In the face of this economic crisis an increasing number of companies are confronted with financial difficulties, therefore restructuring procedures are currently becoming more and more popular. Restructuring is meant to be the company's rescue from bankruptcy, meeting creditors' interests in the company and forming the conditions that enable the company to duly perform to its duties with regard to the creditors, to preserve and further develop operations, to return debts and restore solvency.
An extremely important role in the company's restructuring process is taken by the company's creditors. In compliance with the Law on Restructuring of Enterprises of the Republic of Lithuania (hereinafter 's "the Law") 's the company's creditors are considered to be all persons entitled to demand and to apply obligations and liabilities on the company. It is essential to precisely identify the respective persons, as upon initiating, starting and performing the restructuring procedures it is necessary to be aware of the exact number of the company's creditors, and the precise asking amounts.
The Law stipulates a specific mode of protection of rights for major creditors of the company. The major creditors are considered to be the creditors in pursuance of the claims of which are ensured by pledge and (or) mortgage, guarantee and (or) bond, or creditors, in the claim amount of which amounts to less than 1/5 of the total amount claimed by the creditors. They have a decisive voice upon taking decisions on addressing the court regarding the filing of the company's restructuring case, and on approval of the restructuring plan outline, etc.
In all cases, the appeal to the court regarding the filing of the restructuring case against the company may be submitted only in case where, at the creditors' meeting of the company, it has adopted the decision (agreed) to file the restructuring case against the company. The following decision may be adopted in one of three ways under the majority of the creditors' votes 's 1) at the first creditors' meeting of the company, 2) at the major creditors' meeting equated to the first creditors' meeting of the company, if the major creditors represent more than 1/2 of the total amount claimed by the creditors, or 3) in case a considerable number of the creditors exists and difficulties arise upon gathering them together 's after receiving written consents from the creditors, the claims of each of them make up more than 1/5 of the total amount of claims drawn into the records, and the total amount of the following claims 's no more than 1/2 of the total amount of claims.
The first creditors' meeting regarding the filing of the restructuring case is convened by the company's manager. All the creditors, for which the liabilities' deadlines of the company have expired or will expire during the restructuring period of the company set in the outline of the restructuring plan, must be called at the first meeting. The creditors must be informed in writing and via national newspaper about the convenable meeting no later than 10 calendar days prior the meeting date.
The meeting convened only by the major creditors of the company may be also acknowledged as the first creditors' meeting, in case the total amount of claims of the major creditors exceeds 1/2 of the total amount claimed by the creditors. In such a case, it is not mandatory to inform all the creditors about the meeting dealing with a problem regarding the filing of the restructuring case against the company.
In case a considerable number of major creditors exists, and difficulties arise upon gathering them together, and the company's operations need to be started without delay, the company's manager for restructuring may receive written consent from the creditors, the claims of each of them making up more than 1/5 of the total amount of claims drawn into the records. It should be noted that the following provision cannot be applied formally 's the company, in first place, should inform all major creditors about the convened meeting and only after facing difficulties of gathering them together and under the necessity to promptly start the restructuring process uses the established exemption. It should be emphasized, that the usage of the following provisions like "considerable number of the major creditors", "difficulties upon gathering," "the process needs to be started without delay" bring obscurity and ambiguity to the Law. Different meanings can be attributed to them by those involved, consequently, unnecessary disputes may arise.
Since the success of the restructuring is mostly subject to close cooperation with the creditors (particularly the major ones) and the company being restructured and its members, the aforementioned requirements must be in particular taken into consideration. Before starting the restructuring process, it must be verified and assured that all creditors with the granted right, established by the Law, to make decisions regarding the filing of the restructuring case against the company have been informed and have been duly notified about the intention to file the restructuring case.
Lauras Stankevicius is a lawyer at Jurevicius, Balciunas & Bartkus, a member of Baltic Legal Solutions, a pan-Baltic integrated legal network of law firms including Glikman & Partnerid in Estonia and Kronbergs & Cukste in Latvia, dedicated to providing a quality "one-stop shop" approach toclients' needs in the Baltics.