RIGA - The International Monetary Fund has a positive opinion of the first stage of reforms to Latvia's insolvency procedures, Justice Minsiter Janis Bordans (New Conservative Party) told a press conference today.
The Justice Ministry's deputy state secretary Laila Medina said that the IMF's assessment of reforms to the system of supervision of insolvency administrators found that stepped up requirements on insolvency administrators was correct.
The IMF recommendations cover a broad range of issues in the insolvency supervision system, added Medina. For instance, the IMF recommends revising the cost of insolvency proceedings and administrator's remuneration, so the cost of an insolvency process would not exceed the amounts recovered by administrators. The IMF also recommends revising administrators' responsibility for damage and losses they can potentially cause, and introducing different requirements on administrators in charge of insolvency proceedings at large companies so that such cases be not entrusted to administrators with little experience.
Another recommendation offered by the IMF is to increase the use of legal protection proceedings or restructuring of debts, so businessmen would have one more opportunity before insolvency proceedings commence. The IMF believes that there has to be closer cooperation with the authorities when insolvency fraud is suspected.
As for companies that cannot be rescued from insolvency, the IMF recommends selling their assets as a whole, not in parts, so the entity that acquires them could promptly start a new business using these assets.
Speaking about the future, Medina added that the Justice Ministry would be working on improvements to the regulations on private individuals' insolvency procedures in order to improve low income-earners' access to insolvency procedures.
Bordans said that he was pleased with progress made so far. The reform has been successful as the Justice Ministry made society's interests a priority, he explained.