Instituting Bankruptcy Proceedings in Court

According to the Enterprise Bankruptcy Law of the Republic of Lithuania (hereinafter referred to as Enterprise Bankruptcy Law), a petition for the institution of enterprise bankruptcy proceedings shall be filed by these following persons: the creditor (creditors), the owner (owners) and the head of the enterprise administration (Paragraph 1 of Article 5 of Enterprise Bankruptcy Law).

It should be noted that the court or the judge shall, within one month from the day of receipt of the petition, make a decision to institute bankruptcy proceedings or to refuse to grant the petition.
For valid reasons the court shall be entitled to extend this period, but for not longer than one month. Bankruptcy proceedings shall be instituted by the county court of the locality where the registered office of the enterprise is situated.
Under Paragraph 5 of Article 9 of the Enterprise Bankruptcy Law, bankruptcy proceedings shall be instituted if the court establishes the presence of at least one of the following conditions:

1) the enterprise is insolvent or the enterprise delays paying the employee (employees) wages;
2) the enterprise has made a public announcement, or in any other manner notified the creditor (creditors), of its inability to effect settlement with the creditor (creditors) and/or of its lack of intent to discharge its liabilities.

The court also shall refuse instituting bankruptcy proceedings if:
1) before the court makes a decision to institute bankruptcy proceedings, the enterprise satisfies the claims of the creditor (creditors) who filed a petition for bankruptcy;
2) restructuring proceedings have been instituted against the enterprise;
3) during the hearing of the petition for the institution of bankruptcy proceedings the court makes a sufficiently justified assumption that the enterprise possesses no assets, or that its assets are not sufficient to cover legal and administration costs, save in cases provided for in paragraphs 10 and 12 of Article 10 of Enterprise Bankruptcy Law.

It should be noted that the court decision made in written proceedings to institute or to refuse to institute bankruptcy proceedings could be appealed within 10 days from the day of its making.