Bankruptcy begins for Litimpeks

VILNIUS - As expected, the Bank of Lithuania launched bankruptcy proceedings Sept. 2 against Litimpeks Bankas, which has been long haunted by liquidity problems.

The central bank's decision sent no shock waves through the banking sector or society in general. Litimpeks' financial woes were already well known after the bank spent most of August experiencing one bad break after another.

The central bank cut off Litimpeks' banking activities Aug. 13. Litimpeks was only allowed to hunt for investors willing to pull the bank out its hole. No savior was found.

A few days later, the central bank also carried out a week-long set of inspections of Litimpeks, during which the proverbial fine-tooth comb was dragged over the bank's financial data. At the end of inspections, the Bank of Lithuania reported that Litimpeks' liabilities exceeded its assets by almost $10 million.

With Litimpeks unable to meet the national risk-requirements, the central bank's 13-member board unanimously voted on Sept. 2 to begin bankruptcy procedures.

"The decision prompts the Bank of Lithuania to apply to the Vilnius District Court in order to begin bankruptcy proceedings," explained a central bank spokesman. "The decision to revoke Litimpeks' license will be applied after the court's decision has been made."

Bankruptcy was not the central bank's only option. Litimpeks' executive board earlier presented the idea of hooking up the suffocating bank with Lietuvos Taupomasis Bankas, Lithuania's largest bank. But this option was tossed aside by the central bank after it analyzed the information obtained from inspections.

"It was decided that the expense for the bankruptcy procedure would be less," said a central bank spokesman. "All variants and all possible aspects were considered."