Extrajudicial bankruptcy process

  • 2011-09-21
  • By Indre Triponaite, Assistant to the Attorney at Law

According to the Enterprise Bankruptcy Law of the Republic of Lithuania (hereinafter referred to as the Enterprise Bankruptcy Law), bankruptcy procedures may be applied out of court. It is possible only then, if no action has been brought in a court in which claims, including claims connected with employment relationships, has been entered against the enterprise, also if no execution is levied on the enterprise under the writs of execution issued by the courts or other institutions. If the enterprise is unable and will not be able to settle with a creditor (or creditors), the head of the enterprise administration, the owner (or owners), intending to seek the creditors’ consent to carry out bankruptcy procedures out of court, then it must notify every creditor in writing of the motion to implement extrajudicial bankruptcy procedures, at the same time indicating the date and place of the creditors’ meeting.

Extrajudicial bankruptcy procedures shall be carried out in compliance with the Enterprise Bankruptcy Law. The issues within the competence of a court shall be considered and decided by a creditors’ meeting.
The decision to carry out extrajudicial bankruptcy procedures may be adopted by the creditors’ meeting if the decision is voted in favor of the creditors, whose claims in terms of value account for at least 4/5 of the amount of the enterprise’s liabilities on the day of adoption of the resolution, including those which have not yet matured. It should be noted, that if the creditors’ meeting rejects the decision to carry out extrajudicial procedures, the creditor (or creditors), the owner (or owners) and the head of the enterprise administration may file to court a petition for bankruptcy.