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];
22 December 2016 [shall come into force from 6 January
2017];
31 May 2018 [shall come into force from 1 July
2018];
21 November 2019 [shall come into force from 11 December
2019];
5 December 2019 [shall come into force from 18 December
2019];
5 June 2020 [shall come into force from 10 June
2020].
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 for 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 govern insolvency proceedings of
credit institutions.
(4) The provisions of this Law shall be applicable to
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
insolvency proceedings of the subject of a financial security
contract in conformity with 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 the purpose of which 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 are commenced from the day
when a matter of legal protection proceedings are initiated in a
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) 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) Insolvency proceedings of a legal person are commenced
from the day when a court has proclaimed insolvency proceedings
by a ruling and shall take place until the day when a court takes
a decision to terminate insolvency proceedings.
Section 5. Insolvency Proceedings of
a Natural Person
(1) Insolvency proceedings of a natural person are an
aggregate of measures of a legal nature the objective of which 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) Insolvency proceedings of a natural person are commenced
from the day when a court has proclaimed insolvency proceedings
by a ruling and take shall place until the day when a court takes
a decision to terminate 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,
insolvency proceedings of a legal person, and insolvency
proceedings of a natural person (hereinafter in this Section -
the proceedings) are applied as follows:
1) principle of the preservation of rights - the rights of
creditors acquired prior to proceedings are conformed to 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 are 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 for 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 8.1 Supervisory
Person of Legal Protection Proceedings
A supervisory person of legal protection proceedings is a
natural person appointed by a court who has the rights and
obligations in legal protection proceedings specified in this
Law.
[22 December 2016]
Section 9. Administrator of
Insolvency Proceedings
(1) An administrator of insolvency proceedings (hereinafter -
the administrator) is a natural person who has been appointed to
the position of an administrator and who has the rights and
obligations specified in this Law. In respect of the official
activities, administrators shall be considered equivalent to
public officials.
(2) An administrator, within the meaning of Regulation (EU) No
2015/848 of the European Parliament and of the Council of 20 May
2015 on insolvency proceedings (hereinafter - Regulation No
2015/848 of the European Parliament and of the Council), also has
the rights and obligations of an administrator specified in this
Law and other laws and regulations.
[25 September 2014; 22 December 2016; 31 May 2018 /
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: "In respect of the
official activities, administrators of insolvency proceedings
shall be considered 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
(1) The remuneration of the supervisory person of legal
protection proceedings and the expenses arising from ensuring
lawful and efficient course of legal protection proceedings shall
constitute the costs of legal protection proceedings.
(2) The remuneration of the administrator and the value added
tax if the administrator has been registered with the State
Revenue Service Value Added Tax Taxable Persons Register, and the
expenses arising from ensuring lawful and efficient course of
insolvency proceedings of the legal person or insolvency
proceedings of the natural person shall constitute the costs of
insolvency proceedings of a legal person and insolvency
proceedings of a natural person.
[22 December 2016; 31 May 2018]
Section 12. Insolvency Register
(1) The purpose of the Insolvency Register is to ensure public
access to legal protection proceedings, insolvency proceedings of
a legal person, and insolvency proceedings of a natural person,
to promote the direction of legal protection proceedings,
insolvency proceedings of a legal person, and insolvency
proceedings of a natural person, the protection of legal
interests of the persons involved in these proceedings and other
persons, the performance of the functions of the Insolvency
Control Service as well as to enhance the cooperation of persons
in insolvency issues. The Insolvency Register is accessible to
everyone free of charge, and the entries therein shall be
publicly reliable.
(2) Information regarding the administrator, the supervisory
person of legal protection proceedings, the course of legal
protection proceedings, insolvency proceedings of a legal person,
and insolvency proceedings of a natural person shall be entered
into the Insolvency Register.
[22 December 2016; 31 May 2018]
Section 12.1 Electronic
Insolvency Accounting System
(1) The Electronic Insolvency Accounting System (hereinafter -
the System) is a State information system managed by the
Insolvency Control Service and held by the Court
Administration.
(2) The System promotes the performance of the tasks of the
Insolvency Control Service, the preparation and publication of
the information specified in laws and regulations on the website
of the Insolvency Control Service, the sharing of information
between the persons and authorities involved in insolvency
proceedings, as well as the fulfilment of the obligations and
exercising of the rights of administrators and supervisory
persons of legal protection proceedings.
(3) The following shall be included in the system:
1) information regarding the supervisory person of legal
protection proceedings, the administrator, and other persons
involved in legal protection proceedings and insolvency
proceedings;
2) information regarding the course of legal protection
proceedings and insolvency proceedings;
3) information regarding any violations which have been
committed by supervisory persons of legal protection proceedings
and administrators during the fulfilment of the obligations
imposed on them, as well as exercising of the rights granted to
them in legal protection proceedings and insolvency proceedings
and which have been established by a court, the Insolvency
Control Service, and the Commission of Disciplinary Matters
specified in this Law;
4) information and documents the preparation or submission of
which is specified in the laws and regulations governing
activities of the administrator or supervisory person of legal
protection proceedings and the course of insolvency proceedings,
and the preparation of which in electronic form or attaching of
which is ensured in the System.
(4) The information specified in Paragraph three of this
Section shall be included in the System and updated on the basis
of the information received from State or local government
authorities from other State information systems, as well as the
official activities carried out within the framework of the
fulfilment of official duties of officials of the Insolvency
Control Service, the documents prepared within the framework of
the fulfilment of the obligations and exercising of the rights of
the administrator and the supervisory person of legal protection
proceedings specified in the laws and regulations governing the
field of insolvency, the documents and any other information
received from the administrators and the supervisory persons of
legal protection proceedings.
(5) Persons employed by the Insolvency Control Service and the
Court Administration who require access to the System for the
fulfilment of official or work duties, the administrators, and
the supervisory persons of legal protection proceedings shall
process the information included in the System to the extent
necessary for the fulfilment of obligations and exercising of
rights specified in laws and regulations.
(6) The documents prepared by the Insolvency Control Service,
the administrator, and the supervisory person of legal protection
proceedings which are submitted and made available using the
System also have legal effect if they do not contain the detail
"signature".
(7) Upon updating the information included in the System, the
information registered previously is saved.
(8) The Cabinet shall determine the procedures for using and
maintaining the System, the procedures for including and
receiving information and documents in and from the System, as
well as the scope of information and documents to be included in
the System and the time periods for storage thereof.
(9) A creditor and a representative thereof, a representative
of a debtor, a debtor in insolvency proceedings of a natural
person, or a representative thereof may use the System for the
fulfilment of the obligations and exercising of the rights
specified in laws and regulations.
(10) The information included in the System shall be
restricted access information.
[31 May 2018 / Paragraph nine shall come into force
on 15 April 2019. See Paragraphs 63 and 69 of Transitional
Provisions]
Section 12.2 Information
to be Published on the Website of the Insolvency Control
Service
(1) For the purpose of contributing to the protection of
interests of creditors in legal protection proceedings and
insolvency proceedings, promoting implementation of legal
protection proceedings by providing a possibility to select the
best supervisory person of legal protection proceedings, as well
as informing the public of results of activities of the
Insolvency Control Service, the Insolvency Control Service shall
publish the following information on its website regarding the
supervisory person of legal protection proceedings and the
administrator, as well as legal protection proceedings,
insolvency proceedings of a legal person, and insolvency
proceedings of a natural person:
1) the given name, surname, and contact information of the
supervisory person of legal protection proceedings or the
administrator, as well as information regarding education and
qualification of the supervisory person of legal protection
proceedings;
2) information regarding results of activities of the
administrator in insolvency proceedings according to the
information provided in the final operational report;
3) information regarding any violations committed by the
supervisory persons of legal protection proceedings or the
administrators during the fulfilment of the obligations and
exercising of the rights specified in laws and regulations
governing the field of insolvency which have been established
under a decision of a court, the Insolvency Control Decision, and
the Commission of Disciplinary Matters which is no longer subject
to appeal;
4) information regarding the number of legal protection
proceedings supervised by the supervisory person of legal
protection proceedings;
5) information regarding legal protection proceedings
supervised by the supervisory person of legal protection
proceedings which have been terminated upon declaring insolvency
proceedings of a legal person;
6) information regarding legal protection proceedings
supervised by the supervisory person of legal protection
proceedings which have been terminated due to the carrying out of
the plan of measures of legal protection proceedings;
7) information regarding the number and duration of insolvency
proceedings of legal persons and insolvency proceedings of
natural persons administered by the administrator;
8) information regarding the time of practice in the status of
a supervisory person of legal protection proceedings or the time
of practice of the profession of an administrator.
(2) Upon publishing the information specified in this Law, the
Insolvency Control Service shall ensure conformity with the
requirements of the laws and regulations governing personal data
protection and the requirements for the protection of trade
secret. The specific information regarding the results of
activities of the administrators shall be published unaltered
according to the information indicated in the operational report
of the administrator. The submitter of information shall be
responsible for the correctness and conformity of the content of
this information with the requirements of laws and
regulations.
(3) The information published on the website of the Insolvency
Control Service which has been indicated in this Section shall be
of informative nature, and publication thereof shall neither
impose any obligations on nor grant any rights to persons.
(4) The Cabinet shall determine the scope of information
published by the Insolvency Control Service and the procedures
for publishing, as well as correcting errors thereof.
[22 December 2016; 31 May 2018 / Section shall come
into force on 1 July 2018. See Paragraph 52 of
Transitional Provisions]
Chapter
I1.
Supervisory Person of Legal Protection Proceedings
[22 December 2016]
Section 12.3 Requirements
and Restrictions Imposed on the Supervisory Person of Legal
Protection Proceedings
(1) Any natural person with the capacity to act who has the
right to reside and be employed in Latvia during the entire
course of legal protection proceedings and who is not subject to
the restrictions specified in this Law may be the supervisory
person of legal protection proceedings.
(2) The supervisory person of legal protection proceedings may
not be a person:
1) who has been convicted of committing an intentional
criminal offence or against whom criminal proceedings for
committing an intentional criminal offence have been terminated
for reasons other than exoneration of the person;
2) for whom insolvency proceedings of a natural person have
been declared and less than five years have passed since the day
of termination thereof;
3) who has been a member of the administrative body of a legal
person and has caused insolvency proceedings of this legal person
due to the neglect thereof or deliberately;
4) who, on the basis of a decision in a disciplinary matter,
has been removed from the office of a general or specialised
civil servant, removed from the office of an administrator,
excluded from the number of sworn advocates or assistants
thereto, released from the office of a prosecutor, or removed
from the office of a sworn bailiff or an assistant thereto, a
sworn notary or an assistant thereto, or a judge, or whose
certificate of a sworn auditor has been cancelled, unless five
years have passed since the day when the decision has entered
into effect in the disciplinary matter or a decision has been
taken to cancel the certificate of a sworn auditor;
41) who has been suspended from the office of an
administrator;
42) who has been removed from the office of an
administrator in accordance with Section 17.2,
Paragraph one, Clause 5 or 6 of this Law, unless five years have
passed since the day of removal or termination of the
certificate;
5) on whom, on the basis of a decision in an administrative
offence case, an administrative penalty - deprivation of the
right to hold any office in a commercial company - has been
imposed;
6) who has been removed from legal protection proceedings by a
court upon establishing abuse of power by this person, unless
five years have passed from the day when the relevant court
ruling has entered into effect;
7) who, in accordance with the legal framework established in
his or her country of residence, has been denied the right to
hold offices similar to that of the supervisory person of legal
protection proceedings.
(3) The following person who meets at least one of the
following criteria may not be the supervisory person of legal
protection proceedings in specific legal protection
proceedings:
1) who has participated in the development of the plan of
measures of legal protection proceedings of the debtor;
2) who has provided an opinion of a sworn auditor on the plan
of measures of legal protection proceedings;
3) who is considered to be an interested party with respect to
the subject of legal protection proceedings in accordance with
the provisions of Section 72 of this Law;
4) who is a suspect or accused in criminal proceedings related
to his or her actions in specific legal protection
proceedings.
(4) The activities, rights, and obligations of administrators,
sworn advocates, sworn bailiffs, sworn auditors, and other
representatives of regulated professions appointed as supervisory
persons of legal protection proceedings in specific legal
protection proceedings shall be governed by the norms governing
the activities of the supervisory person of legal protection
proceedings. Upon fulfilling the obligations of the supervisory
person of legal protection proceedings, administrators, sworn
advocates, sworn bailiffs, sworn auditors, and other
representatives of regulated professions do not have the right to
exercise the special rights and benefits specified in the
relevant laws and regulations governing professional activities
thereof and provided for or guaranteed by the relevant laws and
regulations.
(5) If any of the restrictions specified in Section 20 of this
Law applies to the supervisory person of legal protection
proceedings, this person shall inform creditors thereof without
delay.
[22 December 2016; 31 May 2018]
Section 12.4 Appointing
and Removal of the Supervisory Person of Legal Protection
Proceedings
(1) A court shall appoint the supervisory person of legal
protection proceedings in legal protection proceedings in
accordance with the procedures laid down in this Law and the
Civil Procedure Law.
(2) The court shall appoint the supervisory person of legal
protection proceedings as follows:
1) upon its own initiative in the cases specified in the Civil
Procedure Law;
2) on the basis of an application of the supervisory person of
legal protection proceedings if the relevant person has withdrawn
from specific legal protection proceedings;
3) on the basis of an application of a representative
authorised by the majority of creditors specified in Section 42,
Paragraph three of this Law;
4) on the basis of an application of the Insolvency Control
Service if the restrictions specified in Section 12.3,
Paragraphs two and three of this Law have been established;
5) on the basis of an application of the Director of the
Insolvency Control Service if:
a) a disciplinary matter has been initiated against the
supervisory person of legal protection proceedings or a decision
of the Commission of Disciplinary Matters has entered into effect
to remove the supervisory person of legal protection proceedings
from legal protection proceedings;
b) the supervisory person of legal protection proceedings
fails to pay the imposed fine specified in Section
31.7, Paragraph one, Clause 1 or 2 of this Law within
the time period specified in Section 31.7, Paragraph
five of this Law.
[22 December 2016; 31 May 2018]
Section 12.5 General
Obligations of the Supervisory Person of Legal Protection
Proceedings
(1) The supervisory person of legal protection proceedings has
an obligation to register with the State Revenue Service as a
performer of economic activity and to declare his or her place of
practice in Latvia.
(2) The supervisory person of legal protection proceedings has
an obligation to ensure keeping of documents and communication
with the persons involved in legal protection proceedings in the
official language.
(3) The supervisory person of legal protection proceedings
shall ensure that he or she may be reached at the address of his
or her place of practice by using the indicated contact
information, as well as receives the correspondence addressed
thereto (including documents signed with a secure electronic
signature).
(4) The supervisory person of legal protection proceedings has
an obligation to ensure that the Insolvency Control Service may
access the place of practice in Latvia registered with the
Insolvency Register and the location of the debtor - legal person
- when performing the procedural actions specified in Section
174.2, Paragraph one, Clause 9 of this Law.
(5) The supervisory person of legal protection proceedings
shall use the System when exercising the rights granted in the
law and performing the obligations specified in the law.
[22 December 2016; 31 May 2018 / Paragraph five
shall come into force on 1 January 2019. See Paragraph 62
of Transitional Provisions]
Section 12.6 Conducting a
Case of Legal Protection Proceedings
(1) The supervisory person of legal protection proceedings
shall conduct a case of legal protection proceedings in his or
her place of practice and include therein all information and
documents related to the relevant proceedings when making a list
of the documents in the case of these proceedings.
(2) The Cabinet shall determine the procedures for keeping
records of the legal protection proceedings.
[22 December 2016]
Section 12.7
Record-keeping and Accounts of Income and Expenditures of the
Supervisory Person of Legal Protection Proceedings
(1) The supervisory person of legal protection proceedings
shall keep records at his or her place of practice, as well as
accounts of income and expenditures thereof resulting from the
fulfilment of the duties of office of the supervisory person of
legal protection proceedings.
(2) Income from the fulfilment of the duties of office of the
supervisory person of legal protection proceedings shall consist
of the remuneration of the supervisory person of legal protection
proceedings for the fulfilment of the duties in legal protection
proceedings.
(3) Expenditures of the supervisory person of legal protection
proceedings shall consist of the expenditures related to the
maintenance of the place of practice and other payments specified
in laws and regulations and related to the relevant legal
protection proceedings.
(4) The Cabinet shall determine the nomenclature of files of
the supervisory person of legal protection proceedings and the
time periods for storage thereof, as well as the procedures for
keeping records.
[22 December 2016]
Section 12.8 Liability
and Security of the Supervisory Person of Legal Protection
Proceedings
(1) The supervisory person of legal protection proceedings
shall be liable for any losses caused to the State, debtor,
creditors, or other persons due to his or her fault.
(2) The supervisory person of legal protection proceedings
shall not be liable for actions and transactions of the debtor
and previous supervisory persons of legal protection
proceedings.
(3) Actions against the supervisory person of legal protection
proceedings shall be brought in accordance with the procedures
and within the time periods laid down in Section 30 of this
Law.
(4) The supervisory person of legal protection proceedings may
insure his or her civil liability for possible damage which he or
she may cause with his or her action to the debtor, creditors, or
other persons in legal protection proceedings, if this person
considers it necessary or it is required by the majority of
creditors specified in Section 42, Paragraph three of this
Law.
[22 December 2016]
Section 12.9 Expiration
of Obligations of the Supervisory Person of Legal Protection
Proceedings
Obligations of the supervisory person of legal protection
proceedings shall expire:
1) if the supervisory person of legal protection proceedings
is removed from specific legal protection proceedings;
2) if the legal protection proceedings are being
terminated;
3) in the event of death of the supervisory person of legal
protection proceedings.
[22 December 2016]
Chapter
II
Administrator
[22 December 2016]
Section 13. Requirements and
Restrictions Set Out for the Administrator
(1) The administrator may be a natural person with the
capacity to act:
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;
5) who has passed the examination of an administrator;
6) who has impeccable reputation.
(2) An administrator may not be a person:
1) who does not comply with the requirements laid down in
Paragraph one of this Section;
2) who has been removed from the office of an administrator in
accordance with Section 17.2, Paragraph one, Clause 5
or 6 of this Law, unless five years have passed since the day of
removal or termination of the certificate;
3) who has been convicted of committing an intentional
criminal offence or against whom criminal proceedings for
committing an intentional criminal offence have been terminated
for reasons other than exoneration of the person;
4) for whom insolvency proceedings of a natural person have
been declared and less than five years have passed since the day
of termination thereof;
5) who has been a member of the administrative body of a legal
person and has caused insolvency proceedings of this legal person
due to the neglect thereof or deliberately;
6) on whom, on the basis of a decision in an administrative
offence case, an administrative penalty - deprivation of the
right to hold any office in a commercial company - has been
imposed;
7) who, on the basis of a decision in a disciplinary matter,
has been removed from the office of an administrator, excluded
from the number of sworn advocates or assistants thereto,
released from the office of a prosecutor or removed from the
office of a sworn bailiff, an assistant thereto, a sworn notary,
an assistant thereto, or a judge, or whose certificate of a sworn
auditor has been cancelled, unless five years have passed since
the day when the decision has entered into effect in the
disciplinary matter or a decision has been taken to cancel the
certificate of a sworn auditor.
[22 December 2016]
Section 13.1 Office of an
Administrator
(1) The Director of the Insolvency Control Service shall
appoint the administrator to the office by an order after passing
of the examination of an administrator.
(2) After appointing of the administrator to the office the
Director of the Insolvency Control Service shall issue a
certificate of the administrator office to the administrator
which is valid for two years.
(3) The Cabinet shall determine the procedures for appointing
the administrator to the office, as well as the form and content
of the certificate of the administrator office, and the
procedures for issuing and handing it out.
[22 December 2016; 31 May 2018]
Section 14. Professional
Organisation of Administrators
(1) The functions of the professional organisation of
administrators shall be implemented by the association
Latvijas Sertificēto maksātnespējas procesa administratoru
asociācija [Association of the Certified Administrators of
Insolvency Proceedings of Latvia] (hereinafter - the Association
of Administrators). The Association of Administrators shall
comprise all administrators of Latvia according to the principle
of professional activities.
(2) The Association of Administrators shall notify the
Insolvency Control Service if it has information at its disposal
which may constitute grounds for the initiation of a disciplinary
matter against the administrator.
[22 December 2016; 31 May 2018]
Section 15. Training of
Administrator Applicants
(1) A precondition for taking the examination of an
administrator shall be the attendance of a training course and a
relevant certificate issued by the organiser of the training
course. The certificate attesting the attendance of the training
course shall be valid for two years after the issue thereof.
(2) The Cabinet shall determine the minimum content and scope
of the training course, as well as the information to be included
in the certificate attesting the attendance of the training
course.
[22 December 2016]
Section 16. Certification and
Re-Certification of an Administrator
[22 December 2016]
Section 16.1 Examining of
an Administrator
(1) A person who wishes to hold the office of an administrator
shall be examined by the Examining Commission appointed by the
Minister for Justice. The Examining Commission shall consist of
one representative from each of the following institutions: the
Ministry of Justice, the Insolvency Control Service, academic
staff of higher education institutions, and the Association of
Administrators. The Examining Commission shall also include a
judge of a district (city) court specified by the Judicial
Council and a representative of a non-governmental organisation
delegated by the Insolvency Advisory Board.
(2) The examination of an administrator may be taken by the
following persons:
1) who meet the requirements of Section 13, Paragraph one,
Clauses 1, 2, 3, 4, and 6 of this Law;
2) to whom the restrictions specified in Section 13, Paragraph
two of this Law do not apply;
3) who have received a certificate attesting the attendance of
the training course;
4) who have paid the examination fee into the account of the
Insolvency Control Service.
(3) If the Insolvency Control Service establishes or receives
information regarding non-compliance of the person with the
requirements of Section 13, Paragraph one, Clause 6 of this Law,
the relevant issue shall be examined and decided by the Examining
Commission.
(4) The Examining Commission shall also conduct a regular
qualification examination of an administrator (hereinafter - the
qualification examination).
(5) The Cabinet shall determine the procedures for examining
an administrator, the minimum volume of knowledge, the
examination fee, and the procedures by which the Examining
Commission shall operate.
[22 December 2016; 31 May 2018]
Section 16.2
Qualification Examination of an Administrator
(1) After appointing to the office an administrator shall,
every two years from the day of appointing to the office or from
the day of passing the previous qualification examination
(hereinafter - the qualifying period), take the qualification
examination.
(2) A precondition for taking the qualification examination
shall be the attendance of the qualification improvement
activities in the amount of 32 academic hours during the period
of validity of the current certificate until the moment when a
submission regarding application for the qualification
examination is submitted.
(3) During the qualification examination the Examining
Commission shall examine the theoretical knowledge of the
administrator which is necessary for the fulfilment of the duties
of office of the administrator, as well as the ability to apply
this knowledge.
(4) If during the time of taking the regular qualification
examination the official activities of the administrator have
been suspended or the administrator has been suspended from the
performance of official activities on the basis of a motivated
submission of the administrator, the Director of the Insolvency
Control Service may take a decision to extend the time period for
taking the qualification examination for the period until the
next time the qualification examination is organised after expiry
of the time period for the suspension of official activities of
the administrator or suspension thereof from the office. In this
case the official activities of the administrator shall be
renewed on the basis of a decision of the Director of the
Insolvency Control Service after passing of the qualification
examination.
(5) The Insolvency Control Service shall organise the
qualification examination at least three times a year - by 15
February, 15 June, and 15 October - and ensure the course
thereof.
(6) The Cabinet shall determine the qualification examination
fee, the qualification examination procedures, the areas in which
the knowledge and skills of the administrator are examined, as
well as the evaluation procedures and the procedures for issuing
a certificate.
(7) An administrator who fails to pass the regular
qualification examination shall take a repeated qualification
examination the next time the qualification examination is
organised. In such case the Director of the Insolvency Control
Service shall, on the basis of a submission of the administrator,
take a decision to extend the time period for taking the
qualification examination of the administrator until the next
time the qualification examination is organised, and the
administrator has the right to fulfil the obligations of the
administrator on the basis of the issued certificate of the
office.
(8) An administrator who has not been able to take the
qualification examination for objective reasons shall take the
qualification examination the next time the qualification
examination is organised. In such case the Director of the
Insolvency Control Service shall, on the basis of a motivated
submission of the administrator, take a decision to extend the
time period for taking the qualification examination of the
administrator until the next time the qualification examination
is organised, and the administrator has the right to fulfil the
obligations of the administrator on the basis of the issued
certificate of the office. An administrator who has not been able
to take the qualification examination for objective reasons has
the right to ask for extension of the time period for taking the
qualification examination once during the qualifying period.
[22 December 2016; 31 May 2018]
Section 17. Suspension and
Termination of the Operation of an Administrator's Certificate
and Its Annulment
[22 December 2016]
Section 17.1 Release from
the Office of an Administrator
(1) The Director of the Insolvency Control Service shall
release an administrator from the office upon his or her
request.
(2) The Cabinet shall determine the procedures for releasing
an administrator.
[22 December 2016; 31 May 2018]
Section 17.2 Removal from
the Office of an Administrator
(1) The Director of the Insolvency Control Service shall
remove an administrator from the office by a decision in the
following cases:
1) the administrator has been convicted of an intentional
criminal offence;
2) trusteeship has been established for the administrator by a
court judgement;
3) insolvency proceedings of a natural person have been
proclaimed for the administrator;
4) the administrator has not taken the qualification
examination unjustifiably or has received a negative evaluation
in taking a repeated qualification examination;
5) the court has removed the administrator from the fulfilment
of the obligations in insolvency proceedings on the basis of
Section 22, Paragraph two, Clause 7 of this Law;
6) over the last two years of official activities of the
administrator a court has removed the administrator from the
fulfilment of obligations in insolvency proceedings of a legal
person or insolvency proceedings of a natural person twice due to
violations of laws and regulations;
7) on the basis of a decision of the Commission of
Disciplinary Matters on a proposal to remove the administrator
from the office;
8) the administrator fails to pay the imposed fine specified
in Section 31.7, Paragraph one, Clause 1 or 2 of this
Law within the time period specified in Section 31.7,
Paragraph five of this Law;
9) in the event of death of the administrator;
10) a decision of the competent authority has entered into
effect to hold the administrator administratively liable by
imposing an administrative penalty - deprivation of the right to
hold any office in a commercial company;
11) any of the restrictions specified in Section 13, Paragraph
two of this Law has been established.
(2) The Cabinet shall determine the procedures for removing
the administrator from the office.
[22 December 2016; 31 May 2018]
Section 17.3 Suspension
from the Fulfilment of Official Activities of an
Administrator
(1) The Director of the Insolvency Control Service may suspend
an administrator from the performance of official activities
if:
1) the administrator is a suspect or accused in a criminal
case and non-suspension thereof may be harmful to the interests
of the State or substantiated interests of third persons in the
area of insolvency;
2) a disciplinary matter has been initiated against the
administrator and non-suspension of the administrator may be
harmful to the substantiated interests of the State or third
persons;
3) the Commission of Disciplinary Matters has suggested that
the Director of the Insolvency Control Service suspends the
administrator from the office.
(2) The Cabinet shall determine the procedures for suspending
the administrator.
[22 December 2016; 31 May 2018]
Section 17.4 Suspension
of Official Activities of an Administrator
(1) The Director of the Insolvency Control Service shall, on
the basis of a submission of an administrator, take a decision to
suspend temporarily official activities of the administrator
while the administrator is in the service of a direct or indirect
State administration institution, a derived public person,
another State institution or State (local government) capital
company, or for a time period of prolonged illness, pregnancy,
maternity leave or child-care leave of the administrator, as well
as upon substantiated request of the administrator in other
cases.
(2) The Cabinet shall determine the procedures for suspending
official activities of the administrator.
[22 December 2016; 31 May 2018]
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 office certificate of the
administrator;
3) the date of issue and validity period of the certificate of
the administrator office;
4) the address of the place of practice of the administrator
in Latvia;
5) the telephone number of the administrator;
6) the electronic mail address of the administrator;
7) the date from which the administrator is, in accordance
with this Law or other laws and regulations, restricted to fulfil
the obligations of the administrator (official activities of the
administrator have been suspended, the administrator has been
suspended from the office, a decision has been taken within the
framework of criminal proceedings to apply a procedural
compulsory measure - a prohibition of specific employment - which
imposes a restriction to fulfil the duties of office of the
administrator, or a case specified in Section 16.2,
Paragraph four of this Law has occurred - the time period for the
suspension of official activities of the administrator has
expired or the circumstances forming grounds for the suspension
of the administrator from the office are no longer present, and
the administrator has not yet passed the qualification
examination the next time it is organised);
71) the date from which the administrator has been
released or removed from the office;
72) the date from which the right of the
administrator to fulfil the duties of office of the administrator
have been restored;
8) the date of the making of the entry.
(2) The Insolvency Control Service shall ensure that the
information referred to in Paragraph one, Clauses 1, 2, 3, 4, 5,
6, and 7 of this Law would be available to the responsible
institution which makes entries in the Insolvency Register, as
well as maintain registers of the administrators appointed,
removed, released, and suspended from the office and of the
administrators whose activities have been suspended.
[18 December 2014; 22 December 2016; 31 May 2018]
Chapter
III
Appointing and Removal of an Administrator in Insolvency
Proceedings of a Legal or Natural Person
[22 December 2016]
Section 19. Appointing of an
Administrator in Insolvency Proceedings of a Legal Person and
Insolvency Proceedings of a Natural Person
(1) A court shall appoint an administrator in 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.
(11) A candidate for the office of an administrator
for the appointing in specific insolvency proceedings of a legal
person and natural person shall be selected from a list of
candidates for the office of administrators maintained in the
System of the Insolvency Control Service (hereinafter - the List
of Candidates), using automated selection provided by the
Judicial Informative System.
(2) The Cabinet shall determine the procedures for compiling
the List of Candidates in the System, the characteristics by
which an administrator is included in the List of Candidates, and
the procedures for selecting a candidate for the office of an
administrator, using automated selection provided by the Judicial
Informative System.
[25 September 2014; 22 December 2016; 31 May 2018 /
Paragraph 1.1 and the new wording of Paragraph two
shall come into force on 1 January 2019. See Paragraph 64
of Transitional Provisions]
Section 20. Restrictions in
Fulfilling Administrator's Duties
(1) The administrator may not assume and fulfil the
obligations of an administrator in specific insolvency
proceedings in the following cases:
1) [22 December 2016];
11) the administrator has been released, removed,
or suspended from the office;
12) the official activities of the administrator
have been suspended;
13) a decision has been taken with regard to the
administrator within the framework of criminal proceedings to
apply a procedural compulsory measure - a prohibition of specific
employment - which imposes a restriction to fulfil the duties of
office of an administrator;
2) the administrator is a suspect or accused in criminal
proceedings related to his or her actions in specific insolvency
proceedings of a legal person or 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) [22 December 2016];
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 case of
insolvency proceedings of a legal person or in the case of
insolvency proceedings of a natural person or there are other
circumstances which cause reasonable doubt as to his or her
impartiality;
8) the administrator performs activities related to the
obligations of the administrator in insolvency proceedings of a
legal person or insolvency proceedings of a natural person in
which he or she, his or her spouse, or persons who are in a
kinship or affinity relationship with the administrator up to the
second degree, or his or her business partners are or might be
personally or financially interested;
9) the administrator performs activities related to the
obligations of the administrator with regard to a creditor or
debtor whose shareholder, stockholder, member, or member of a
supervisory, control or executive body happens to be he or she
himself or herself, his or her spouse or persons who are in a
kinship or affinity relationship with the administrator up to the
second degree;
10) over the last two years prior to his or her appointing to
specific insolvency proceedings the administrator has decided on
claims of the debtor in other insolvency proceedings of a legal
person or insolvency proceedings of a natural person in which the
administrator fulfilled obligations of the administrator;
11) the administrator has already the fulfilled obligations of
the administrator in insolvency proceedings of this debtor.
(2) If any of the cases referred to in Paragraph one of this
Section applies to the administrator, he or she shall immediately
inform the court and the Insolvency Control Service.
[22 December 2016; 31 May 2018]
Section 21. Exceptions to the
Restrictions on the Fulfilment of the Obligations of the
Administrator
(1) The provisions of Section 20 of this Law shall not be
applicable if in a business relationship the administrator is a
recipient of goods or services within the framework of regular
economic activity of a business partner, there is no dispute
about the transaction and the administrator does not enjoy any
particular advantage in the transaction.
(2) The administrator shall immediately inform all creditors
and the Insolvency Control Service of his or her business
partners and substantiate the fact that the restrictions
specified in Section 20 of this Law are not applicable to him or
her.
(3) It shall be permitted for the administrator to cover the
costs of insolvency proceedings in accordance with the procedures
laid down in this Law.
[22 December 2016; 31 May 2018]
Section 22. Removal of the
Administrator from Insolvency Proceedings of a Legal Person or
Insolvency Proceedings of a Natural Person
(1) A court shall remove the administrator upon its own
initiative, upon an application of the Insolvency Control Service
or the administrator, or upon 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 ruling;
4) he or she fails to fulfil the legal obligation imposed by
the Insolvency Control Service;
5) he or she has withdrawn from insolvency proceedings of a
legal person or insolvency proceedings of a natural person
(Section 23);
6) the creditors meeting has proposed that the administrator
should be removed from specific insolvency proceedings of a legal
person or 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) [22 December 2016];
81) the administrator has been released, removed,
or suspended from the office or his or her professional
activities have been suspended.
(3) If violations have been established in the activities of
the administrator, the administrator shall only be removed from
such insolvency proceedings of a legal person or insolvency
proceedings of a natural person in which the violations have been
established.
(4) If the administrator has been released, removed, or
suspended, the Insolvency Control Service shall submit an
application to the court for the removal of the administrator
from all insolvency proceedings of a legal person or insolvency
proceedings of a natural person to which he or she has been
appointed.
[22 December 2016; 31 May 2018]
Section 23. Resignation of the
Administrator from Insolvency Proceedings of a Legal Person or
Insolvency Proceedings of a Natural Person
(1) The administrator has the right to resign from insolvency
proceedings of a legal person or insolvency proceedings of a
natural person at any time if he or she is unable to fulfil the
obligations of the administrator due to objective
circumstances.
(2) When resigning from insolvency proceedings of a legal
person or insolvency proceedings of a natural person, the
administrator shall submit a justified application to the court
for the resignation accompanied by his or her operational report,
as well as a draft deed of delivery and acceptance of documents
and property, concurrently informing the Insolvency Control
Service thereof.
(3) The administrator shall resign from insolvency proceedings
of a legal person or insolvency proceedings of a natural person
if the restrictions specified in Section 20 of this Law exist
with regard to him or her.
(31) The administrator shall submit an application
to the court for the resignation from all insolvency proceedings
of a legal person and insolvency proceedings of a natural person
to which he or she has been appointed if official activities of
the administrator have been suspended.
(4) Upon resigning from insolvency proceedings of a legal
person or insolvency proceedings of a natural person the
administrator shall follow the provisions of Section 24 of this
Law regarding the change of administrators.
[22 December 2016; 31 May 2018]
Section 24. Change of
Administrators
(1) If the administrator is removed from insolvency
proceedings of a legal person or insolvency proceedings of a
natural person, another administrator is appointed in accordance
with the procedures laid down in Section 19 of this Law.
(2) If the previous administrator resigns or is removed from
insolvency proceedings of a legal person or insolvency
proceedings of a natural person, the previous administrator
shall, within the time period specified by the court that may not
exceed 10 days, draw up a deed of delivery and acceptance of
documents and property 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 appointing of a new administrator, the previous
administrator shall continue to fulfil the duties thereof. After
appointing 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 according to the deed of delivery and acceptance of
documents and property.
(4) If the drawing up of a deed of delivery and acceptance of
documents and property 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; 22 December 2016]
Section 25. Expiration of the
Obligations of the Administrator in Insolvency Proceedings of a
Legal Person or Insolvency Proceedings of a Natural Person
The obligations of an administrator shall expire:
1) if the administrator is removed from insolvency proceedings
of a legal person or insolvency proceedings of a natural
person;
2) [22 December 2016];
3) if insolvency proceedings of a legal person are being
terminated;
4) if insolvency proceedings of a natural person are being
terminated;
5) [22 December 2016];
6) if the administrator is released, removed, or suspended
from the office or his or her professional activities are
suspended.
[25 September 2014; 22 December 2016]
Chapter
IV
General Provisions for the Activity of an Administrator
Section 26. General Duties of an
Administrator
(1) After appointing of an administrator to the office the
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 Insolvency Control Service thereof.
(2) The administrator shall ensure efficient and lawful course
of insolvency proceedings of a legal person and insolvency
proceedings of a natural person, and achievement of objectives
thereof.
(21) The administrator shall use the System upon
exercising the rights granted in the law and fulfilling the
obligations specified in the law.
(3) The administrator has the following obligations:
1) to participate in a court hearings in cases of insolvency
proceedings of a legal person and insolvency proceedings of a
natural person;
2) to provide information regarding the course of insolvency
proceedings of a legal person and insolvency proceedings of a
natural person to the court, creditors, the Insolvency Control
Service, and other persons and authorities specified in laws and
regulations;
3) to notify the Insolvency Control Service of any change in
his or her place of practice, electronic mail address, given name
or surname within five days;
4) to cooperate with the authorised persons and authorities
that, in accordance with laws and regulations of other countries,
have the right to implement their powers in insolvency
proceedings of a legal person or insolvency proceedings of a
natural person;
5) upon request of the Insolvency Control Service, to provide
his or her operational report, documents and information
regarding the course of insolvency proceedings of a legal person
or insolvency proceedings of a natural person in which the
administrator has fulfilled or is fulfilling his or her
obligations;
6) if supervision of activities of a participant of the
financial and capital market is performed by the Financial and
Capital Market Commission in accordance with the requirements of
laws and regulations, upon request thereof, to provide this
Commission with information or a report on the course of
insolvency proceedings of the relevant participant of the
financial and capital market or insolvency proceedings of a legal
person;
7) to examine complaints about the course of specific
insolvency proceedings of a legal person or insolvency
proceedings of a natural person, and provide a reply to the
submitter of the complaint within two weeks;
8) to provide reports and materials to law enforcement
authorities regarding the facts established in insolvency
proceedings of a legal person or insolvency proceedings of a
natural person which may form the grounds for initiation of
criminal proceedings.
9) to ensure that the Insolvency Control Service may access
the place of practice of the administrator in Latvia registered
with the Insolvency Register and the location of the debtor -
legal person - when performing procedural actions specified in
Section 174.2, Paragraph one, Clause 9 of this
Law.
10) to register and grant the right of access to users of data
dissemination website of the System in the cases and in
accordance with the procedures stipulated by the Cabinet.
(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 insolvency proceedings of a legal person, the
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.
(6) The administrator shall at his or her place of practice or
location of the debtor settle a case of insolvency proceedings of
a legal person and insolvency proceedings of a natural person and
include therein all the information and documents related to
insolvency proceedings of a legal person and insolvency
proceedings of a natural person, as well as compile a list of
documents in the case of the relevant proceedings.
(7) The Cabinet shall determine the procedures for maintaining
records of insolvency proceedings of a legal person and
insolvency proceedings of a natural person.
[25 September 2014; 22 December 2016; 31 May 2018 /
Paragraph 2.1 and Paragraph three, Clause 10 shall
come into force on 1 January 2019. See Paragraph 62 of
Transitional Provisions]
Section 26.1
Record-keeping and Accounts of Income and Expenditures of an
Administrator
(1) An administrator shall keep records at his or her place of
practice, as well as accounts of income and expenditures thereof
resulting from the fulfilment of the duties of office of the
administrator.
(2) Income from the fulfilment of the duties of office of the
administrator shall consist of the remuneration to the
administrator for the fulfilment of the duties in insolvency
proceedings of a legal person and insolvency proceedings of a
natural person.
(3) Expenditures of the administrator shall consist of the
expenditures related to the maintenance of the place of practice
and other payments specified in this Law and other laws.
(4) The Cabinet shall determine the nomenclature of files of
the administrator and the time periods for storage thereof, as
well as the procedures for keeping records.
[22 December 2016]
Section 27. General Rights of an
Administrator
(1) An administrator has the following rights:
1) to request and receive from the debtor and representatives
thereof the information necessary in insolvency proceedings of a
legal person or insolvency proceedings of a natural person;
2) to request and receive from State and local government
authorities, free of charge, the information at the disposal
thereof regarding the debtor and representatives thereof
necessary in insolvency proceedings of a legal person or
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 insolvency proceedings of a legal person
and 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.
(2) The administrator with regard to whom the procedural
actions specified in Section 174.2, Paragraph one,
Clause 9 of this Law have been performed has the following
rights:
1) to be present at the time of performance of procedural
actions, to make comments and requests;
2) to suggest that the status of restricted access information
is determined with regard to the information or any part thereof
to be provided;
3) to become acquainted with the minutes of the procedural
action and the documents appended thereto, to recommend
corrections and additions;
4) within one month after signing the minutes of the
procedural action specified in Section 174.3 of this
Law, to submit a complaint to the Director of the Insolvency
Control Service regarding actions of an official of the
Insolvency Control Service.
[22 December 2016; 31 May 2018]
Section 28. Authorisation of an
Administrator
(1) An administrator has the right to authorise 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) The administrator shall prepare the authorisation
specified in Paragraph one of this Section and submit it to the
Insolvency Control Service, using the System.
[31 May 2018 / The new wording of Paragraph two
shall come into force on 1 January 2019. See Paragraph 62
of Transitional Provisions]
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) Actions may be brought against an administrator before a
court not later than within one year after termination of
insolvency proceedings of a legal person or 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; 22 December 2016]
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 civil liability insurance of their
activities.
(2) The Cabinet shall determine the procedures for civil
liability insurance of the administrator, as well as the minimum
insurance amount.
Chapter
IV.1
Disciplinary Liability of the Supervisory
Person of Legal Protection Proceedings and the Administrator
[22 December 2016]
Section 31.1 Initiation
of a Disciplinary Matter
(1) The Director of the Insolvency Control Service may
initiate a disciplinary matter against the supervisory person of
legal protection proceedings and the administrator upon proposal
of a judge or a prosecutor, or the Association of Administrators
or upon his or her own initiative.
(2) A disciplinary matter may be initiated against the
supervisory person of legal protection proceedings and the
administrator regarding the following:
1) a substantial violation of laws and regulations;
2) a substantial violation of the rules of professional
ethics;
3) systematic violations of laws and regulations if they have
been established by the Insolvency Control Service in accordance
with the procedures laid down in this Law;
4) abuse of power if it has been established by the Insolvency
Control Service in accordance with the procedures laid down in
this Law;
5) losses caused to the State, debtor, or creditors if the
amount of losses exceeds 20 minimum monthly salaries, and it has
been established by a court ruling which has entered into
effect.
(21) If criminal proceedings or administrative
offence proceedings have been initiated, or a complaint is
examined before a court within the framework of legal protection
proceedings, insolvency proceedings of a legal person, or
insolvency proceedings of a natural person and this complaint
concerns the same offence which forms the grounds for the
initiation of a disciplinary matter, the issue regarding deciding
on initiation of the disciplinary matter may be postponed but if
the disciplinary matter has been initiated, the examination
thereof may be suspended until the moment when a final ruling
enters into effect in the relevant criminal proceedings or
administrative offence proceedings, or a decision enters into
effect under which the court has examined the complaint within
the framework of a case of legal protection proceedings,
insolvency proceedings of a legal person, or insolvency
proceedings of a natural person.
(22) In the case referred to in Paragraph
2.1 of this Section a decision to initiate a
disciplinary matter shall be taken or examination of a
disciplinary matter shall be renewed within one month from the
day when the Insolvency Control Service has received the final
ruling which has entered into effect in the relevant criminal
proceedings or administrative offence proceedings or the decision
which has entered into effect and under which the court has
examined the complaint within the framework of a case of legal
protection proceedings, insolvency proceedings of a legal person,
or insolvency proceedings of a natural person.
(3) The Cabinet shall determine the procedures for initiating
a disciplinary matter against the supervisory person of legal
protection proceedings and the administrator.
[22 December 2016; 31 May 2018]
Section 31.2 Removal of
the Supervisory Person of Legal Protection Proceedings from the
Proceedings in Relation to Examination of a Disciplinary
Matter
If during examination of a disciplinary matter the Commission
of Disciplinary Matters establishes that a violation for the
elements of which in activities of the supervisory person of
legal protection proceedings a disciplinary matter has been
initiated is not compatible with the fulfilment of the
obligations of the supervisory person of legal protection
proceedings, the Commission of Disciplinary Matters may ask the
Director of the Insolvency Control Service to submit an
application to the court for removal of the supervisory person of
legal protection proceedings from specific legal protection
proceedings or all legal protection proceedings to which he or
she has been appointed.
[22 December 2016; 31 May 2018]
Section 31.3 Suspension
of the Administrator from the Fulfilment of Official Duties until
Examination of a Disciplinary Matter
(1) If during examination of a disciplinary matter the
Commission of Disciplinary Matters establishes that a violation
for the elements of which in activities of the administrator a
disciplinary matter has been initiated is not compatible with the
fulfilment of official duties of the administrator, the
Commission of Disciplinary Matters may ask the Director of the
Insolvency Control Service to suspend the administrator from the
office until examination of the matter.
(2) The Director of the Insolvency Control Service shall,
within two weeks from the day when a decision has been received
from the Commission of Disciplinary Matters on proposal to
suspend the administrator from the office, take a decision to
suspend the administrator from the office.
[22 December 2016; 31 May 2018]
Section 31.4 Commission
of Disciplinary Matters
(1) The Commission of Disciplinary Matters shall examine a
disciplinary matter against the supervisory person of legal
protection proceedings and the administrator and impose a
disciplinary punishment on the supervisory person of legal
protection proceedings and the administrator.
(2) The composition of the Commission of Disciplinary Matters
which is approved by the Minister for Justice shall include:
1) one representative of the Ministry of Justice;
2) two representatives of the Insolvency Control Service;
3) one judge of the Supreme Court assigned by the Chief
Justice of the Supreme Court;
4) one representative of the Association of
Administrators.
(3) The Chair of the Commission of Disciplinary Matters is a
representative of the Ministry of Justice.
(4) The composition of the Commission of Disciplinary Matters
shall be approved for three years.
(5) The Insolvency Control Service shall ensure and organise
the work of the Commission of Disciplinary Matters.
(6) The Cabinet shall determine the procedures for the
operation of the Commission of Disciplinary Matters and the
procedures for examining a disciplinary matter.
(7) The Commission of Disciplinary Matters shall develop and
adopt the code of professional ethics for supervisory persons of
legal protection proceedings and administrators.
[22 December 2016; 31 May 2018]
Section 31.5 Rights of
the Commission of Disciplinary Matters
In examining the disciplinary matters, the Commission of
Disciplinary Matters has the right:
1) to listen to explanations of other persons and request
opinions of experts, request information and documents from State
and local government authorities, as well as from other legal
persons governed by private law and officials thereof;
2) to ask the Insolvency Control Service to perform an
inspection of activities of the supervisory person of legal
protection proceedings or the administrator.
[22 December 2016; 31 May 2018]
Section 31.6 Decision of
the Commission of Disciplinary Matters
(1) The Commission of Disciplinary Matters shall take the
following decision within one month from the initiation of a
disciplinary matter:
1) to impose one of the disciplinary punishments provided for
in Section 31.7, Paragraph one, Clauses 1 and 2 of
this Law on the supervisory person of legal protection
proceedings and the administrator;
2) to suggest that the Director of the Insolvency Control
Service removes the administrator from the office;
3) [31 May 2018];
4) to suggest that the Director of the Insolvency Control
Service removes the supervisory person of legal protection
proceedings from specific legal protection proceedings or all
legal protection proceedings to which it has been appointed;
5) to dismiss the disciplinary matter;
6) not to impose a disciplinary punishment and to send a
decision to the Insolvency Control Service in order for it to
explain to the supervisory person of legal protection proceedings
or the administrator the incorrectness of his or her action.
(11) If it is impossible to conform to the time
period specified in Paragraph one of this Section due to
objective reasons, the Commission of Disciplinary Matters may
extend the time period for taking a decision to up to three
months from the day of initiation of a disciplinary matter. The
decision on extending the time period shall not be subject to
appeal.
(2) The Cabinet shall determine the procedures by which the
Commission of Disciplinary Matters shall take a decision.
[22 December 2016; 31 May 2018]
Section 31.7 Disciplinary
Punishments and Imposition Thereof
(1) One of the following disciplinary punishments shall be
imposed on the supervisory person of legal protection proceedings
and the administrator:
1) a reproof, with or without applying a fine of up to EUR
150;
2) a reprimand, with or without applying a fine from EUR 150
to 15 000;
3) a removal from the office of an administrator.
(2) The Commission of Disciplinary Matters shall impose the
disciplinary punishment specified in Paragraph one, Clauses 1 and
2 of this Section.
(3) The Director of the Insolvency Control Service shall
impose the disciplinary punishment specified in Paragraph one,
Clause 3 of this Section on the basis of a decision of the
Commission of Disciplinary Matters on proposal to remove the
administrator from the office.
(4) The Director of the Insolvency Control Service shall,
within two weeks from the day when a decision has been received
from the Commission of Disciplinary Matters on proposal to remove
the administrator from the office, take a decision to impose the
disciplinary punishment - removal from the office - on the
administrator.
(5) The supervisory person of legal protection proceedings and
the administrator on whom the disciplinary punishment provided
for in Paragraph one, Clause 1 or 2 of this Section has been
imposed has an obligation to pay the fine into the State basic
budget within three months from the day of taking of the
decision.
(6) The Commission of Disciplinary Matters may, upon a
reasoned request of the supervisory person of legal protection
proceedings or the administrator, take a decision to suspend the
payment of the imposed fine until a specific time period or to
divide it in time periods with regard to the supervisory person
of legal protection proceedings or the administrator on whom the
disciplinary punishment specified in Paragraph one, Clause 1 or 2
of this Section has been imposed.
(7) If the administrator fails to respect the disciplinary
punishment referred to in Paragraph one, Clause 1 or 2 of this
Section imposed on him or her, the Director of the Insolvency
Control Service shall decide to remove him or her from the
office.
[22 December 2016; 31 May 2018]
Section 31.8 Limitation
Period of a Disciplinary Matter
(1) A disciplinary matter shall not be initiated and a
disciplinary punishment shall not be imposed if two years have
passed from the day of discontinuation of a violation.
(2) If a disciplinary matter has not been initiated on the
basis of the fact that the supervisory person of legal protection
proceedings has been removed from the proceedings or the
administrator has been released from office, it may be initiated
if the relevant person is appointed to the office of the
supervisory person of legal protection proceedings or of the
administrator, unless two years have passed from the day when a
possible disciplinary offence has been established.
(3) If a disciplinary matter has been terminated on the basis
of the fact that the supervisory person of legal protection
proceedings has been removed from the proceedings or the
administrator has been released from office, the terminated
disciplinary matter shall be renewed if the relevant person is
appointed to the office of the supervisory person of legal
protection proceedings or of the administrator, unless two years
have passed from the day when the supervisory person of legal
protection proceedings has been removed from the proceedings or
the administrator has been released from office.
(4) In the case referred to in Paragraphs two and three of
this Section the limitation period referred to in Paragraph one
of this Section shall not include the time from the day when the
supervisory person of legal protection proceedings has been
removed from the proceedings or the administrator has been
released from office until the day when the relevant person is
appointed to the office of the supervisory person of legal
protection proceedings or of the administrator but not exceeding
five years from the day when a possible disciplinary offence has
been established.
[22 December 2016; 31 May 2018]
Section 31.9 Appeal of a
Decision of the Commission of Disciplinary Matters
The supervisory person of legal protection proceedings or the
administrator who has been subject to a disciplinary punishment
may appeal a decision of the Commission of Disciplinary Matters
to impose a disciplinary punishment to the District
Administrative Court within 30 days from the day of notification
of the decision.
[22 December 2016]
Section 31.10 Time Period
after which a Person is Considered not to be Subject to a
Disciplinary Punishment
If during two years from the day of imposing a disciplinary
punishment it has not been established that the supervisory
person of legal protection proceedings or the administrator who
had been subject to a disciplinary punishment has committed a new
disciplinary offence, the supervisory person of legal protection
proceedings or the administrator shall be recognised as not to be
subject to a disciplinary punishment.
[31 May 2018]
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 - the debtor).
(2) In legal protection proceedings, the producer of
agricultural products shall mean 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.
(11) If an application for legal protection
proceedings is re-submitted within one year, lodging of the
deposit specified in Section 62, Paragraph one of this Law shall
be a precondition for the submission of such application. The
debtor may agree that the deposit specified in Section 62,
Paragraph one of this Law shall be lodged by the creditor or
creditors.
(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; 31 may 2018 / See Paragraph 58
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 insolvency
proceedings of a legal person proclaimed and an application for
legal protection proceedings has been submitted.
Section 35. Appointing of an
Administrator to Legal Protection Proceedings
[22 December 2016]
Section 35.1 Appointing
of the Supervisory Person of Legal Protection Proceedings to
Specific Legal Protection Proceedings
(1) The majority of creditors specified in Section 42,
Paragraph three of this Law shall recommend to a court a
candidate for the supervisory person of legal protection
proceedings in specific legal protection proceedings upon
agreement thereon with the supervisory person of legal protection
proceedings and the debtor.
(2) The supervisory person of legal protection proceedings has
the right to withdraw from the specific legal protection
proceedings at any moment. The supervisory person of legal
protection proceedings shall submit an application for withdrawal
from the specific legal protection proceedings to the court in
which the relevant case of legal protection proceedings has been
initiated by concurrently notifying the creditors of the
debtor.
(3) If the supervisory person of legal protection proceedings
has submitted to a court an application for withdrawal from the
specific legal protection proceedings, the majority of creditors
specified in Section 42, Paragraph three of this Law shall
recommend to the court a new candidate for the supervisory person
of legal protection proceedings upon agreement thereon with the
supervisory person of legal protection proceedings and the
debtor. An authorised representative of the majority of creditors
specified in Section 42, Paragraph three of this Law shall submit
to the court an application for approval of a new candidate for
the supervisory person of legal protection proceedings in the
specific legal protection proceedings within 15 days from the day
when the application for withdrawal of the supervisory person of
legal protection proceedings has been submitted to the court.
(4) The majority of creditors specified in Section 42,
Paragraph three of this Law has the right to change the
supervisory person of legal protection proceedings. The majority
of creditors specified in Section 42, Paragraph three of this Law
shall recommend to a court a new candidate for the supervisory
person of legal protection proceedings upon agreement thereon
with the supervisory person of legal protection proceedings and
the debtor. An authorised representative of the majority of
creditors specified in Section 42, Paragraph three of this Law
shall submit to the court an application for approval of a new
candidate for the supervisory person of legal protection
proceedings.
(5) If an agreement is not reached on a candidate for the
supervisory person of legal protection proceedings in the case
referred to in Paragraph one or three of this Section, a court
shall select him or her from the candidates for the supervisory
person of legal protection proceedings proposed by the majority
of creditors specified in Section 42, Paragraph three of this Law
and appoint him or her to specific legal protection
proceedings.
[22 December 2016]
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 a court ruling has been taken to implement
legal protection proceedings and the plan of measures of the
legal protection proceedings has been approved, the name of the
court, the case number and, if applicable, also the time period
within which the complaint referred to in Article 5 of Regulation
No 2015/848 of the European Parliament and of the Council is to
be submitted;
6) the given name, surname, address of the place of practice
in Latvia, telephone number and electronic mail address of the
supervisory person of legal protection proceedings appointed to
the case, as well as the identification number assigned by the
responsible institution which maintains the Insolvency
Register;
61) if applicable, also the given name, surname,
address of the place of practice, telephone number, or electronic
mail address of the administrator involved in the insolvency
proceedings specified in Article 3(1) of Regulation No 2015/848
of the European Parliament and of the Council;
7) [22 December 2016];
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;
91) if applicable, also the type of the insolvency
proceedings in accordance with Article 3(1), (2) or (4) of
Regulation No 2015/848 of the European Parliament and of the
Council;
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; 22 December 2016; 31 May 2018]
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 for the case
referred to in Paragraph two of this Section;
3) a prohibition for the creditor to submit an application for
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 for 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) The debtor has an obligation, upon request of the
supervisory person of legal protection proceedings, to provide
him or her with all information regarding the development and
coordination of the plan of measures of legal protection
proceedings in writing without delay, as well as to submit
documents attesting the validity of the claims of creditors and
to ensure a possibility to inspect economic activity and
documents of the debtor in person.
[12 September 2013; 25 September 2014; 22 December
2016]
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 claims of creditors;
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 group of creditors and each type of the
claim of 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 penalties applied in the administrative
offence proceedings and punishments laid down in 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; 5 December 2019 /
Amendments to Paragraph seven regarding the replacement of the
words "the sanctions laid down in the Latvian Administrative
Violations Code" with the words "the penalties applied in the
administrative offence proceedings and punishments laid down in"
shall come into force on 1 July 2020. See Paragraph 70 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 - the 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 is 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 the non-secured creditor has been reduced or
cancelled after proclamation of legal protection proceedings, in
conformity with the possible surcharge of the shares.
(5) When a non-secured creditor applies for new shares, they
are 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 case of legal protection proceedings
the debtor shall immediately send a list of the current creditors
to all creditors by indicating the amount of the claim of each
creditor and contact information, as well as develop a plan of
measures of legal protection proceedings which shall be
coordinated with the creditors in accordance with the procedures
laid down in this Law and submitted to the court for approval not
later than on the day following expiry of the time period for
coordination specified in Paragraph two of this Section.
(11) Upon developing the plan of measures of legal
protection proceedings, the debtor has the right to convene a
creditors meeting, choosing one of the types of occurrence of the
creditors meeting referred to in Section 86, Paragraph
2.2 of this Law.
(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 legal protection
proceedings is at least as large as that if 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 legal protection proceedings or will take effect
during legal protection proceedings, separately indicating the
obligations of the debtor for the performance of which the
creditors have brought an action in a 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 the debtor may perform
without coordination with the supervisory person of legal
protection proceedings, and the amount of such transactions;
11) the procedures by which creditors shall be informed of the
results of the activities of the debtor during the time period of
the implementation of the plan of legal protection
proceedings;
12) information regarding a candidate for the supervisory
person of legal protection proceedings if the agreement specified
in Section 35.1 of this Law has been reached,
indicating the following:
a) his or her given name, surname;
b) the personal identity number (if the person does not have a
personal identity number - the date of birth, the number and date
of issue of a personal identification document, the country and
authority which issued the document);
c) the address of the place of practice in Latvia;
d) the telephone number;
e) the electronic mail address;
f) the amount of remuneration;
121) the confirmation of a candidate for the
supervisory person of legal protection proceedings that the
restrictions specified in Section 12.3, Paragraphs two
and three of this Section are not applicable to him or her;
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 claim of the secured creditor, as well as
the procedures for payment of such a type of compensation;
15) justification for the fact that the gain of creditors not
having co-ordinated the plan of measures of legal protection
proceedings by implementing legal protection proceedings is at
least as large as that if 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 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 abovementioned plan shall
be considered to be expenses of 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) [22 December 2016];
4) the opinion of a sworn auditor referred to in Section
43.1 of this Law if such has been prepared;
5) the information referred to in Paragraph four, Clauses 12
and 12.1 of this Section regarding the candidates for
the supervisory person of legal protection proceedings proposed
by the creditors if an agreement has not been reached on the
candidate for the supervisory person of legal protection
proceedings.
(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 an obligation to deliver to the creditors
whose claims prima facie have been recognised as invalid
the opinion of the supervisory person of legal protection
proceedings on the plan of measures of legal protection
proceedings concurrently with submitting the plan of measures of
legal protection proceedings to the court, as well as immediately
inform the creditors of the day when the application for legal
protection proceedings will be examined.
[25 September 2014; 22 December 2016; 31 May 2018; 5 June
2020]
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 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. As to the objections not taken into account, the
debtor shall immediately commence the activities referred to in
Section 43.1 of this Law and append the objections not
taken into account to the coordinated 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 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
Regulation No 2015/848 of the European Parliament and of the
Council have been initiated against the debtor in Latvia, the
plan of measures of legal protection proceedings shall be
coordinated in writing with the administrator involved in the
insolvency proceedings specified in Article 3(1) of Regulation No
2015/848 of the European Parliament and of the Council.
[25 September 2014; 22 December 2016; 31 May 2018]
Section 43. Opinion of the
Supervisory Person of Legal Protection Proceedings on the Plan of
Measures of Legal Protection Proceedings
(1) Prior to approving the plan of measures of legal
protection proceedings in a court, the supervisory person of
legal protection proceedings shall provide an opinion on this
plan within the time period specified by the court.
(11) The supervisory person of legal protection
proceedings shall deliver the opinion on the plan of measures of
legal protection proceedings to the debtor concurrently with the
submission thereof to the court.
(2) The supervisory person of legal protection proceedings
shall provide in his or her opinion an assessment of the
conformity of the plan of measures of legal protection
proceedings with the requirements of Sections 38, 40, and 42 of
this Law. The supervisory person of legal protection proceedings
shall provide in his or her opinion an assessment of the fact
whether the prepared plan would achieve the purpose of legal
protection proceedings specified in the law.
(3) The supervisory person of legal protection proceedings
shall, upon his or her own initiative, if the respective
information is at his or her disposal, express a reasoned view in
the opinion as to whether the claim of creditor indicated in the
plan of measures of legal protection proceedings and in the
documents appended thereto is prima facie justified. If
the supervisory person of legal protection proceedings has
evidence at his or her disposal attesting that the claims
prima facie are unjustified, the supervisory person of
legal protection proceedings shall append it to the opinion.
(4) If the supervisory person of legal protection proceedings
recognises in his or her opinion any of the claims as prima
facie unjustified, his or her opinion shall be handed over to
the debtor who shall in turn immediately inform the relevant
creditor.
(5) The debtor or the creditor whose claim has been recognised
as prima facie unjustified by the supervisory person of
legal protection proceedings has the right to, not later than
three days prior to the day of examination of the application for
legal protection proceedings, submit to the court evidence of the
validity of the claim of the creditor.
(6) If the supervisory person of legal protection proceedings
establishes that the plan of measures of legal protection
proceedings contains liabilities which raise reasonable doubt, or
the supervisory person of legal protection proceedings suspects
that the documents appended to the plan might be forged, he or
she shall provide the relevant information to the responsible
State authorities.
[25 September 2014; 22 December 2016; 31 May 2018]
Section 43.1 Opinion of a
Sworn Auditor on the Objections of the Creditors
(1) If the debtor has not taken into account the objections
made by the creditors to the plan of measures of legal protection
proceedings, an independent sworn auditor who is not the
supervisory person of legal protection proceedings shall evaluate
these objections and provide his or her opinion on them.
(2) If the objections of the creditors refer to the validity
of the claim of the creditor, the sworn auditor shall express a
reasoned view in his or her opinion as to whether the claim of
the creditor indicated in the plan of measures of legal
protection proceedings and in the documents appended thereto is
prima facie justified.
(3) If the sworn auditor recognises any of the claims as
prima facie unjustified, he or she shall hand over the
opinion to the debtor who shall in turn immediately inform the
relevant creditor.
(4) The debtor or the creditor whose claim has been recognised
as prima facie unjustified by the sworn auditor has the
right, not later than three days prior to the day of examination
of the application for legal protection proceedings, to submit to
the court evidence of the validity of the claim of the
creditor.
(5) If the sworn auditor establishes that the plan of measures
of legal protection proceedings contains liabilities which raise
reasonable doubt, or suspects that the documents appended to the
plan might be forged, he or she shall provide the relevant
information to the responsible State authorities.
(6) Any costs related to the provision of the opinion of a
sworn auditor shall be financed by the creditors whose objections
have formed the grounds for the commencement of the activities
specified in this Section.
[22 December 2016]
Chapter
VII
Implementation of Legal Protection Proceedings
Section 44. Pre-Conditions for the
Implementation of Legal Protection Proceedings
Legal protection proceedings are implemented in respect of a
debtor if:
1) the plan of measures of legal protection proceedings has
been coordinated in accordance with the procedures and time
period laid down in this Law;
2) the court has approved the plan of measures of legal
protection proceedings and has ruled 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 - takes
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) The supervisory person of legal protection proceedings,
the creditor, and the shareholder (stockholder) of the debtor -
commercial company - may submit an application to the court for
recognition of the decision of a meeting of shareholders
(stockholders) of the debtor - commercial company - on
reorganisation as invalid if it has been taken in violation of
this Law or does not conform to the plan of measures of 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 for
the transformation of a debtor, may not be applied within the
scope of legal protection proceedings.
[22 December 2016]
Section 47. Amendment of the Plan of
Measures of Legal Protection Proceedings
The debtor shall coordinate amendments to the plan of measures
of legal protection proceedings with the creditors in accordance
with the procedures laid down in Section 42 of this Law and,
together with the opinion of the supervisory person of legal
protection proceedings, submit them to the court for
approval.
[22 December 2016]
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 ruling regarding the
implementation of 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 amending 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 for the 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 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 for the cases where this is provided for in the
plan of measures of legal protection proceedings;
5) dividing and paying dividend profits;
6) performing financial obligations which are not included in
the plan of measures of legal protection proceedings.
(2) The debtor may, by coordinating with the supervisory
person of legal protection proceedings in writing and without
making any amendments to the plan of measures of legal protection
proceedings, fulfil the payment obligations (payment of invoices)
which are not included in the plan of measures of legal
protection proceedings, if during the period of implementation of
legal protection proceedings these payments in total do not
exceed two per cent of the total amount of the claims of
creditors at the moment of the approval of the plan of measures
of legal protection proceedings.
(3) A debtor shall have the following obligations during legal
protection proceedings:
1) to implement the plan of measures of legal protection
proceedings;
2) to shift all profits towards the implementation of legal
protection proceedings;
3) to cover the costs of legal protection proceedings;
4) to notify the supervisory person of legal protection
proceedings in writing, at least once a month, of the
implementation of the plan of measures of legal protection
proceedings;
5) upon request of the supervisory person of legal protection
proceedings, to immediately provide him or her in writing with
all information regarding the implementation of the plan of
measures of legal protection proceedings and to ensure a
possibility to inspect economic activity and documents of the
debtor in person;
6) to notify immediately the supervisory person of legal
protection proceedings of any circumstances due to which the
debtor will not be able to implement the plan of measures of
legal protection proceedings;
7) to notify the supervisory person of legal protection
proceedings of change in legal address thereof and any other
changes which are to be entered in the public registers;
8) to notify the supervisory person of legal protection
proceedings of any significant events in the activities of the
debtor.
[22 December 2016]
Section 50. Activities of the
Supervisory Person of Legal Protection Proceedings During Legal
Protection Proceedings
(1) In order to ensure lawful and efficient course of legal
protection proceedings, the supervisory person of legal
protection proceedings shall perform the supervision of the
activities of the debtor according to the purpose of the
protection proceedings, the plan of measures of legal protection
proceedings, and the requirements of laws and regulations.
(2) The supervisory person of legal protection
proceedings:
1) within five days after proclamation of the ruling regarding
the implementation of legal protection proceedings, shall submit
an approved plan of measures of legal protection proceedings to
the responsible authority which maintains the Insolvency
Register;
2) within five days after taking of a court decision on
approval of amendments to the plan of measures of legal
protection proceedings, shall submit amendments to the plan of
measures of legal protection proceedings approved by court to the
responsible authority which maintains the Insolvency
Register;
3) shall supervise the implementation of the plan of measures
of legal protection proceedings;
4) shall request and receive from the debtor all information
regarding the course of the legal protection proceedings and
economic activity;
5) shall inform the creditors, upon their request, regarding
the implementation of the plan of measures of legal protection
proceedings and examine the complaints submitted.
(3) The supervisory person of legal protection proceedings has
the following rights:
1) to request and receive from the debtor and representatives
thereof the information necessary for legal protection
proceedings;
2) to request and receive from other competent persons and
authorities the information at their disposal which is related to
the course of legal protection proceedings;
3) to become acquainted with the financial situation and all
the documents of the debtor, as well as to request and receive
all the documents;
4) to submit in electronic form to the Insolvency Control
Service the information regarding his or her education and
qualification for publication on the website. The submitter of
information shall ensure that the information submitted for
publication is presented in accordance with the requirements for
drawing up of documents laid down in laws and regulations and
corresponds to the requirements for official secret, restricted
access information, as well as personal data protection.
(4) The supervisory person of legal protection proceedings
with regard to whom the procedural actions specified in Section
174.2, Paragraph one, Clause 9 of this Law have been
performed has the following rights:
1) to be present at the time of performance of procedural
actions, make comments and requests;
2) to suggest that the status of restricted access information
is set with regard to the information or any part thereof to be
provided;
3) to become acquainted with the minutes of the procedural
action and the documents appended thereto, to recommend
corrections and additions;
4) within one month after signing the minutes of the
procedural action specified in Section 174.3 of this
Law, to submit a complaint to the Director of the Insolvency
Control Service regarding actions of an official of the
Insolvency Control Service.
(5) The supervisory person of legal protection proceedings has
the following obligations:
1) to participate in a court hearings in cases of legal
protection proceedings;
2) to provide information regarding the course of legal
protection proceedings to the court, creditors, the Insolvency
Control Service, and other persons and authorities specified in
laws and regulations;
3) to notify, within five days, the responsible institution
which maintains the Insolvency Register and the creditors of any
changes in the contact information specified in the plan of
measures of legal protection proceedings;
4) to cooperate with the authorised persons and authorities
which, in accordance with laws and regulations of other
countries, have the right to implement their powers in legal
protection proceedings;
5) to provide reports and materials to law enforcement
authorities regarding the facts established in legal protection
proceedings which may form the grounds for initiation of criminal
proceedings.
[22 December 2016; 31 May 2018]
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) A court shall terminate legal protection proceedings and
declare insolvency proceedings of a legal person:
1) if a case of legal protection proceedings has been
initiated with regard to the debtor for the second time within a
year but implementation of legal protection proceedings has not
been declared;
2) upon receipt of an application of the creditor if the
feature referred to in Paragraph three, Clause 2 of this Section
is present;
3) upon receipt of an application of a representative of the
majority of creditors specified in Section 42, Paragraph three of
this Law if any of the features referred to in Paragraph three of
this Section is present.
(3) The supervisory person of legal protection proceedings has
an obligation to immediately inform the creditors of the
following:
1) when implementing the legal protection proceedings, a
debtor has not performed the activities specified in this Law or
has provided false information;
2) the debtor has not implemented the plan of measures of
legal protection proceedings for more than 30 days and has not
submitted the amendments to this plan to the 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 legal protection
proceedings.
(5) A debtor shall submit an application for insolvency
proceedings to the court, concurrently requesting termination of
legal protection proceedings if he or she is unable to honour the
obligations specified in the plan of measures of legal protection
proceedings (Section 57, Paragraph one, Clause 9).
(6) The supervisory person of legal protection proceedings
shall, not later than within five days after the court has taken
a decision to terminate legal protection proceedings, send a copy
of the relevant 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 is not applied if legal
protection proceedings have been terminated by proclaiming
insolvency proceedings of a legal person.
[25 September 2014; 22 December 2016]
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 legal protection
proceedings is justification for the termination of the
restriction of action of the debtor specified in 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
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 are 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 legal
protection proceedings in accordance 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 coordinated the plan of measures
of legal protection proceedings;
3) the majority of creditors specified in Section 42,
Paragraph three of this Law has agreed with the supervisory
person of legal protection proceedings and the debtor on the
supervisory person of legal protection proceedings in the plan of
measures of extrajudicial legal protection proceedings;
4) the debtor has received an opinion of the supervisory
person of legal protection proceedings (Section 43);
5) the debtor has sent the coordinated plan of measures of the
legal protection proceedings to those creditors who have not
coordinated 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).
[22 December 2016]
Section 54. Supervisory Person of
Legal Protection Proceedings in Extrajudicial Legal Protection
Proceedings
(1) A court shall appoint the supervisory person of legal
protection proceedings to extrajudicial legal protection
proceedings upon an agreement between the majority of creditors
specified in accordance with Section 42, Paragraph three of this
Law, the supervisory person of legal protection proceedings, and
the debtor.
(2) An agreement of the majority of creditors specified in
Section 42, Paragraph three of this Law with the supervisory
person of legal protection proceedings and the debtor on the
choice of the supervisory person of legal protection proceedings
(Section 53, Paragraph one, Clause 3) shall be considered reached
if the plan of measures of extrajudicial legal protection process
has been coordinated by the majority of creditors specified in
Section 42, Paragraph three of this Law.
[22 December 2016]
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 - the 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 insolvency
proceedings of a legal person exists:
1) when applying compulsory execution means it has not been
possible to execute the court ruling 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
EUR 4268 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 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
EUR 2134 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 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 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 insolvency proceedings of a legal person have
been declared in the court, the name of the court, the case
number and, if applicable, also the time period within which a
complaint referred to in Article 5 of Regulation No 2015/848 of
the European Parliament and of the Council is to be
submitted;
5) the given name, surname and the number of office
certificate of the administrator appointed to the case;
6) the given name, surname, the number of office certificate
and the time period of validity of the authorisation of the
authorised administrator;
7) if applicable, also the given name, surname, address of the
place of practice, telephone number, or electronic mail address
of the administrator involved in the insolvency proceedings
specified in Article 3(1) of Regulation No 2015/848 of the
European Parliament and of the Council;
8) the time period for the application by creditors;
9) the address, date and time of the creditors meeting;
10) if applicable, also the type of insolvency proceedings in
accordance with Article 3(1), (2) or (4) of Regulation No
2015/848 of the European Parliament and of the Council;
11) the date of the termination of 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; 22 December 2016; 31 May 2018]
Section 59. Appointing of an
Administrator to Insolvency Proceedings of a Legal Person
(1) A candidate for the office of an administrator in specific
insolvency proceedings of a legal person shall be selected from
the List of Candidates, using an automated selection provided by
the Judicial Informative System.
(2) Information regarding a candidate for the office of an
administrator who is selected from the List of Candidates, using
automated selection provided by the Judicial Informative System,
shall be communicated to the Financial and Capital Market
Commission, if this candidate is recommended to a participant of
the financial and capital market whose supervision is performed
by the Financial and Capital Market Commission in accordance with
the requirements of laws and regulations.
[31 May 2018 / The new wording of Section shall come
into force on 1 January 2019. See Paragraph 64 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 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
insolvency proceedings of a legal person referred to in Section
57, Paragraph one, Clause 1, 2, 3, or 4 of this Law exists;
11) a creditor or creditors if the feature referred
to in Section 51, Paragraph three, Clause 2 of this Law is
present;
12) a representative of the majority of creditors
specified in Section 42, Paragraph three of this Law if any of
the features referred to in Section 51, Paragraph three of this
Law is present;
2) a debtor, if any of the features of 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 referred to in Article 37(1)(a) of Regulation No
2015/848 of the European Parliament and of the Council in order
to initiate insolvency proceedings specified in Article 3(2) of
this Regulation against the debtor;
4) [22 December 2016].
(2) An employee who has or who has had employment legal
relationships with the debtor may submit an application for
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 an obligation to submit an application for
insolvency proceedings of a legal person without delay, if any of
the features of 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 an obligation to
submit an application for 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 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; 22 December 2016; 31 May 2018]
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) A precondition for the submission of an application for
insolvency proceedings of a legal person shall be the payment of
a deposit for insolvency proceedings of a legal person in the
amount of two minimum monthly salaries into an account specially
created by the Insolvency Control Service.
(2) The objective of the deposit for insolvency proceedings of
a legal person is to meet the costs of 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.
(21) The administrator has an obligation,
immediately after declaration of insolvency proceedings of a
legal person but not later than until submission of an
application for the termination of insolvency proceedings of a
legal person to the court, to submit a submission to the
Insolvency Control Service for the disbursement of a deposit for
insolvency proceedings of a legal person if insolvency
proceedings of a legal person have been declared according to the
debtor's application for insolvency proceedings.
(3) The deposit may be used if the debtor has no property or
its value is lower than the deposit amount and 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 insolvency proceedings of a legal person, the
deposit shall be repayable to the submitter of the application
for insolvency proceedings of a legal person.
(5) The deposit for insolvency proceedings of a legal person
is not repaid to the submitter of an application for insolvency
proceedings of a legal person in the following cases:
1) the application for insolvency proceedings of a legal
person has been unjustified or deliberately false;
2) the creditor, upon receiving the settlement of the claim
thereof, does not revoke the application for insolvency
proceedings of a legal person and the court holds a sitting for
the examination of the matter of insolvency proceedings of a
legal person;
3) if an application for the disbursement of a deposit for
insolvency proceedings of a legal person is not submitted within
a year after occurrence of the cases referred to in Paragraph
three or four of this Section;
4) if the administrator fails to perform the obligation
specified in Paragraph 2.1 of this Section until
submission of an application for the termination of insolvency
proceedings of a legal person to the court.
(6) In the cases specified in Paragraph five of this Section,
the deposit paid shall be transferred to the Treasury.
(7) [22 December 2016]
(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 ruling 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 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 insolvency proceedings of a
legal person are covered from resources of the employee claim
guarantee fund.
(73) [31 May 2018 / See Paragraph 65 of
Transitional Provisions]
(74) In the case referred to in Paragraph
7.1 of this Section, the costs of insolvency
proceedings of a legal person are covered according to 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 a
deposit for insolvency proceedings of a legal person shall be
paid into the account specially created by the Insolvency Control
Service and disbursed to the submitter of the application for
insolvency proceedings of a legal person, the administrator, or
to the Treasury.
[25 September 2014; 22 December 2016; 31 May 2018 /
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. Amendment to
Paragraph 7.2 shall come into force on 1 January
2019. See Paragraph 65 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 is suspended and the administration of the debtor is
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 is suspended for tax claims) ceases;
4) two months from the day after proclamation of insolvency
proceedings of a legal person, a secured creditor is prohibited
from requesting the sale of the pledged property of the
debtor.
(2) If enforcement of a judgment is commenced prior to the
proclamation of 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 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 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 insolvency proceedings of the legal person.
(4) The judgement of the court proclaiming 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 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, obligations, 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, not later than until drawing up of
the plan for sale of the property or the report on non-existence
of the property, decide on continuation of economic activity of
the debtor to full or limited extent if the continuation of this
activity is economically justified, or on 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, shall 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 regarding the appointing of an administrator.
(2) If the insolvency proceedings specified in Article 3(1) of
Regulation No 2015/848 of the European Parliament and of the
Council have been initiated against a debtor in another Member
State and the administrator involved therein operates in Latvia,
without commencing the insolvency proceedings specified in
Article 3(2) of this Regulation, the administrator involved in
the insolvency proceedings specified in Article 3(1) of
Regulation No 2015/848 of the European Parliament and of the
Council shall ensure that a properly certified copy of the ruling
regarding the declaration of insolvency proceedings of a legal
person and the appointing of an administrator, as well as the
translation of this ruling into the official language certified
in accordance with the specified procedures, are submitted to the
relevant competent persons and authorities of insolvency
proceedings of a legal person.
[31 May 2018 / See Paragraph 67 of Transitional
Provisions]
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 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 claims of creditors;
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 and within the
time periods specified in this Law, provide his or her
operational report to the creditors and the Insolvency Control
Service;
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 Control
Service with a submission regarding settlement of the claims of
employees from resources of the employee claim guarantee fund.
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 a 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 Financial and Capital Market Commission performs
supervision of 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 the known creditors
of the course of insolvency proceedings of a legal person by
sending an individual notification to the creditors whose place
of residence or legal address is in a foreign country, as well as
a notification to the Insolvency Control Service;
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 obligations specified in this Law.
[25 September 2014; 31 May 2018]
Section 66. Obligations of the
Administrator in Insolvency Proceedings which have been Initiated
in Accordance with Regulation No 2015/848 of the European
Parliament and of the Council
(1) If the insolvency proceedings specified in Article 3(1) of
Regulation No 2015/848 of the European Parliament and of the
Council have been initiated against a debtor in another Member
State, the person referred to in Article 29(1) of this Regulation
shall inform the relevant public registers of the initiation of
insolvency proceedings against the debtor when performing
activities in Latvia which are related to the recovery and
alienation of the property of the debtor. Information shall be
accompanied by a properly certified copy of the ruling regarding
the initiation of insolvency proceedings against the debtor and
the appointing of the administrator involved in the insolvency
proceedings specified in Article 3(1) of Regulation No 2015/848
of the European Parliament and of the Council, as well as a
translation of this ruling into the official language certified
in accordance with the specified procedures.
(2) If the insolvency proceedings specified in Article 3(1) of
Regulation No 2015/848 of the European Parliament and of the
Council have been initiated against the debtor in another Member
State and the debtor owns an establishment in Latvia within the
meaning of Article 2(10) of this Regulation, the person referred
to in Article 28(1) of Regulation No 2015/848 of the European
Parliament and of the Council shall,, within five days from the
day when the administrator involved in the insolvency proceedings
specified in Article 3(1) of this Regulation has commenced
activities which are related to the recovery and alienation of
the property of the debtor's establishment, submit an application
for insolvency proceedings of a debtor - legal person - to the
responsible institution which makes entries in the Insolvency
Register. 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 ruling was
rendered;
3) the given name, surname, address of the place of practice,
telephone number, or electronic mail address of the administrator
involved in the insolvency proceedings specified in Article 3(1)
of Regulation No 2015/848 of the European Parliament and of the
Council;
4) the fact that the insolvency proceedings specified in
Article 3(1) of Regulation No 2015/848 of the European Parliament
and of the Council have been initiated against the debtor;
5) the Member State whose laws and regulations are applicable
to the opening, conduct and termination of insolvency
proceedings.
(3) If the insolvency proceedings specified in Article 3(1) of
Regulation No 2015/848 of the European Parliament and of the
Council have been initiated against a debtor in another Member
State, the person referred to in Article 28(2) of this Regulation
is entitled, when performing activities in Latvia which are
related to the recovery and alienation of the property of the
debtor, to submit an application to the responsible institution
for the making of an entry in the Insolvency Register by
indicating the information referred to in Paragraph two of this
Section.
(4) If the insolvency proceedings specified in Article 3(1) or
(2) of Regulation No 2015/848 of the European Parliament and of
the Council have been initiated against a debtor in Latvia, the
administrator shall, within five days after declaration of the
insolvency of the debtor, send to the creditors whose place of
residence or legal address is in another Member State a
notification regarding insolvency of the debtor and submission of
the claims of creditors in accordance with the procedures laid
down in the relevant 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, the day of proclaiming of the
judgement, the case number and the time period within which the
complaint specified in Article 39 of Regulation No 2015/848 of
the European Parliament and of the Council should be
submitted;
3) the given name, surname, address of the place of practice,
telephone number, or electronic mail address of the
administrator;
4) the type of the initiated insolvency proceedings in
accordance with Article 3(1), (2), or (4) of Regulation No
2015/848 of the European Parliament and of the Council;
5) the Member State the laws and regulations of which are
applicable to the opening, conduct, and termination of insolvency
proceedings;
6) that information as to whether the claim is secured with
rights in rem is to be included in the claim of the creditor.
(5) If the insolvency proceedings specified in Article 3(2) of
Regulation No 2015/848 of the European Parliament and of the
Council have been initiated against a debtor in Latvia, the
administrator shall cooperate with the administrator involved in
the insolvency proceedings specified in Article 3(1) of this
Regulation, provide the information necessary for administration
of the insolvency proceedings upon request of the administrator,
also 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 the property,
regarding the submitted claims of creditors, recognised and
non-recognised claims of creditors and complaints in connection
with claims, regarding the grouping of creditors, the settled
claims of creditors, creditors meetings, regarding the course,
solutions, and measures of the insolvency proceedings specified
in Article 3(2) of Regulation No 2015/848 of the European
Parliament and of the Council, the division of property and money
surplus.
(6) If the insolvency proceedings specified in Article 3(1) of
Regulation No 2015/848 of the European Parliament and of the
Council 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 and
initiated against the debtor in another Member State and, if
necessary, request information from the administrator involved in
the insolvency proceedings specified in Article 3(2) of the
relevant Regulation, inform the administrator of other insolvency
proceedings specified in Article 3(2) of this Regulation and
initiated against the debtor, and the important aspects of the
course of these proceedings.
[31 May 2018]
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 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 insolvency
proceedings of a legal person;
7) to cover the costs of 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
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 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 efficient 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 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 claim
of a creditor, 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 ruling regarding undisputed
enforcement of obligations or compulsory enforcement of
obligations according to the warning procedures, if there is
reasonable doubt that the claim of the creditor is based on a
court ruling that has taken effect within the three years
preceding the date of proclaiming 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 insolvency proceedings is mandatory
in conformity with 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 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 submitted claims of 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 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;
7) to use the System in accordance with the procedures and to
the extent laid down in laws and regulations when exercising the
rights granted in the law and fulfilling the obligations
specified in the law.
[31 May 2018 / Clause 7 shall come into force on 15
April 2019. See Paragraph 63 of Transitional
Provisions]
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
insolvency proceedings of a legal person. The representative of a
debtor has an obligation to prepare a list of the property and
documents of the debtor to be handed over. The representative of
the debtor shall hand over documents to the administrator after
having arranged them according to the record-keeping rules.
(3) If the representative of a debtor changes his or her place
of residence during the period of insolvency proceedings of a
legal person, he or she has an obligation to notify the
administrator and the court of the address of the new place of
residence without delay.
[25 September 2014; 22 December 2016]
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 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 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 insolvency proceedings.
(2) In the cases referred to in Paragraph one of this Section,
the amount of losses incurred by the debtor are the claims of
creditors 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 insolvency proceedings the administrator of 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
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
Claims of Creditors
Section 73. Submission of Claims of
Creditors
(1) Claims of creditors 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
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 insolvency
proceedings of the debtor, but not later than until the day when
the plan for settling the claims of creditors 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 insolvency proceedings of a debtor, but not later
than until the day when the plan for settling the claims of
creditors has been settled in accordance with the procedures laid
down in this Law, the creditor in question shall be included in
the Register of Claims of Creditors, however, this creditor is
not granted voting rights.
(31) The creditors have the right to submit a claim
of a creditor against the debtor through the System within the
time period specified in Paragraphs one, two, and three of this
Section.
(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) The secured creditor, when submitting a claim of a
creditor, shall indicate the amount for which the claim is
secured. The 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 claim of a creditor, shall
state the value of the debtor's property serving as a security
(pledged) as on the date of proclamation of 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 claim of a creditor is based on the
court ruling 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
(2) of Regulation No 2015/848 of the European Parliament and of
the Council have been initiated against a debtor in Latvia, the
debtor's creditor whose place of residence or legal address is in
another Member State shall submit the claim of a creditor. The
information specified in Articles 41 and 42 of the abovementioned
Regulation shall be indicated in the claim. The administrator
shall convert a claim of a creditor in foreign currency into
euros according to the exchange rate applied for accounting
purposes on the date of proclamation of insolvency proceedings of
a legal person.
(8) If the insolvency proceedings specified in Article 3(1) or
(2) of Regulation No 2015/848 of the European Parliament and of
the Council have been initiated against a debtor in Latvia and
the administrator, in the interests of the creditors of these
proceedings, submits claims of creditors in 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 agree to the submission of the
claim of a creditor 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 claim of a
creditor within two weeks after receipt of the retraction.
(9) The Insolvency Control Service shall exercise the right to
claim with regard to the repayment of the funds allocated thereto
which have been disbursed from the State budget funds for
settling claims of employees. When exercising the right to claim
for settling claims of employees in the amount of the disbursed
funds, the provisions of this Law regarding the time period for
the submission of claims of creditors and the recognition or
non-recognition of the claims of creditors are not applicable to
the Insolvency Control Service.
(10) A claim by the Insolvency Control Service to repay the
funds allocated by it for settling the claims of employees shall
be entered into the Register of Claims of Creditors when the
Insolvency Control Service has disbursed the amounts allocated
for settling claims of employees.
(11) The claims of tax authority raised after the date of
proclamation of insolvency proceedings and directly related to
the debtor's transactions performed up to the date when
insolvency proceedings were proclaimed shall be filed as claims
of a creditor in accordance with the procedures laid down in this
Law.
(12) Creditors have an obligation to inform the administrator
of any changes in the information referred to in Paragraph four,
Clause 6 of this Section.
[12 September 2013; 25 September 2014; 31 May 2018 /
Paragraph 3.1 shall come into force on 15 April
2019. See Paragraph 63 of Transitional Provisions]
Section 74. Inspection of the Claims
of Creditors
(1) The administrator shall inspect the validity of the claims
of creditors and the conformity thereof with the requirements of
laws and regulations.
(2) If a claim of a creditor 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
claim of the creditor, 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 claim of the
creditor, 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 claim of
the creditor 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 claim of the creditor 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
on the Claims of Creditors
(1) After inspection of the claims of creditors, the
administrator shall take a justified decision on recognition,
non-recognition, or partial recognition of the claim of a
creditor. The administrator shall not fully or partially
recognise a claim of a creditor regarding which a dispute exists
between the debtor and creditor.
(2) The administrator may not recognise or partially recognise
a claim of a creditor which has been established by a court
ruling only if there is evidence that the debtor has honoured his
or her obligations fully or partially entering into effect of the
court ruling.
(21) The administrator may not recognise a claim of
the secured creditor 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) A ruling of the Court of Arbitration, in terms of legal
outcome, shall be comparable to a court ruling if the writ of
execution issued by the court is appended thereto.
(4) If the administrator has not recognised the claim of a
creditor, the relevant claim is excluded from the Register of
Claims of Creditors in the following cases:
1) the time period for the submission of a complaint has
expired, and the complaint has not been submitted;
2) the time period for the submission of a statement of claim
for examination of a dispute regarding rights has expired, and
the statement of claim has not been submitted;
3) the time period for the submission of a request for renewal
of proceedings has expired, and the request has not been
submitted.
(41) Until the moment when a court has examined a
complaint regarding a decision of the administrator or a
statement of claim for examination of a dispute regarding rights,
the claim of the relevant creditor shall be included in the
Register of Claims of Creditors but this creditor shall not be
granted the right to vote.
(5) A decision of the administrator not to recognise a claim
of a creditor or to recognise it partly within three days after
taking thereof shall be sent to the relevant creditor
electronically to the electronic mail address specified in
Section 73, Paragraph four, Clause 6 of this Law, drawing up a
document in accordance with the requirements for drawing up of
electronic documents specified in laws and regulations. It shall
be considered that the addressee has received the relevant
decision on the third day after sending thereof. In case of any
doubt the administrator must prove that the document has been
sent.
(51) If it is impossible to send the decision of
the administrator not to recognise a claim of a creditor or to
recognise it partly in accordance with the procedures laid down
in Paragraph five of this Law or the administrator has not
received an acknowledgement of receipt of the document from the
addressee, it shall be sent as a registered postal item which is
considered to be received on the seventh day after delivery
thereof to the post 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 claim of a
creditor within seven days after receipt of this claim. The
administrator shall take the decision on recognition,
non-recognition, or partial recognition of the claim of a
creditor 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 claims of creditors, the administrator
shall take a decision on recognition, non-recognition, or partial
recognition of the claim of the relevant creditor not later than
within 15 days after receipt of the claim of the creditor.
(8) If newly discovered circumstances or documents regarding a
claim of a creditor come at 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 claims of creditors 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 claims of creditors specified in Section 73 of
this Law.
(9) After a court has examined a complaint regarding a
decision of the administrator to recognise, not to recognise, or
to recognise partly a claim of a creditor, the administrator
shall, if necessary, within five working days after receipt of
the court decision, take a decision to recognise, not to
recognise, or to recognise partly the claim of the creditor.
(10) If the decision of the administrator to recognise, not to
recognise, or to recognise partly the claim of the creditor is
drawn up in writing, it shall include the following:
1) the firm name (name), registration number and legal address
of a debtor;
2) the applied claim of the creditor (amount and type);
3) the indication regarding recognition, non-recognition, or
partial recognition of the applied claim of the creditor;
4) if the claim of the creditor has been recognised fully or
partly - the recognised amount and the type of the claim, as well
as the fact whether the creditor is to be granted the right to
vote in accordance with conditions of Section 87 of this Law;
5) if the claim of the creditor has not been recognised fully
or partly - the amount not recognised and the type of the claim,
as well as the grounds for non-recognition and the fact whether
there is a possible dispute regarding rights;
6) the information regarding procedures and time period for
appealing the decision;
7) any other information, if necessary.
(11) If the administrator receives evidence from the persons
involved in insolvency proceedings which attests to the fact of
forgery of a document supporting a claim of creditors - the
relevant document shall not be taken into account when taking a
decision on the claim of a creditor, and information shall be
provided to the responsible State authorities, but if the
decision has already been taken - the need to take a new decision
shall be assessed.
(12) If the administrator receives evidence from law
enforcement authorities which attests to the fact of forgery of a
document supporting a claim of creditors - the relevant document
shall not be taken into account when taking a decision on the
claim of a creditor, but if the decision has already been taken -
the need to take a new decision shall be assessed.
(13) The administrator shall hand over the original document
which is possibly forged to a forensic expert-examination
institution for performing an expert examination if the person
involved in insolvency proceedings requests a forensic
expert-examination institution to perform an expert examination.
If the document is handed over for the performance of an expert
examination, a certified copy thereof shall be left in place
thereof.
(14) A person involved in insolvency proceedings who is
requesting an expert examination shall cover the expenditures
related to the performance of the expert examination and the
production of the derivative of the document specified in
Paragraph thirteen of this Section.
[25 September 2014; 31 May 2018]
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 Claims
of Creditors
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 Claims of
Creditors
(1) The administrator shall organise the Register of Claims of
Creditors.
(2) The administrator shall enter the following information in
the Register of Claims of Creditors:
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 claim of the
creditor;
2) a note regarding the recognition or non-recognition of the
claim of the creditor;
3) the grounds for the claim of the creditor;
4) the time the claim of the creditor arose;
5) the type of the claim of the creditor;
6) the amount of the claim of the creditor (the amount of the
main claim and ancillary claim);
7) the number of votes of the creditor at a creditors
meeting;
8) the note regarding imposing of provisional protection on
the creditor, indicating the provisional remedy imposed by the
court.
(3) The administrator shall, within seven days after expiry of
the time period specified in Section 73, Paragraph one of this
Law and in accordance with the procedures laid down in this Law,
send the Register of Claims of Creditors to the creditors, the
representative of the debtor, the Insolvency Control Service, and
the court which has declared the relevant insolvency
proceedings.
(4) The administrator shall, within five days, inform the
creditors, the representative of the debtor, the Insolvency
Control Service, and the court which has declared the relevant
insolvency proceedings of any changes in the Register of Claims
of Creditors.
[31 May 2018]
Section 79. Right to Become
Acquainted with the Register of Claims of Creditors
(1) Any person who has submitted a claim of a creditor, the
Insolvency Control Service, and the representative of the debtor
have the right to become acquainted with the Register of Claims
of Creditors.
(2) Each creditor who has submitted a claim of a creditor, 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 claims of
creditors.
(3) The right specified in Paragraph two of this Section may
be exercised by the administrator involved in the insolvency
proceedings specified in Article 3(1) of Regulation No 2015/848
of the European Parliament and of the Council and initiated
against the debtor in another Member State , but the
administrator 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.
[31 May 2018]
Section 80. Complaints Regarding the
Recognition, Non-Recognition or Partial Recognition of the Claims
of Creditors
(1) The creditor is entitled to appeal to a court the decision
of the administrator not to recognise his or her claim or to
recognise it partly within one month from the day of receipt of
the decision or is entitled to bring an action for the
examination of a dispute regarding rights within one month from
the day of receipt of the decision of the administrator.
(11) The creditor who has brought an action before
court for the examination of a dispute regarding rights prior to
initiation of insolvency proceedings is entitled, within one
month from the day of receipt of the decision of the
administrator, to ask for renewal of the suspended
proceedings.
(12) Upon submitting a complaint regarding the
decision of the administrator to recognise, not to recognise, or
to recognise partly the claim of a creditor and concurrently
asking the court to examine a dispute regarding rights, the
creditor shall append in addition only evidence which has not
been at his or her disposal at the moment of submission of the
claim of the creditor due to objective circumstances.
(2) The creditor is entitled to appeal to a court the decision
of the administrator to recognise or to recognise partly a claim
of another creditor within three weeks after expiry of the time
period for the submission of claims of creditors. Upon appealing
the decision of the administrator the court may concurrently be
asked to impose the temporary protection provided for in Section
250.74, Paragraph four of the Civil Procedure Law. If
the relevant claim of a creditor has been submitted after expiry
of the deadline for the submission of claims of creditors, the
creditor is entitled to appeal to a court the decision of the
administrator to recognise a claim of another creditor within one
month after the day of taking of the decision.
(3) A debtor's representative is entitled, within three weeks
after expiry of the deadline for the submission of claims of
creditors, to appeal to a court the decision of the administrator
by which the claim arising from the transaction and not
recognised by the debtor's representative is approved. Upon
appealing the decision of the administrator the court may
concurrently be asked to impose the temporary protection provided
for in Section 250.74, Paragraph four of the Civil
Procedure Law. If the relevant claim of a creditor has been
submitted after expiry of the deadline for the submission of
claims of creditors, the debtor's representative is entitled,
within one month after the day of taking of the decision, to
appeal to the court the decision of the administrator by which
the claim arising from the transaction and not recognised by the
debtor's representative is approved.
(4) Complaints in relation to the recognition,
non-recognition, or partial recognition of claims of creditors
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.
[31 May 2018 / See Paragraph 59 of Transitional
Provisions]
Chapter
XIV
Duty to Inform Creditors
Section 81. Duty to Inform
Creditors
(1) For ensuring efficient and lawful course of insolvency
proceedings of a legal person, the administrator shall, in
accordance with the procedures laid down in this Law, 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 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 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.
(4) Creditors have the right to use the System for the
protection of their interests in accordance with the procedures
and to the extent laid down in laws and regulations.
[25 September 2014; 31 May 2018 / Paragraph four
shall come into force on 15 April 2019. See Paragraph 63
of Transitional Provisions]
Section 82. 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;
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
accordance 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 declaration of insolvency proceedings of a legal
person, the administrator shall prepare and send his or her
operational report to the creditors and the Insolvency Control
Service electronically on a monthly basis.
(2) The Cabinet shall determine the content of the
administrator's operational report and the procedures for
preparing it.
[31 May 2018 / Amendment to Paragraph one regarding
the replacement of the word "quarterly" with the word "monthly"
and amendment to Paragraph two regarding the replacement of the
words "form" and "filling in thereof" with the words "content"
and "preparing it" shall come into force on 1 January 2019.
See Paragraph 66 of Transitional Provisions]
Section 85.1 Audit of the
Administrator's Actions
(1) Creditors who represent at least 25 per cent of the amount
of the recognised principal claims in a group of secured or
non-secured creditors may request an audit of the administrator's
actions in the relevant insolvency proceedings.
(2) An audit shall be performed by a sworn auditor or a
commercial company of sworn auditors invited by the
creditors.
(3) The audit shall be commenced on the basis of the
notification to the administrator taken by the creditors referred
to in Paragraph one of this Section indicating the performer of
the audit, the task of the audit, and the information necessary
for the audit.
(4) The work task of the auditor specified by the creditors
may include both an inspection of the administrator's actions in
the relevant proceedings and an inspection of the debtor's
transactions, accounting, and finances until declaration of
insolvency proceedings.
(5) The administrator shall provide the auditor with the
information indicated in the notification regarding the
performance of an audit not later than within two weeks after
receipt of the notification. The administrator shall immediately,
upon request of the auditor, provide the auditor with any
additional or explanatory information, insofar as it results from
the work task specified in the notification.
(6) The auditor shall send a report to the administrator with
regard to whose actions the audit has been performed.
(7) The performance of the audit shall be financed by the
creditors who requested it.
[22 December 2016]
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 the decisions of
creditors.
(2) The administrator shall lead the creditors meeting.
(21) A creditors meeting may be held in person or
remotely. The type of occurrence of the creditors meeting shall
be determined by the administrator.
(22) In convening the creditors meeting, the
administrator shall determine one of the following types of
occurrence thereof:
1) participants of the meeting participate and vote in the
meeting in person;
2) participants of the meeting participate and vote in the
meeting through electronic means;
3) participants of the meeting vote in writing on items on the
agenda of the meeting and submit their vote to the administrator
at least one day prior to the day of the creditors meeting.
(3) Representatives of the Insolvency Control Service 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 has an obligation to show a document
certifying representation to the chairperson of the creditors
meeting.
(5) If the administrator involved in the insolvency
proceedings specified in Article 3(1) or (2) of Regulation No
2015/848 of the European Parliament or of the Council and
initiated 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 ruling regarding appointing
of the administrator involved in the insolvency proceedings
specified in Article 3(1) or (2) of the relevant Regulation or an
appropriately certified copy of another certification and a
translation of the ruling or certification into the official
language certified in accordance with the specified
procedures.
(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 Claims of Creditors, 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
so 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
for 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
for 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 recorded in
minutes. 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 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.
[31 May 2018; 5 June 2020]
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 are 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 claims of creditors 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 claim of a creditor, 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 administrator involved in the insolvency
proceedings specified in Article 3(1) or (2) of Regulation No
2015/848 of the European Parliament or of the Council and
initiated against a debtor in another Member State has submitted
the claims of creditors in insolvency proceedings initiated
against a debtor in Latvia, then the administrator involved in
the insolvency proceedings specified in Article 3(1) or (2) of
this Regulation shall obtain the rights of creditors in the
amount of the submitted claims of creditors 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 insolvency
proceedings of a legal person, shall not have voting rights at
the creditors meeting.
(6) The creditors in whose claim of creditors 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; 31 May 2018]
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 Control Service;
f) the administrator involved in the insolvency proceedings
specified in Article 3(1) of Regulation No 2015/848 of the
European Parliament and of the Council and initiated against a
debtor in another European Union Member State;
g) the creditor in order to assess the validity of the costs
of insolvency proceedings of the legal person specified in
Section 170, Paragraph one of this Section.
(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) The administrator shall, not later than two weeks prior to
the date of the specified creditors meeting, 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 claims of creditors, 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 Claims of Creditors, 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.
[31 May 2018 / See Paragraph 67 of Transitional
Provisions]
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) the remuneration of the administrator;
2) the proposal for the removal of the administrator;
3) the recognition of the costs of insolvency proceedings as
valid;
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; 31 May 2018 / See Paragraph 67
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
efficient course of 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 insolvency proceedings of a legal person;
5) other property legally acquired during insolvency
proceedings of a legal person.
(2) If the insolvency proceedings specified in Article 3(2) of
Regulation No 2015/848 of the European Parliament and of the
Council 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 in accordance with
laws and regulations shall not be included in the list of
debtor's property to which claims of creditors are to be
addressed.
[31 May 2018]
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
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
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 proclamation of 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 authorisation for the recovery thereof and act with this
property within the scope of the authorisation 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 proclamation of insolvency proceedings of
a legal person or four months prior to the day of proclamation of
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
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 an obligation 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 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
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 insolvency
proceedings of the debtor.
(2) The administrator has an obligation 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 insolvency proceedings of a legal person, as well
as after the day of proclamation of insolvency proceedings of a
legal person (except for the amounts of money which the
administrator has paid during 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 entering 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 entered 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 for which the time period for
honouring has entered into effect prior to the time period for
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 insolvency proceedings of a legal
person in order to prevent the proclamation of 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 an obligation 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 an obligation 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 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 claim of a creditor.
(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 insolvency proceedings of a legal person, are 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 claims of creditors are addressed shall lose effect from
the day of the proclamation of 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 claim of a creditor to
the administrator.
Section 103. Termination of an
Employment Contract
(1) After the proclamation of 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 are
not 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 insolvency proceedings of a
legal person.
Section 104. Restrictions on a
Set-off
A set-off in 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
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
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) 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
insolvency proceedings of a legal person, the proclamation of
legal protection proceedings, as well as to draw up a plan of
measures of legal protection proceedings:
1) the debtor's representative;
2) the administrator;
3) the administrator involved in the insolvency proceedings
specified in Article 3(1) of Regulation No 2015/848 of the
European Parliament and of the Council and initiated against a
debtor in another Member State;
4) a creditor or group of creditors.
(2) The plan of measures of 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 insolvency proceedings of a legal person and
the remuneration for the drawing up of the plan of measures of
legal protection proceedings shall be included in the plan of
measures of legal protection proceedings, and they shall be
covered in the full amount prior to the honouring of the claims
of creditors.
(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 legal protection proceedings and be covered
in the full amount prior to covering the costs of insolvency
proceedings of a legal person.
(5) If the insolvency proceedings specified in Article 3(2) of
Regulation No 2015/848 of the European Parliament and of the
Council have been initiated against a debtor in Latvia, prior to
the submission of an application for legal protection proceedings
to a court, a written consent to the plan of measures of legal
protection proceedings shall be received from the administrator
involved in the insolvency proceedings specified in Article 3(1)
of this Regulation.
[22 December 2016; 31 May 2018]
Section 108. Informing Creditors of
the Application of Legal Protection Proceedings
Prior to submitting the relevant application to a court the
person who has drawn up and co-ordinated the plan of measures of
legal protection proceedings has an obligation 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 a ruling regarding the
implementation of legal protection proceedings, the effects of
the proclamation of 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 is also
restored.
(2) After the court has rendered a ruling 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 is
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
insolvency proceedings of a legal person, the administrator shall
draw up a plan for the sale of the debtor's property or a report
on the non-existence of the debtor's property.
(2) The sale of the debtor's property takes 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) is 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 proclamation of 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 insolvency
proceedings of a legal person;
5) a proposal for the further solution of insolvency
proceedings of a legal person - to terminate or to continue
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 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 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 creditor (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 insolvency proceedings of a
legal person;
11) the planned costs of 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 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 recognise 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 according to 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 or Independent Part Thereof
(1) When preparing a plan for the sale of the debtor's
property, the administrator shall assess a possibility of selling
the debtor's establishment or an independent part thereof.
(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 or an independent part
thereof, the creditors' gain from the sale of the establishment
or independent part thereof must be greater than if the debtor's
property was sold separately.
(4) If the administrator has taken a decision to sell the
establishment or an independent part thereof at an auction, then
the auction occurs in accordance with the procedures by which the
sale of immovable property is intended, and this shall be carried
out by the administrator.
(5) When taking a decision to sell the establishment or an
independent part thereof, the administrator shall draw up a list
in which the tangible and intangible items contained in the
establishment or independent part thereof to be sold and the
economic gain belonging to the establishment or independent part
thereof shall be included.
(6) In case of the sale of the establishment or an independent
part thereof, all the rights and liabilities of the debtor shall
be transferred to the beneficiary, except for the debtor's
liabilities which have arisen prior to the declaration of
insolvency proceedings of a legal person, unless the debtor and
the beneficiary have agreed otherwise.
(61) In case of the sale of the establishment or an
independent part thereof, the claims of creditors recognised in
insolvency proceedings shall not be transferred to the
beneficiary.
(7) A decision to approve a statement of auction of the
establishment or an independent part thereof shall be taken by
the court which examines the case of the debtor's insolvency
proceedings.
[31 May 2018 / See Paragraph 67 of Transitional
Provisions]
Section 115. Auction of a Debtor's
Property
(1) If the debtor's property is sold at an 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 the debtor's property within the
scope of insolvency proceedings of a legal person is recognised
as not having occurred, the second auction shall be organised
according to the regulations of the first auction by descending
step.
(21) If the second auction of the debtor's property
within the scope of insolvency proceedings of a legal person is
recognised as not having occurred, the administrator shall
immediately send to the creditors the adjusted plan for the sale
of the debtor's property by putting forward 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 debtor's property has been sold at the auction,
the court has approved the statement of the auction of the
immovable property or has taken a decision to register the title
to the property in the name of the creditor 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
debtor's property for a time period starting from the day of
declaration of insolvency proceedings until the last day of the
month when a court ruling approving the auction of the debtor's
property 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 for the purchase of the debtor's
property shall not be reimbursed but 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 evaluation of
the debtor's property, but not less than EUR 50.
(7) If the administrator has set a participation fee for the
auction, the persons willing to participate in the second auction
of the debtor's property shall pay the participation fee into 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; 31 May 2018]
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) is 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 day of proclamation of
insolvency proceedings 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 claims of the secured
creditor 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 a claim of the secured creditor from funds
received by selling the pledged property, the main claim of this
claim is 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 Insolvency Proceedings of a
Legal Person
Section 117. List of the Costs of
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 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 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
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 insolvency proceedings of a legal person and the
plan for covering the claims of creditors.
(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 insolvency proceedings of a legal person
and the plan for settling the claims of creditors 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
insolvency proceedings of a legal person within 15 days after
sending of the list of the costs of insolvency proceedings of a
legal person and the plan for settling the claims of creditors,
the decision to approve the costs of 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 costs of
insolvency proceedings of a legal person and a plan for settling
the claims of creditors, legal proceedings are in progress which
have been initiated or renewed within a time period set by the
court because a dispute has been established regarding rights,
then in respect of the decision of the administrator on
recognition, non-recognition, or partial recognition of the claim
of a creditor, the time periods referred to in this Section shall
commence on the day when the court ruling in the relevant legal
proceedings enters into effect.
[25 September 2014; 31 May 2018]
Section 118. Procedures for Settling
the Claims of Creditors in Insolvency Proceedings of a Legal
Person
(1) The costs of insolvency proceedings of a legal person are
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 insolvency proceedings of a
legal person (the funds of creditors, other natural persons or
legal persons), except for funds which have been acquired in the
case specified in Section 116 of this Law.
(2) After fully covering the costs of insolvency proceedings
of a legal person specified in Paragraph one of this Section, the
claim of the Insolvency Control Service is settled, if the claims
of the debtor's employees are settled from resources of the
employee claim guarantee fund 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 are
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 time period for submission of claims of
creditors referred to in Section 73, Paragraph one of this Law,
are settled in the amount of the principal debt after settling
the costs of insolvency proceedings of a legal person and the
claims of creditors specified in Paragraphs two and three of this
Section.
(5) After covering of the expenses of insolvency proceedings
of a legal person referred to in Paragraph one of this Section
and the settlement of the claims of creditors specified in
Paragraphs two, three, and four of this Section, the remaining
funds of the debtor are 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 claims of creditors
referred to in Section 73 of this Law. At this round, the claims
of the secured creditors are also settled for the non-secured
part thereof and the part not covered in the claims of the
secured creditors in accordance with Section 76 of this Law, if
the claims of the 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 the non-secured creditors in the amount of the basic
debt, the ancillary claims of the non-secured creditors are
settled (in proportion to the amount due to each creditor).
(10) The debtor's funds remaining after settling the costs of
insolvency proceedings of a legal person indicated in this
Section and settling the claims of creditors are 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 Regulation No 2015/848 of the European Parliament and of the
Council have been initiated against a debtor in Latvia, the
administrator shall transfer the relevant funds remaining after
settlement of the costs of insolvency proceedings of a legal
person specified in Paragraph one of this Section and settlement
of the claims of creditors specified in Paragraphs two, three,
four, five, and nine of this Law, to the administrator involved
in the insolvency proceedings specified in Article 3(1) of the
relevant Regulation.
(12) From the funds acquired by selling the debtor's
establishment or an independent part thereof, the costs related
to the sale of the property and the claims of the secured
creditors are covered in the first place in the amount of the
pledged property, but not exceeding the amount of the security.
The remaining funds are divided in accordance with the procedures
laid down in this Section.
[25 September 2014; 31 May 2018 / See Paragraph 67
of Transitional Provisions]
Section 118.1 Procedures
for Settling the Claims of Creditors in Case when a Claim of the
Secured Creditor has been Filed where the Right to Claim is
Conditional
(1) Any funds acquired from the sale of the debtor's property
serving as security for a claim of the secured creditor where the
right to claim is conditional shall be deposited by the
administrator in an escrow account specially created by the
Insolvency Control Service with the Treasury until the moment
when the secured creditor has submitted to the Insolvency Control
Service a notification regarding 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 insolvency proceedings of the debtor, whichever occurs
earlier.
(3) If the secured creditor whose right to claim is
conditional has specified a date in the submission by which the
condition should materialise, and has failed to submit a
notification to the Insolvency Control Service 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 submission.
(4) If the secured creditor whose right to claim is
conditional has failed to submit a notification to the Insolvency
Control Service regarding the materialisation of the condition by
the time period specified in Paragraph two or three of this
Section, then the funds referred to in Paragraph one of this
Section are 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 funds in the escrow account specially created by the
Insolvency Control Service with the Treasury which have been
acquired by selling the debtor's property serving as security for
a claim of the secured creditor where the right to claim is
conditional, and for disbursing such funds to the creditors.
[25 September 2014; 31 May 2018]
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
termination of 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 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 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
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 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 insolvency proceedings of a legal person are terminated
concurrently with the court ruling 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 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 ruling 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 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 accordance with the provisions of
insolvency proceedings of a legal person, unless it is laid down
otherwise in this Chapter.
(2) If 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 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 insolvency proceedings of an
individual merchant or partnership in accordance with the
procedures laid down in Chapter XXI of this Law, the non-covered
right to claims of creditors shall have the limitation period
specified in The Commercial Law.
(2) The right to claim of creditors 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 insolvency
proceedings of an individual merchant or partnership.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Section 123. Right to Use 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 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 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
insolvency proceedings of a legal person have been
terminated.
[25 September 2014 / See Paragraph 34 of
Transitional Provisions]
Chapter
XXIII
Features of 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) Insolvency proceedings of the producer of agricultural
products shall be implemented in accordance with the provisions
of insolvency proceedings of a legal person, unless it is laid
down otherwise in this Chapter.
(2) In insolvency proceedings a producer of agricultural
products shall be mean the subject of insolvency proceedings of a
legal person from whose annual income more than 50 per cent on
the day of the proclamation of 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 is commenced not before the end of the
respective period of agricultural activities, conforming to 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 is 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 is 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 - the debtor).
(2) The debtor's guardian or trustee in 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 insolvency proceedings of a legal person
are applied to insolvency proceedings of a natural person in
conformity with the provisions of this Chapter.
(2) The debtor has the rights and obligations of a debtor's
representative specified in this Law.
(3) Insolvency proceedings of a natural person comprise the
bankruptcy procedure and the procedure for extinguishing
obligations in succession.
(4) Within the scope of the bankruptcy procedure all the
debtor's property are sold off, and the funds acquired from the
selling shall be transferred for settling the claims of
creditors, except for 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 are shifted for settling the
claims of creditors and after expiry of the time period for the
procedure for extinguishing obligations, the obligations not
covered within the scope of this procedure are 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 EUR 5000 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 EUR 10 000 in
total;
3) this person does not have a possibility to settle debt
obligations out of which at least one debt obligation is based on
an unsettled ancillary obligation or joint obligation between the
debtor and the persons specified in Section 131, Paragraph one,
Clauses 1 and 2 of this Law if it exceeds EUR 5000.
(2) A precondition for the application of insolvency
proceedings of a natural person shall be the payment of a deposit
for insolvency proceedings of a natural person in the amount of
two minimum monthly salaries into an account specially created by
the Insolvency Control Service.
(3) The deposit for insolvency proceedings of a natural person
shall be used to cover the remuneration of the administrator
specified in Section 171, Paragraph one of this Law and value
added tax if the administrator has been registered with the State
Revenue Service Value Added Tax Taxable Persons Register.
(4) If insolvency proceedings of a natural person are not
proclaimed, the deposit shall be reimbursed to the submitter of
the application for 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 Control
Service and disbursed to the administrator or to the submitter of
the application for insolvency proceedings of a natural
person.
[12 September 2013; 25 September 2014; 31 May 2018]
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
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
those stated in the agreement and a ruling of the competent
authority has entered into effect in criminal proceedings;
3) who has, within the last 10 years prior to the declaration
of insolvency proceedings of a natural person, had insolvency
proceedings of a natural person terminated within the scope of
which obligations have been extinguished;
4) within the last five years prior to the declaration of
insolvency proceedings of a natural person or during insolvency
proceedings of a natural person, a ruling of the competent
authority has entered into effect in criminal proceedings under
which it has been established that the debtor has avoided tax
payment;
5) who has had insolvency proceedings of a natural person
terminated without extinguishing the obligations within the last
year prior to the declaration of insolvency proceedings of a
natural person.
[25 September 2014; 31 May 2018 / See Paragraph 68
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) Such person shall also be considered as an interested
person in relation to a debtor who 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 personal identity
number;
2) the date when insolvency proceedings of a natural person
have been declared, the name of the court, the case number and,
if applicable, also the time period within which the complaint
referred to in Article 5 of Regulation No 2015/848 of the
European Parliament and of the Council shall be submitted;
3) the given name, surname, and number of the office
certificate of the administrator appointed to the case;
4) the given name, surname, the number of the office
certificate, and the period of validity of the authorisation of
the authorised administrator;
5) if applicable, also the given name, surname, address of the
place of practice, telephone number, or electronic mail address
of the administrator involved in the insolvency proceedings
specified in Article 3(1) of Regulation No 2015/848 of the
European Parliament and of the Council;
6) if applicable, also the type of insolvency proceedings in
accordance with Article 3(1), (2) or (4) of Regulation No
2015/848 of the European Parliament and of the Council;
7) the type of insolvency proceedings in accordance with
Section 128, Paragraph three of this Law;
8) the date of termination of 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.
(3) The information referred to in Paragraph one of this
Section may be published in the Insolvency Register during
insolvency proceedings of a natural person, as well as one year
after the day of making an entry regarding termination of
insolvency proceedings of a natural person.
(4) The responsible institution shall store the information
referred to in Paragraph one of this Section in the Insolvency
Register:
1) for 10 years after termination of insolvency proceedings of
a natural person;
2) until the moment it is established that a natural person
has died but at least for 10 years after termination of
insolvency proceedings of a natural person - if insolvency
proceedings of a natural person have been suspended on the basis
of Section 130, Clause 2 of this Law.
[25 September 2014; 22 December 2016; 31 May 2018]
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 is present;
2) the person referred to in Article 37(1)(a) of Regulation No
2015/848 of the European Parliament and of the Council;
3) the debtor jointly with the interested persons specified in
Section 131, Paragraph one, Clauses 1 and 2 of this Law, if the
feature referred to in Section 129, Paragraph one, Clause 3 of
this Law is present 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; 31 May 2018]
Section 134. Effects of the
Proclamation of Insolvency Proceedings of a Natural Person
(1) After proclamation of insolvency proceedings of a natural
person, the bankruptcy procedure is commenced.
(2) After proclamation of insolvency proceedings of a natural
person:
1) the execution proceedings in the matters on the recovery of
the amounts adjudged but not recovered is 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 for 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, are 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 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 insolvency proceedings.
(4) A court decision proclaiming 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 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. Appointing of an
Administrator to Insolvency Proceedings of a Natural Person
Section 59, Paragraphs one and four of this Law shall be
applied to the appointing of an administrator to insolvency
proceedings of a natural person.
Section 136. Restrictions on the
Debtor's and Creditor's Actions in Insolvency Proceedings of a
Natural Person
(1) After proclamation of insolvency proceedings of a natural
person a debtor is prohibited from performing activities which
cause losses to the creditors.
(2) Upon proclamation of 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 insolvency proceedings of a natural
person and commencement of the bankruptcy procedure, the
administrator shall:
1) open in his or her name an account with a credit
institution for securing the claims of creditors 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 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 information from the debtor, as well as
from State authorities and credit institutions necessary in order
to study the debtor's property and obligations, as well as other
information within the scope of insolvency proceedings of a
natural person;
5) accept, register, and check claims of creditors;
6) where necessary, take the debtor's property under his or
her administration, except for 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
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 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; 1 January 2015 /
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 insolvency proceedings of a
natural person (Section 172);
3) to invite specialists in order to ensure efficient 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 insolvency
proceedings of other natural persons.
Section 139. Obligations of a Debtor
During the Bankruptcy Procedure
A debtor has an obligation to:
1) generate income according to his or her possibilities;
2) not later than within 10 days after proclamation of
insolvency proceedings of a natural person, 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 insolvency proceedings;
6) cover the costs of insolvency proceedings of a natural
person;
7) upon request of the administrator, transfer the property
under his or her administration, except for 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; 21 November 2019]
Section 140. Rights of Debtor During
the Bankruptcy Procedure
The debtor has the following rights:
1) to keep the income which is necessary to cover indirect
costs of insolvency proceedings of a natural person;
2) to keep property which is essential for the acquisition of
income;
3) to use the System in accordance with the procedures and to
the extent laid down in laws and regulations when exercising the
rights granted in the law and fulfilling the obligations
specified in the law.
[31 May 2018; 21 November 2019]
Section 141. Claims of Creditors and
the Creditors Meeting
(1) The claims of creditors 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 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 claims of
creditors 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
person, 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 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
insolvency proceedings of a debtor, creditors have the right to
submit to the administrator a proposal to terminate 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 an application
to a court regarding termination of the bankruptcy procedure
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 insolvency proceedings of a natural person has been
initiated.
[14 October 2010; 25 September 2014; 1 January 2015 /
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 insolvency proceedings of a natural
person.
(3) The administrator shall be responsible for keeping the
debtor's property, the former being allowed to 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 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 is 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 is
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 Claims of Creditors
(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 claims of creditors,
as well as a report on the funds received and spent.
(2) The payments for the means of support are 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
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
claim of the secured creditor.
(4) The claims of the non-secured creditors are amalgamated
into one group without priority. After making of the payments
referred to in Paragraphs two and three of this Section, the
claims of the non-secured creditors are settled in proportion to
the amount of the basic debt of each creditor. From the debtor's
funds remaining after settling the claims of the non-secured
creditors in the amount of the basic debt, the ancillary claims
of the non-secured creditors are settled (in proportion to the
amount due to each creditor).
(5) The debtor's funds remaining after settling the costs of
insolvency proceedings referred to in this Section and the
settling of the claims of creditors are 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 is not sold during insolvency
proceedings of a natural person.
(2) In the case referred to in Paragraph one of this Section,
a payment are made to the secured creditor during 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 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 claim of the creditor is 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 EUR
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 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 the
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 on the 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 accordance 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 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 the
Bankruptcy Procedure
(1) The court shall terminate the bankruptcy procedure
concurrently terminating insolvency proceedings of a natural
person, if restrictions on the application of insolvency
proceedings of a natural person are determined (Section 130).
(2) The administrator shall submit an application regarding
termination of the bankruptcy procedure in the case referred to
in Paragraph one of this Section within three months after
proclamation of insolvency proceedings of a natural person.
(3) The court shall terminate the bankruptcy procedure
concurrently terminating insolvency proceedings of a natural
person, if the claims of creditors 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 regarding
termination of the bankruptcy procedure within one month after
expiry of the deadline for submitting claims of creditors
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 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 regarding 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 the Bankruptcy Procedure if
Insolvency Proceedings of a Natural Person are Terminated
Concurrently
(1) If insolvency proceedings of a natural person are
terminated concurrently with the completion or termination of the
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 insolvency proceedings of a natural person are
terminated concurrently with the completion or termination of the
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 insolvency
proceedings of a natural person shall be restored, as well as the
matters regarding the recovery of the amounts adjudged but not
recovered and the matters regarding the honouring of the debtor's
obligations through the court shall be restored.
Chapter
XXVII
Course of the Procedure for Extinguishing Obligations
Section 152. Subjects of the
Procedure for Extinguishing Obligations
(1) A subject of the procedure for 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 obligations in accordance with the provisions
of The Civil Law.
Section 153. Restrictions on the
Application of the Procedure for 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 insolvency proceedings of a
natural person or during 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 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
obligations of a natural person during the bankruptcy
procedure.
(2) The following is indicated in the plan for extinguishing
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
the bankruptcy procedure, as well as the amount of such claims of
creditors;
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 obligations of a natural person shall be
determined, taking into account the estimated income in the
procedure for extinguishing 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 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
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 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 obligations will be sufficient to cover at least 20
per cent of the total obligations remaining after completion of
the bankruptcy procedure.
(4) If during the procedure for extinguishing obligations the
debtor is not able to settle the amount of the obligations
specified in Paragraphs two and three of this Section for reasons
beyond his or her control, it shall be provided for in the plan
for extinguishing obligations of a natural person that funds in
the amount of one third of the debtor's income, but not less than
in the amount of one third of one minimum monthly salary before
tax payment will be directed towards settling the claims of
creditors. In the plan for extinguishing 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 EUR 30 000;
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
EUR 30 001 to EUR 150 000;
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 EUR 150 000.
(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; 31 May 2018]
Section 156. Right of Creditors to
Provide an Opinion and Proposals Regarding the Plan for
Extinguishing Obligations of a Natural Person
(1) When drawing up the plan for extinguishing 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 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
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 a Court
(1) The debtor shall submit the plan for extinguishing
obligations of a natural person for approval in a 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
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 obligations of a
natural person;
2) upon request of the creditor, shall supervise the debtor's
actions in the fulfilment of the obligations specified in this
Chapter;
3) upon request of the debtor, shall provide him or her with
legal aid in connection with insolvency proceedings of a natural
person (if necessary, shall also draw up amendments to the plan
for extinguishing 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 obligations of a
natural person;
2) to acquire income according to his or her possibilities in
order to satisfy the claims of creditors as fully as
possible;
3) upon request of the administrator, to provide information
for the implementation of the plan for extinguishing 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 insolvency proceedings of a natural person (if necessary,
also to draw up amendments to the plan for extinguishing
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 an obligation 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 obligations of a natural person.
(3) The debtor shall reduce the deadline for the
implementation of the plan for extinguishing 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 for extinguishing obligations by making amendments to
the plan for extinguishing 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 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 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 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 abovementioned plan are extinguished and execution
proceedings for the recovery of the extinguished obligations are
terminated.
(2) A debtor is not released from the remaining obligations
indicated in the plan for extinguishing 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
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 is not 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 abovementioned
obligations are restored in the amount of the remaining debt;
4) claims for the penalties applied in the administrative
offence proceedings and punishments laid down in 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; 5 December 2019 / Amendments to
Paragraph four, Clause 4 regarding the replacement of the words
"the sanctions provided for in the Latvian Administrative
Violations Code" with the words "the penalties applied in the
administrative offence proceedings and punishments laid down in"
shall come into force on 1 July 2020. See Paragraph 70 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 a 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
obligations of a natural person;
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 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 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 are restored and calculated in full amount,
but the suspended court proceedings and execution proceedings of
the judgment are 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 Efficient Course of Legal
Protection Proceedings and Extrajudicial Legal Protection
Proceedings
Section 166. Remuneration of the
Supervisory Person of Legal Protection Proceedings in Legal
Protection Proceedings and Extrajudicial Legal Protection
Proceedings
(1) The majority of the creditors specified in Section 42,
Paragraph three of this Law shall agree in writing with the
supervisory person of legal protection proceedings on the amount
of the remuneration of the supervisory person of legal protection
proceedings and the procedures for covering it in legal
protection proceedings or extrajudicial legal protection
proceedings, and indicate this information in the plan of
measures of legal protection proceedings.
(2) The majority of the creditors specified in Section 42,
Paragraph three of this Law that has supported the plan of
measures of legal protection proceedings shall pay the
remuneration of the supervisory person of legal protection
proceedings for the fulfilment of obligations in legal protection
proceedings or extrajudicial legal protection proceedings in
proportion to the amount of the claim of each creditor, unless
the creditors have agreed otherwise.
(3) Paragraphs one and two of this Section shall not be
applicable to the tax administration.
[22 December 2016]
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 legal protection
proceedings and extrajudicial legal protection proceedings and
the procedures for the covering thereof shall be provided for in
the plan of measures of legal protection proceedings.
(3) The following shall be included in the expenses of legal
protection proceedings:
1) [22 December 2016];
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.
[22 December 2016]
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 insolvency proceedings of a
legal person are terminated in accordance with Section 119,
Paragraph four of this Law, the costs of insolvency proceedings
of a legal person shall be covered from the deposit for
insolvency proceedings of a legal person indicated in Section 62
of this Law which shall be paid to the administrator as the costs
of insolvency proceedings of a legal person from which he or she
shall cover the expenses and remuneration of insolvency
proceedings of a legal person. If the deposit for insolvency
proceedings of a legal person has not been lodged fully or partly
(Section 62, Paragraph 7.1), the costs of insolvency
proceedings of a legal person are covered from resources of the
employee claim guarantee fund.
(3) If it is impossible to cover the costs of 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 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 insolvency proceedings of a legal person shall be
comparable to the costs of 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 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; 31 May 2018]
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
insolvency proceedings of a legal person, except for the cases
referred to in this Law.
(2) The remuneration of the administrator is specified in the
following amount:
1) in the amount of the deposit referred to in Section 62,
Paragraph one of this Law for the work from the day of appointing
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;
11) in the amount of two minimum monthly salaries
which is covered from the debtor's property in addition to the
remuneration specified in Paragraph two, Clause 1 of this Section
if the debtor complies with the following criteria according to
data of the last financial year ended:
a) the debtor has employed more than 250 employees;
b) the annual turnover of the debtor has exceeded EUR 50
million or the annual balance-sheet total has exceeded EUR 43
million;
2) if after drawing up of the plan for the sale of the
debtor's property, 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
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, 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 insolvency proceedings on the amount of the
administrator's remuneration and the procedures for covering
thereof;
4) if economic activity is continued during insolvency
proceedings of a legal person - one per cent of the net turnover
but not exceeding the amount of two minimum monthly salaries per
month. After compilation of the Register of Claims of Creditors
the administrator may agree with the creditors on other amount of
the remuneration at a creditors meeting.
(3) The remuneration for the sale of the pledged property of a
debtor, if this has been performed by the administrator, is
specified in the following amounts:
1) up to EUR 4268 - 15 per cent of the amount payable to the
creditor;
2) from EUR 4268 to EUR 14 228 - EUR 640.20 plus 10 per cent
of the amount exceeding EUR 4268 payable to the creditor;
3) from EUR 14 228 to EUR 142 287 - EUR 1636.20 plus 5 per
cent of the amount exceeding EUR 14 228 payable to the
creditor;
4) from EUR 142 287 to EUR 711 435 - EUR 8039.15 plus 3 per
cent of the amount exceeding EUR 142 287 payable to the
creditor;
5) from EUR 711 435 to EUR 1 422 871 - EUR 25 113.59 plus 2
per cent of the amount exceeding EUR 711 435 payable to the
creditor;
6) if the amount recovered exceeds EUR 1 422 871 - EUR 39
342.29 plus 1 per cent of the amount exceeding EUR 1 422 871
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 is
applied to the remuneration specified in Paragraph three of this
Section.
(5) In cases where the administrator is removed from
insolvency proceedings of a legal person in accordance with the
procedures laid down in Section 90 of this Law, the remuneration
of the administrator shall amount to one minimum monthly salary
from the moment of appointing of the administrator. 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 is not specified for the administrator if he
or she is removed from insolvency proceedings of a legal person
for the reasons referred to in Section 22, Paragraph two, Clause
1, 2, 3, 4, or 7 of this Law.
(7) Value added tax are added to remuneration for the
performance of administrator's obligations in insolvency
proceedings of a legal person, if the administrator is registered
with the State Revenue Service Value Added Tax Taxable Persons
Register.
(8) In cases where the remuneration of the administrator and
value added tax, if the administrator has been registered with
the State Revenue Service Value Added Tax Taxable Persons
Register, as well as the costs of insolvency proceedings are to
be covered from the deposit referred to in Section 62, Paragraph
one of this Law, the total amount to be disbursed from the
deposit may not exceed the amount of the deposit referred to in
Section 62, Paragraph one of this Law.
[14 October 2010; 12 September 2013; 25 September 2014; 22
December 2016; 31 May 2018 / See Paragraph 60 of
Transitional Provisions]
Section 170. Expenses of Insolvency
Proceedings of a Legal Person
(1) Costs of insolvency proceedings of a legal person related
to ensuring of these proceedings, except for expenses related to
the property which serves as security, as well as to ensuring of
continuation of economic activity of the debtor to full or
limited extent, if the creditors meeting has not recognised them
as justified, may not exceed the following:
1) the amount of five per cent of the appraisal of the
property if the plan for the sale of property has been drawn
up;
2) the amount of the deposit for insolvency proceedings of a
legal person if the report on non-existence of the property has
been drawn up.
(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
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 are 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
insolvency proceedings of a legal person;
7) expenses which are related to the liquidation of the
debtor, including removal, processing, and disposal of hazardous
waste;
8) regular tax and duty payments for the time period from the
day when 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.
[31 May 2018 / See Paragraph 67 of Transitional
Provisions]
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 for the
fulfilment of obligations of the administrator in insolvency
proceedings of a natural person:
1) if the procedure for extinguishing of obligations has been
declared:
a) for the time period from the day of appointing until
completion of the bankruptcy procedure - half of the amount of
the deposit referred to in Section 129, Paragraph two of this
Law;
b) for the time period from the day of declaration of the
procedure for extinguishing of obligations, if the administrator
has been appointed prior to the day of declaration of the
extinguishing of obligations, until termination of the procedure
for extinguishing of obligations, or for the time period from the
day of appointing, if the administrator has been appointed after
declaration of the procedure for extinguishing of obligations,
until termination of the procedure for extinguishing of
obligations - half of the amount of the deposit referred to in
Section 129, Paragraph two of this Law;
2) for the time period from the day of appointing until
completion or termination of the bankruptcy procedure, unless the
procedure for extinguishing of obligations is declared - half of
the amount of the deposit referred to in Section 129, Paragraph
two of this Law.
(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 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 obligations of a natural person and for giving
advice for drawing up a plan for extinguishing obligations of a
natural person in the bankruptcy procedure, not exceeding 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 insolvency proceedings of a natural
person, except for the case referred to in Paragraph four of this
Section, when expenses are covered by the relevant creditor.
(6) Value added tax is added to remuneration for the
performance of administrator's obligations in insolvency
proceedings of a natural person if the administrator is
registered with the State Revenue Service Value Added Tax Taxable
Persons Register.
(7) In cases where the remuneration of the administrator and
value added tax, if the administrator has been registered with
the State Revenue Service Value Added Tax Taxable Persons
Register, are to be covered from the deposit referred to in
Section 129, Paragraph two of this Law, the total amount to be
disbursed from the deposit may not exceed the amount of the
deposit referred to in Section 129, Paragraph two of this
Law.
[25 September 2014; 22 December 2016; 31 May 2018 /
See Paragraph 60 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 are 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 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
are 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 insolvency proceedings of a natural person:
1) subsistence costs;
2) 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 penalties,
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 are 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 Control Service in Legal Protection Proceedings and
Insolvency Proceedings
[31 May 2018]
Section 173. Competence of the
Insolvency Control Service
(1) The Insolvency Control Service is a direct administration
institution 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 Control Service:
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; 31 May 2018]
Section 174. Rights of the
Insolvency Administration in Supervision of Legal Protection
Proceedings and Insolvency Proceedings
[22 December 2016]
Section 174.1 Tasks of
the Insolvency Control Service
For the purpose of performance of the functions specified in
Section 173 of this Law and other laws and regulations, the
Insolvency Control Service shall:
1) perform the supervision of administrators;
2) examine complaints regarding actions of the administrator,
except for the cases specified in law where complaints regarding
decisions of the administrator are to be examined in a court in
which the relevant case of insolvency proceedings have been
initiated;
3) examine administrative offence cases according to the
competence specified in this Law;
4) examine applications for settling the claims from employees
of insolvent employers;
5) examine applications for the disbursement of the deposit
for insolvency proceedings of a legal person and the deposit for
insolvency proceedings of a natural person;
6) examine applications for the disbursement of funds
specified in Section 118.1 of this Law;
7) inform the public of the results of implementation of the
insolvency policy and the current issues in the field of
insolvency;
8) organise the examination and qualification examination of
the administrator;
9) appoint administrators to office;
10) release, remove, and suspend the administrator from
office, as well as suspend official activities of the
administrator;
11) in the cases and to the extent specified in this Law
perform supervision of the supervisory person of legal protection
proceedings and examine complaints regarding actions thereof;
12) establish, maintain, and develop the System;
13) ensure that the documents submitted by the administrator
and other persons specified in laws and regulations who have an
obligation to submit information to the Insolvency Control
Service are transformed in electronic form for storage in
electronic environment in the System in accordance with the laws
and regulations regarding the management of archives;
14) ensure that the information specified in laws and
regulations governing the field of insolvency is accessible;
15) perform tasks specified in other laws and regulations.
[22 December 2016; 31 May 2018; 5 December 2018 /
Amendments to Clause 3 regarding the replacement of the words
"the Latvian Administrative Violations Code" with the words "this
Law" shall come into force on 1 July 2020. See Paragraph
70 of Transitional Provisions]
Section 174.2 Rights of
the Insolvency Control Service
(1) The Insolvency Control Service has the following
rights:
1) to request from State and local government authorities and
to receive from them, free of charge, any information related to
legal protection proceedings or insolvency proceedings necessary
for the performance of the functions of the Insolvency Control
Service;
2) to request from the authorities and persons involved in
legal protection proceedings or insolvency proceedings and to
receive from them the necessary information and documents
regarding the course of legal protection proceedings or
insolvency proceedings;
3) to request from the supervisory person of legal protection
proceedings or the administrator and to receive from him or her
the necessary information and the relevant documents regarding
the course of legal protection proceedings or insolvency
proceedings;
4) to request that the supervisory person of legal protection
proceedings or the administrator presents original documents and
to receive derivatives of the documents for inspection of
legality of the actions of the supervisory person of legal
protection proceedings or the administrator;
5) to request from the supervisory person of legal protection
proceedings or the administrator and to receive from him or her
explanations about his or her actions in legal protection
proceedings or insolvency proceedings;
6) to invite the supervisory person of legal protection
proceedings or the administrator to arrive at the Insolvency
Control Service in order to provide explanations about the course
of the relevant legal protection proceedings or insolvency
proceedings;
7) impose legal obligations on the administrator;
8) to submit an application to a court for removal of the
supervisory person of legal protection proceedings from the
relevant legal protection proceedings or for removal of the
administrator from the fulfilment of obligations of the
administrator in the relevant insolvency proceedings;
9) to arrive at the supervisory person of legal protection
proceedings and the administrator at the place of practice
registered in the Insolvency Register or at the location of the
debtor - legal person. During inspection officials of the
Insolvency Control Service have the following rights upon
presenting a written authorisation of the institution in which
the subject and objective of the inspection are indicated:
a) to request and receive information and documents (also
documents containing trade secret which have been drawn up in
electronic form) related to any legal protection proceedings,
insolvency proceedings of a legal person, or insolvency
proceedings of a natural person in the record-keeping of the
supervisory person of legal protection proceedings or the
administrator, to become acquainted with them on site, as well as
to receive derivatives of these documents certified in accordance
with the procedures laid down in laws and regulations;
b) to request and receive information and documents regarding
accounts of income and expenditures of the administrator when
fulfilling official duties of the administrator, to become
acquainted with them on site, as well as to receive derivatives
of these documents certified in accordance with the procedures
laid down in laws and regulations;
c) to request from the supervisory person of legal protection
proceedings or the administrator and to receive written or oral
explanations from him or her;
10) to request and receive information from the Punishment
Register, free of charge, which is necessary for the Insolvency
Control Service for the performance of the tasks specified in
this Law;
11) to request and receive information from the Enterprise
Register of the Republic of Latvia, the State Revenue Service,
the Court Administration, the Office of Citizenship and Migration
Affairs, and the State Social Insurance Agency, free of charge,
which is necessary for the Insolvency Control Service for the
performance of the tasks specified in this Law;
12) to request and receive information regarding the
administrator and the person who wishes to take the office of an
administrator and to hand it over to the Examining
Commission;
13) to request and receive information regarding the
supervisory person of legal protection proceedings, the
administrator, and the person who wishes to take the office of an
administrator and to hand it over to the Commission of
Disciplinary Matters.
(2) The authorisation of an official of the Insolvency Control
Service shall be certified by a service identification
document.
(3) The Cabinet shall determine the content and form of the
service identification document of officials and employees of the
Insolvency Control Service.
(4) Upon commencing the procedural actions specified in
Section 174.2, Paragraph one, Clause 9 of this Law, an
official of the Insolvency Control Service shall inform the
supervisory person of legal protection proceedings or the
administrator of his or her rights.
[22 December 2016; 31 May 2018]
Section 174.3 Minutes of
a Procedural Action
(1) Officials of the Insolvency Control Service shall record
the procedural actions specified in Section 174.2,
Paragraph one, Clause 9 of this Law in the minutes of a
procedural action.
(2) The minutes of a procedural action shall indicate the
following:
1) the place and date of the occurrence of the action;
2) the legal basis of the performance of the action;
3) the time when the action was commenced and completed;
4) the position, given name, and surname of the performers of
the action;
5) the position, given name, and surname of the taker of the
minutes;
6) the given name, surname, and position of the persons -
participants in the action - or the relation thereof to legal
protection proceedings or insolvency proceedings;
7) the course of the action and established facts;
8) the documents obtained in the course of the procedural
action.
(3) The documents obtained in the course of a procedural
action shall be appended to the minutes.
(4) The performer of a procedural action shall familiarise the
persons who participate in the relevant action with the content
of the minutes of such procedural action and annexes thereto. Any
corrections and supplements suggested by the persons shall be
recorded in the minutes of the procedural action.
(5) The performer of a procedural action, the taker of
minutes, and all the persons who participated in the relevant
action shall sign the minutes of the procedural action as a whole
and each page thereof separately. If a person refuses to sign,
this shall be recorded in the minutes, indicating the reason and
grounds for such refusal.
[22 December 2016; 31 May 2018]
Chapter
XXXII
Procedures for Contesting and Appealing a Decision of the
Insolvency Control Service
[31 May 2018]
Section 175. Decisions of the
Insolvency Control Service, Contesting and Appealing Thereof
(1) The Insolvency Control Service shall take decisions:
1) to settle the claims from employees of insolvent
employers;
2) on actions of the administrator in insolvency proceedings
or when fulfilling the general obligations imposed upon him or
her in this Law, as well as on imposing of the legal obligation
in case of establishing a violation;
3) to appoint to, release, remove, or suspend the
administrator from the office, as well as to suspend official
activities of the administrator;
4) to extend the time period for taking the qualification
examination of the administrator;
5) to pay the deposit referred to in Sections 62 and 129 of
this Law;
6) to disburse the funds referred to in Section
118.1 of this Law.
(2) The decision of the Insolvency Control Service referred to
in Paragraph one, Clause 1 of this Section may be contested
before a higher institution. The decision of the higher
institution on the relevant decision of the Insolvency Control
Service may be appealed to a court. The decision of the director
of the Insolvency Control Service referred to in Paragraph one,
Clause 3 of this Section may be appealed to a court.
(3) The decisions referred to in Paragraph two of this Section
shall 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.
(4) The decision of the Insolvency Control Service referred to
in Paragraph one, Clause 2 of this Law may be appealed in
accordance with the procedures laid down in the Civil Procedure
Law within a month from the day of receipt of the decision to the
court where the relevant case of insolvency proceedings has been
initiated. Submission of a complaint to the court shall not
suspend operation of the decision of the Insolvency Control
Service.
(5) The decision of the Insolvency Control Service referred to
in Paragraph one, Clauses 5 and 6 of this Section may be appealed
in accordance with the procedures laid down in the Civil
Procedure Law to the court where the relevant case of insolvency
proceedings has been initiated within a month from the day of
receipt of the decision. Submission of a complaint to the court
shall suspend operation of the decision of the Insolvency Control
Service.
[22 December 2016; 31 May 2018]
Section 176. Submission and
Examination of Complaints Regarding Actions of the Administrator
or the Supervisory Person of Legal Protection Proceedings in the
Insolvency Control Service
(1) A creditor, a commercial company (in legal protection
proceedings), a natural person (in insolvency proceedings such
person), the debtor's representative (in insolvency proceedings
of a legal person), or a third person whose lawful rights have
been infringed upon may submit a complaint to the Insolvency
Control Service regarding actions of the administrator or the
supervisory person of legal protection proceedings.
(2) A creditor, commercial company (in legal protection
proceedings), a natural person (in insolvency proceedings of such
person), the debtor's representative (in 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 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 Control Service shall not examine
complaints regarding decisions of the administrator which are
based on a dispute regarding rights.
(4) Upon examining complaints regarding actions of the
administrator, the Insolvency Control Service is entitled to
request the necessary information and documents from the
parties.
(5) The Insolvency Control Service shall examine complaints
regarding actions of the administrator or the supervisory person
of legal protection proceedings within one month from the day of
receipt of the complaint.
(6) If it is impossible to conform to the time period referred
to in Paragraph five of this Section due to objective reasons,
the Insolvency Control Service may extend it, but not longer than
by three months from the day of receipt of the complaint,
notifying the submitter of the complaint thereof.
[31 May 2018]
Section 177. Complaint Regarding the
Decision of the Insolvency Administration
[25 September 2014 / See Paragraph 34 of Transitional
Provisions]
Chapter
XXXIII
Administrative Offences in the Field of Legal Protection and
Insolvency, and Competence in Administrative Offence
Proceedings
[5 December 2019 /
Chapter shall come into force on 1 July 2020. See
Paragraph 70 of Transitional Provisions]
Section 178. Failure to Submit an
Application for Insolvency Proceedings
For failure to fulfil the obligation to submit an application
for insolvency proceedings of a legal person in the cases
specified in this Law if such obligation of the debtor sets in
due to non-honoured tax, duty, and other mandatory statutory
payment obligations, a fine of sixty up to two hundred units of
fine shall be applied to a natural person or a board member, with
or without deprivation of the natural person and board member's
right to hold specific positions in commercial companies for a
time period from one month to five years.
[5 December 2019 / Section shall come into force on
1 July 2020. See Paragraph 70 of Transitional
Provisions]
Section 179. Violation of
Regulations of Insolvency Proceedings and Legal Protection
Proceedings
For violating the regulations of insolvency proceedings or
legal protection proceedings if such has been committed by an
administrator, a representative of a debtor, a supervisory person
of legal protection proceedings or another person involved in
insolvency proceedings or legal protection proceedings, a fine of
twenty up to three hundred units of fine shall be applied, with
or without deprivation of the right to hold specific positions in
commercial companies for a time period from one month to five
years.
[5 December 2019 / Section shall come into force on
1 July 2020. See Paragraph 70 of Transitional
Provisions]
Section 180. Competence in
Administrative Offence Proceedings
(1) Administrative offence proceedings for the offences
referred to in Section 178 of this Law shall be conducted by the
State Revenue Service.
(2) Administrative offence proceedings for the offences
referred to in Section 179 of this Law shall be conducted by the
Insolvency Control Service.
[5 December 2019 / Section shall come into force on
1 July 2020. See Paragraph 70 of Transitional
Provisions]
Transitional
Provisions
1. With the coming into force of this Law the Insolvency Law
(Latvijas Vēstnesis, 2007, No. 188; 2009, No. 97), is
repealed.
2. The norms of the law On the Insolvency of Undertakings and
Companies are 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 accordance
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 for 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) the administrator has been removed from the fulfilment of
the obligations of the administrator by a court decision in the
case provided for in Section 28, Paragraph one, Clause 2 or 3 of
the law On the Insolvency of Undertakings and Companies.
[22 December 2016; 31 May 2018]
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 are applied to 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 obligations of a natural person are 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 three 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 higher education institution to the
Association of Administrators. The administrators referred to in
the first and second sentence of this Paragraph who are studying
at a higher education institution, when applying for
re-certification, shall submit a statement issued by the higher
education institution to the Association of Administrators on
successful continuation of the studies. If the administrator has
not commenced studies at an higher education institution 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 authorise 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 authorise 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 of insolvency proceedings shall be covered
in 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 for 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 claims of creditors 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, are not 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
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
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 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 a court in respect of
termination of insolvency proceedings due to completion of the
bankruptcy procedure. If amicable settlement or reorganisation
has been started in the abovementioned proceedings by 28 February
2015, the situation in 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 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 a court in respect of termination of the insolvency
proceedings matter due to completion of the 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 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 the 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 the 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 the 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 the 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 a court by the deadlines specified therein, the
Insolvency Administration shall submit an application to a court
in respect of revoking the administrator from performing his or
her duties in the respective insolvency proceedings, except for
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 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 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 claims
of creditors and shall submit an application to a court in
respect of termination of insolvency proceedings due to the
completion of the bankruptcy procedure: by 30 November 2016 (if
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 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 insolvency proceedings or proceeding with the
court procedure: by 30 November 2016 (if 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 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 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 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 claims
of creditors and shall submit an application to a court in
respect of termination of insolvency proceedings due to the
completion of the bankruptcy procedure: by 30 November 2016 (if
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 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 insolvency proceedings: by
30 November 2016 (if 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 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 a
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 a
court in respect of revoking the administrator from performing
his or her duties in the respective insolvency proceedings and
requesting termination of 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 claims of creditors and shall submit an
application to court in respect of termination of insolvency
proceedings due to the completion of the bankruptcy procedure: by
31 August 2016 (if 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 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 relevant insolvency proceedings 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 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
conforming to 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 relevant insolvency proceedings 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 is 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 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]
35. Administrators whose certificates have been issued in
accordance with the regulation of this Law which was in force
until the day when amendments regarding taking of the
qualification examination and appointing of the administrator to
the office came into force and whose certificates are valid on
the day of coming into force of these amendments have the right
to fulfil the obligations of the administrator on the basis of
the issued certificate. After expiry of the period of validity of
the certificate the administrator has an obligation to take the
qualification examination as soon as it is organised. If the
administrator fails to take the qualification examination or
takes it but receives a negative evaluation, he or she shall lose
the right to fulfil obligations of the administrator.
[22 December 2016]
36. Regulation of this Law that stipulates a restriction on
the fulfilment of the obligations of the administrator if
operation of his or her certificate has been suspended or
terminated, or his or her certificate which was valid until the
day when amendments regarding taking of the qualification
examination and appointing of the administrator to the office
came into force has been cancelled, shall be applicable to the
administrator referred to in Paragraph 35 of these Transitional
Provisions until appointing thereof to the office.
[22 December 2016]
37. The Director of the Insolvency Administration shall
appoint the administrators referred to in Paragraph 35 of these
Transitional Provisions to the office and issue an office
certificate to them after they have passed the qualification
examination successfully. Until issuing of the office certificate
the right of the administrator to fulfil the obligations of the
administrator shall be certified by a certificate issued in
accordance with the regulation of this Law which was in force
until the day when amendments regarding taking of the
qualification examination and appointing of the administrator to
the office came into force. Until issuing of the office
certificate information regarding a certificate of the
administrator shall be entered in the columns of the Insolvency
Register which are intended for the information regarding the
office certificate.
[22 December 2016]
38. Starting from the day when amendments regarding taking of
the qualification examination and appointing of the administrator
to the office come into force, the Insolvency Administration
shall carry out the task of the Association of Administrators to
take a decision to suspend or terminate operation of the issued
certificate of the administrator or to cancel it in accordance
with the provisions of the Law which were in force until the day
when these amendments to the Law providing for appointing of the
administrator to the office came into force. Upon taking a
decision to suspend or terminate operation of the certificate of
the administrator or to cancel it, the procedures provided for in
Cabinet Regulation No. 1038 of 9 November 2010, Procedures for
Training Candidates for the Administrators of Insolvency
Proceedings and for Certifying Administrators of Insolvency
Proceedings, shall be applied insofar as they are not in
contradiction with the purpose of this Law. A decision of the
Insolvency Administration to suspend or terminate operation of
the issued certificate of the administrator or to cancel it may
be appealed to a court in accordance with the procedures laid
down in the Administrative Procedure Law. Appealing of the
relevant decision shall not suspend the operation thereof.
[22 December 2016]
39. Administrators the operation of whose certificate has been
suspended during organisation of the qualification examination
specified in Paragraph 35 of these Transitional Provisions shall
take the qualification examination to be taken prior to the
appointing to the office, as soon as the qualification
examination is organised after expiry of the time period for the
suspension of operation of the certificate.
[22 December 2016]
40. The Insolvency Administration shall organise the first
qualification examination for administrators starting from 1 June
2017.
[22 December 2016]
41. After notification of the results of the qualification
examination the Insolvency Administration shall immediately
provide the responsible institution which maintains the
Insolvency Register with the information that is necessary for
updating the information regarding administrators included in
this Register, and in cases where, in accordance with Paragraph
38 of these Transitional Provisions, the administrator loses the
right to fulfil the obligations of the administrator, shall take
measures for suspension thereof from all insolvency proceedings
to which he or she has been appointed in accordance with Section
17.2, Paragraph one, Clause 4 and Section 20,
Paragraph one, Clause 1.1 of this Law.
[22 December 2016]
42. The Insolvency Administration shall take a decision on the
contested administrative acts and actual action of the
Association of Administrators in issues regarding certification
of the administrator, including issuing of a certificate,
termination of operation of the certificate or cancellation of
the certificate, as well as re-certification of the
administrator.
[22 December 2016]
43. The actual action and administrative acts of the
Association of Administrators which refer to the certification of
the administrator, including issuing of the certificate,
termination of operation of the certificate, or cancellation of
the certificate, as well as re-certification of the
administrator, may be contested before the Insolvency
Administration in accordance with the procedures laid down in the
Administrative Procedure Law. A decision of the Insolvency
Administration may be appealed to the court. Contesting or appeal
of the abovementioned decisions shall not suspend the execution
thereof.
[22 December 2016]
44. The Association of Administrators shall, by 1 March 2017,
hand over to the Insolvency Administration a register of the
issued, extended, cancelled, and terminated certificates and
duplicates of certificates; the decisions which have been taken
when performing the State administration tasks assigned thereto
in accordance with the regulation of this Law which was in force
until the day when amendments regarding taking of the
qualification examination and appointing of the administrator to
the office came into force, as well as the documents supporting
such decisions.
[22 December 2016]
45. The provisions of this Law regarding training of
candidates for the office of the administrator shall be
applicable starting from 1 July 2017. Certifications of the
attendance of a training course which have been issued by the
Association of Administrators shall be valid until expiry of the
time period indicated therein. A candidate for the office of an
administrator the period of validity of whose certification of
the attendance of the training course issued by the Association
of Administrators expires during the time period from the day
when amendments regarding taking of the qualification examination
and appointing of the administrator to the office came into force
until 30 June 2017 have the right to take the examination of the
administrator organised by the Insolvency Administration as soon
as it is organised after expiry of the time period indicated in
the certification.
[22 December 2016]
46. Qualification improvement activities which the
administrator has attended until the day when the provisions of
this Law regarding taking of the qualification examination came
into force shall be taken into account when deciding on the issue
of the fulfilment of the preconditions for the qualification
examination.
[22 December 2016]
47. The provisions of this Law by which regulation of the
supervisory person of legal protection proceedings and the
changes related thereto in legal protection proceedings and
extrajudicial legal protection proceedings are introduced and
which restrict the competence of the administrators to fulfil the
obligations of the administrator in legal protection proceedings
and extrajudicial legal protection proceedings respectively shall
be applicable starting from 1 July 2017. The regulation referred
to in this Paragraph shall be applicable to the legal protection
and extrajudicial legal protection proceedings initiated after 1
July 2017. The provisions of this Law which were in force on the
day of initiation of legal protection proceedings shall be
applicable to the relevant legal protection proceedings initiated
until 30 June 2017.
[22 December 2016]
48. The provisions of this Law which provide for the
competence of the Insolvency Administration to conduct the
activities specified in Section 174.2, Paragraph one,
Clause 9 of this Law shall be applicable starting from 1 July
2017.
[22 December 2016]
49. The regulation of this Law which specifies the obligations
of the supervisory person of legal protection proceedings and of
the administrator in the field of record-keeping shall be
applicable starting from 1 July 2017.
[22 December 2016]
50. Section 174.1, Clauses 13, 14, and 15 of this
Law which specify the competence of the Insolvency Control
Service to establish, maintain, and develop the System, perform
electronic processing of documents, and ensure availability of
information on the website shall be applicable starting from 1
July 2018.
[22 December 2016; 31 May 2018]
51. Section 12.1 of this Law which specifies the
operation of the System shall come into force on 1 July 2018.
[22 December 2016]
52. Section 12.2 of this Law which specifies the
information to be published on the website of the Insolvency
Control Service shall come into force on 1 July 2018.
[22 December 2016; 31 May 2018]
53. The Cabinet shall, by 1 May 2017, issue the Cabinet
regulations provided for in Section 13.1, Paragraph
three, Section 15, Paragraph two, Section 16.1,
Paragraph five, Section 16.2, Paragraph six, and
Section 174.2, Paragraph three of this Law.
[22 December 2016]
54. The Cabinet shall, by 1 June 2017, issue the Cabinet
regulations provided for in Section 12.6, Paragraph
two, Section 12.7, Paragraph four, Section
17.1, Paragraph two, Section 17.2,
Paragraph two, Section 17.3, Paragraph two, Section
17.4, Paragraph two, Section 26, Paragraph seven, and
Section 26.1, Paragraph four of this Law.
[22 December 2016]
55. The Cabinet shall, by 31 December 2017, issue the Cabinet
regulations provided for in Section 12.1, Paragraph
eight and Section 12.2, Paragraph four of this
Law.
[22 December 2016]
56. Until the day of issue of the Cabinet regulations provided
for in Paragraph 54 of these Transitional Provisions, but not
later than until 1 June 2017, Cabinet Regulation No. 1038 of 9
November 2010, Procedures for Training Candidates for the
Administrators of Insolvency Proceedings and for Certifying
Administrators of Insolvency Proceedings, shall be applicable
insofar as they are not in contradiction with the purpose of this
Law.
[22 December 2016]
57. The administrators referred to in Paragraph 7 of these
Transitional Provisions who are studying at a higher education
institution shall, when applying for the qualification
examination, submit a statement to the Insolvency Control Service
regarding continuation of the studies issued by the higher
education institution. If the administrator who corresponds to
the criteria specified in Paragraph 7 of these Transitional
Provisions has failed to submit a statement regarding
continuation of the studies when applying for the qualification
examination referred to in Paragraph 35 of these Transitional
Provision, he or she shall lose the right to fulfil the
obligations of the administrator and the Director of the
Insolvency Control Service shall, by a decision, remove this
administrator from the office.
[22 December 2016; 31 May 2018]
58. Amendments to Section 33 of this Law regarding the
supplementation thereof with Paragraph 1.1 in relation
to the obligation to lodge a deposit for insolvency proceedings
of a legal person if an application for legal protection
proceedings is re-submitted within a year shall be applicable to
the cases of legal protection proceedings initiated starting from
1 July 2018.
[31 May 2018]
59. Amendments to Section 80 of this Law with regard to the
procedures for appealing a decision of the administrator to
recognise, not to recognise, or to recognise partly the claim of
the creditor, concurrently asking to examine a dispute regarding
the rights and to impose a provisional remedy, shall be
applicable to the cases of insolvency proceedings of a legal
person initiated after coming into force of these amendments.
[31 May 2018]
60. Amendments to Section 169 of this Law regarding the
supplementation of Paragraph two thereof with Clauses
1.1 and 4 and to Section 171, Paragraph one with
regard to the remuneration of the administrator if the debtor -
legal person -, according to data of the last financial year
ended, has employed more than 250 employees and the annual
turnover thereof has exceeded EUR 50 million or the annual
balance-sheet total thereof has exceeded EUR 43 million and
economic activity is continued during insolvency proceedings of
the debtor, as well as with regard to the disbursement of the
deposit within the framework of insolvency proceedings of a
natural person shall be applicable to the cases of insolvency
proceedings of a legal person and natural person initiated
starting from 1 July 2018.
[31 May 2018]
61. The Cabinet shall, by 1 July 2018, determine the
procedures for lodging and disbursing a deposit for insolvency
proceedings of a legal person and a natural person, determining
actions of the Insolvency Control Service with the deposit lodged
within the framework of a case of legal protection proceedings,
and determining new procedures for disbursing a deposit for
insolvency proceedings of a natural person.
[31 May 2018]
62. Amendments to Section 12.5 of this Law
regarding the supplementation thereof with Paragraph five, to
Section 26 regarding the supplementation thereof with Paragraph
2.1, to Section 26 regarding the supplementation of
Paragraph three thereof with Clause 10, to Section 28 regarding
the new wording of Paragraph two thereof which determine an
obligation of the supervisory person of legal protection
proceedings and the administrator to use the System, including an
obligation of the administrator to submit authorisation to the
Insolvency Control Service through the System, shall come into
force on 1 January 2019.
[31 May 2018]
63. Section 12.1, Paragraph nine of this Law, as
well as amendments to Section 69 of this Law regarding the
supplementation thereof with Clause 7, to Section 73 regarding
the supplementation thereof with Paragraph 3.1, to
Section 81 regarding the supplementation thereof with Paragraph
four, and to Section 140 regarding the supplementation thereof
with Clause 3 which determine the right of the creditor and the
representative thereof, the debtor's representative, the debtor
in insolvency proceedings of a natural person or the
representative thereof to use the System, shall come into force
on 15 April 2019 and shall be applicable to insolvency
proceedings of a legal person, insolvency proceedings of a
natural person, and legal protection proceedings initiated after
31 December 2018.
[31 May 2018]
64. Amendments to Section 19 of this Law regarding the
supplementation thereof with Paragraph 1.1 and the new
wording of Paragraph two, as well as amendments to Section 59 of
this Law regarding the new wording thereof which determine
automated selection of a candidate for the office of the
administrator for the appointing to insolvency proceedings from
the List of Candidates shall come into force on 1 January 2019.
The Cabinet shall, by 1 December 2018, issue a regulation
regarding the procedures for compiling the List of Candidates in
the System, the characteristics by which an administrator shall
be included in the List of Candidates, and the procedures for
selecting a candidate for the office of the administrator by
using automated selection provided by the Judicial Informative
System.
[31 May 2018]
65. Amendments to Section 62 of this Law regarding the
deletion of Paragraph 7.3 thereof which stipulates the
delegation of the Cabinet to determine what part of the State
entrepreneurial risk fee should be directed towards covering of
costs of insolvency proceedings of a legal person, and amendments
to Section 62, Paragraph 7.2 of this Law shall come
into force on 1 January 2019.
[31 May 2018]
66. Amendments to Section 85 of this Law shall come into force
on 1 January 2019. The Cabinet shall, by 1 December 2018, issue a
regulation regarding the content of the operational report of the
administrator and the procedures for filling in thereof. If, in
accordance with Cabinet Regulation No. 247 of 19 April 2016,
Regulations Regarding the Operational Report of the Administrator
of Insolvency Proceedings and the Procedures for Filling in
Thereof (hereinafter in this Paragraph - Regulation No. 247), the
end of the period of the operational report of the administrator
sets in by 31 December 2018, the administrator shall provide his
or her operational report to the creditors and the Insolvency
Control Service in accordance with the abovementioned Regulation
No. 247. In this case the previous form of the operational report
of the administrator shall be available on the website of the
Insolvency Control Service until 18 January 2019. Starting from 1
January 2019 the administrator shall enter in the System the
amount of data specified in Regulation No. 247 which is to be
submitted for filling in the operational report of the
administrator in specific insolvency proceedings after the end of
the period of the last operational report of the administrator
submitted on the website of the Insolvency Control Service by 31
December 2018. The administrator shall enter in the System the
data which are to be submitted in specific insolvency proceedings
from 1 January 2019 in accordance with Cabinet Regulation
Regarding the Content of the Operational Report of the
Administrator and the Procedures for Filling in Thereof which
will come into force on 1 January 2019. The first operational
report of the administrator shall be created in the System by 31
March 2019 in accordance with Section 85, Paragraph one of the
Insolvency Law and the Cabinet Regulation Regarding the Content
of the Operational Report of the Administrator and the Procedures
for Filling in Thereof which will come into force on 1 January
2019. The data entered in the System from 1 January 2019 to 31
March 2019 shall be compiled therein.
[31 May 2018]
67. Amendments to Section 64, Paragraph one, Clause 2, Section
88, Paragraph one, Clause 2, supplementing it with Sub-clause
"g", Section 89, Clause 3, Section 114, Section 118, Paragraph
twelve, and Section 170, Paragraph one of this Law shall be
applicable to insolvency proceedings of legal persons initiated
after coming into force of these amendments.
[31 May 2018]
68. Amendments to Section 130 of this Law, supplementing it
with Clause 5, shall be applicable to insolvency proceedings of
natural persons initiated after coming into force of these
amendments.
[31 May 2018]
69. Section 12.1, Paragraph ten of this Law which
determines that the information included in the System is
restricted access information shall also be applicable to the
information which is included in the System in accordance with
Cabinet Regulation No. 247 of 19 April 2016, Regulations
Regarding the Operational Report of the Administrator of
Insolvency Proceedings and the Procedures for Filling in
Thereof.
[31 May 2018]
70. Amendments to Section 38, Paragraph seven, Section 164,
Paragraph four, Clause 4, Section 174.1, Clause 3 of
this Law related to the administrative offence proceedings and
Chapter XXXIII of this Law shall come into force concurrently
with the Law on Administrative Liability.
[5 December 2019]
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 © 2020 Valsts valodas centrs (State
Language Centre)