 90 days after these amendments come into force,
to submit his or her amendments to the plan for extinguishing of
obligations for a court's approval, concurrently with submitting
evidence to the fact that amendments to the plan for
extinguishing obligations have been delivered to all
creditors.
[18 December 2014; 19 February
2015]
19. If the insolvency proceedings have been initiated in
accordance with the Law On the Insolvency of Undertakings and
Companies and have not been terminated, the administrator shall,
by 31 August 2015, submit an application to court in respect of
termination of insolvency proceedings due to completion of
bankruptcy procedure. If amicable settlement or reorganisation
has been started in the abovementioned proceedings by 28 February
2015, the situation in the insolvency proceedings shall be
addressed in accordance with the procedures laid down in the Law
On the Insolvency of Undertakings and Companies.
[18 December 2014]
20. If the insolvency proceedings of a legal person have been
initiated in accordance with the Insolvency Law that was in force
until 31 October 2010 and have not been terminated, the
administrator shall, by 31 December 2015, submit an application
to court in respect of termination of the insolvency proceedings
matter due to completion of bankruptcy procedure. If amicable
settlement, reorganisation or legal protection proceedings
(extrajudicial legal protection proceedings) have been started in
the abovementioned proceedings by 28 February 2015, the situation
in the insolvency proceedings shall be addressed in accordance
with the procedures laid down in the Insolvency Law that was in
force until 31 October 2010.
[18 December 2014]
21. The creditors' meeting may, by 31 August 2015, take a
decision to apply amicable settlement, settlement, reorganisation
or legal protection proceedings in accordance with laws and
regulations that were in force on the day when the abovementioned
insolvency proceedings were initiated.
[18 December 2014]
22. If amicable settlement, reorganisation or legal protection
proceedings (extrajudicial legal protection proceedings) that
have been initiated in accordance with the procedures laid down
in Paragraphs 19, 20, and 21 of these Transitional Provisions are
discontinued after 28 February 2015, the administrator shall
initiate bankruptcy procedure by applying the legal provisions
that were in force on the day when the abovementioned insolvency
proceedings were initiated.
[18 December 2014]
23. If the administrator has initiated bankruptcy procedure
after the cases referred to in Paragraph 21 of these Transitional
Provisions, he or she shall submit an application to court on
termination of insolvency proceedings due to completion of
bankruptcy procedure within one year after the start date of the
bankruptcy procedure, by applying legal provisions that were in
force on the day when the abovementioned insolvency proceedings
were initiated.
[18 December 2014]
24. If the administrator fails to submit the application
referred to in Paragraphs 19 and 20 of these Transitional
Provisions to court by the deadlines specified therein, the
Insolvency Administration shall submit an application to court in
respect of revoking the administrator from performing his or her
duties in the respective insolvency proceedings, except the cases
when:
1) insolvency proceedings cannot be terminated due to
initiated civil proceedings or administrative matters;
2) according to an evaluation by the Insolvency
Administration, insolvency proceedings cannot be terminated due
to justified reasons;
3) the debtor in respect of whom insolvency proceedings have
been proclaimed has been recognised a victim in criminal
proceedings.
[18 December 2014]
25. In the cases referred to in Paragraph 24, Sub-paragraph 1
of these Transitional Provisions, the Insolvency Administration
shall impose a legal obligation on the administrator to convene a
creditors' meeting for deciding on the issue of proceeding with
the court procedures in accordance with the legal provisions that
were in force on the day when the abovementioned insolvency
proceedings were initiated: by 30 November 2015 (if the
insolvency proceedings have been initiated in accordance with the
Law On the Insolvency of Undertakings and Companies, and have not
been terminated), or by 31 March 2016 (if the insolvency
proceedings of a legal person have been initiated in accordance
with the Insolvency Law that was in force until 31 October 2010,
and have not been terminated). If the creditors' meeting votes on
discontinuation of court procedures, the administrator shall
start or complete the selling of the property, satisfy the
creditors' claims and shall submit an application to court in
respect of termination of insolvency proceedings due to
completion of bankruptcy procedure: by 30 November 2016 (if the
insolvency proceedings have been initiated in accordance with the
Law On the Insolvency of Undertakings and Companies, and have not
been terminated), or by 31 December 2017 (if the insolvency
proceedings of a legal person have been initiated in accordance
with the Insolvency Law that was in force until 31 October 2010,
and have not been terminated). If the creditors' meeting votes on
proceeding with court procedures, the administrator shall convene
the next creditors' meeting for deciding on the issue of either
termination of the insolvency proceedings or proceeding with
court procedure: by 30 November 2016 (if the insolvency
proceedings have been initiated in accordance with the Law On the
Insolvency of Undertakings and Companies, and have not been
terminated), or by 31 December 2017 (if the insolvency
proceedings of a legal person have been initiated in accordance
with the Insolvency Law that was in force until 31 October 2010,
and have not been terminated). The decision shall be deemed taken
when supported by three quarters of the creditors with voting
rights attending the meeting.
[18 December 2014]
26. In the cases referred to in Paragraph 24, Sub-paragraph 2
of these Transitional Provisions, the Insolvency Administration
shall impose legal obligation on the administrator to convene a
creditors' meeting for deciding on the issue of completing the
bankruptcy procedure in accordance with the legal provisions that
were in force on the day when the abovementioned insolvency
proceedings were initiated: by 30 November 2015 (if the
insolvency proceedings have been initiated in accordance with the
Law On the Insolvency of Undertakings and Companies, and have not
been terminated), or by 31 March 2016 (if the insolvency
proceedings a legal person have been initiated in accordance with
the Insolvency Law that was in force until 31 October 2010, and
have not been terminated). If the creditors' meeting votes in
favour of completing the bankruptcy procedure, the administrator
shall start or complete the selling of the property, satisfy the
creditors' claims and shall submit an application to court in
respect of termination of insolvency proceedings due to
completion of bankruptcy procedure: by 30 November 2016 (if the
insolvency proceedings have been initiated in accordance with the
Law On the Insolvency of Undertakings and Companies, and have not
been terminated), or by 31 December 2017 (if the insolvency
proceedings of a legal person have been initiated in accordance
with the Insolvency Law that was in force until 31 October 2010,
and have not been terminated). If the creditors' meeting has not
voted on the actions for completing the bankruptcy procedure, the
administrator shall convene the next creditors' meeting for
deciding on the issue of terminating the insolvency proceedings:
by 30 November 2016 (if the insolvency proceedings have been
initiated in accordance with the Law On the Insolvency of
Undertakings and Companies, and have not been terminated), or by
31 December 2017 (if the insolvency proceedings of a legal person
have been initiated in accordance with the Insolvency Law that
was in force until 31 October 2010, and have not been
terminated). The decision shall be deemed taken when supported by
three quarters of the creditors with voting rights attending the
meeting.
[18 December 2014]
27. If the administrator fails to submit the application to
court requesting termination of insolvency proceedings in the
cases referred to in Paragraph 23, 25, 26, or 28 of these
Transitional Provisions and by the deadlines specified therein,
the Insolvency Administration shall submit an application to
court in respect of revoking the administrator from performing
his or her duties in the respective insolvency proceedings and
requesting termination of the insolvency proceedings.
[25 September 2014]
28. If the court revokes the administrator from performing his
or her duties in the relevant insolvency proceedings based on the
application by the Insolvency Administration referred to in
Paragraph 24 of these Transitional Provisions, the new
administrator shall start or complete the selling of the
property, satisfy the creditors' claims and shall submit an
application to court in respect of termination of insolvency
proceedings due to completion of bankruptcy procedure: by 31
August 2016 (if the insolvency proceedings have been initiated in
accordance with the Law On the Insolvency of Undertakings and
Companies, and have not been terminated), or by 31 December 2016
(if the insolvency proceedings of a legal person have been
initiated in accordance with the Insolvency Law that was in force
until 31 October 2010, and have not been terminated).
[18 December 2014]
29. If the court has revoked the administrator from performing
his or her duties in the insolvency proceedings concerned based
on the application of the Insolvency Administration referred to
in Paragraph 27 of these Transitional Provisions, and the
administrator fails to perform the actions referred to in the
court decision which are related to exclusion of the debtor from
the relevant public register or termination of the insolvency
proceedings, the Association of Administrators, upon proposal of
the Insolvency Administration, may take a decision to terminate
the operation of the administrator's certificate.
[25 September 2014]
30. In order to ensure the performance of the duties referred
to in Paragraphs 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, and 29
of these Transitional Provisions, the administrator may provide
information to creditors in accordance with the procedures laid
down in Section 81, Paragraph three of this Law. Creditors shall
submit an application to the administrator by 1 April 2015,
indicating their electronic mail address.
[18 December 2014]
31. If any contradictions are detected between various
regulations governing insolvency proceedings, for the purpose of
complying with Paragraphs 19, 20, 21, 22, 23, 24, 25, 26, 27, 28,
29, and 30 of these Transitional Provisions, those legal
provisions shall be applied that were in force on the day when
the insolvency proceedings concerned were initiated, unless laid
down otherwise in Paragraphs 12, 13, 14, 15, 16, 17, 18, 19, 20,
21, and 22 of these Transitional Provisions.
[18 December 2014]
32. Value added tax shall be added to the administrator's
remuneration for performing his or her duties in respect of
insolvency proceedings to which laws and regulations referred to
in Paragraphs 2 and 5 of these Transitional Provisions apply, if
the administrator is registered with the State Revenue Service
Value Added Tax Taxable Persons Register.
[25 September 2014]
33. [19 February 2015]
34. Sections 1-76 of the the law "Amendments to the Insolvency
Law" adopted by the Saeima on 25 September 2014 shall come
into force on 1 March 2015.
[18 December 2014 / The abovementioned amendments
are included in the wording of the Law as on 1 March
2015]
This Law shall come into force on 1 November 2010.
This Law has been adopted by the Saeima on 26 July
2010.
President V. Zatlers
Adopted 6 August 2010
1 The Parliament of the Republic of
Latvia
Translation © 2017 Valsts valodas centrs (State
Language Centre)