LITHUANIA
As at 9 March 2018
By Frank Heemann
Rechtsanwalt
Partner at BNT
| Proceedings | Elements of the Directive already included into the national legislation |
| Įmonės restruktūrizavimo byla (Enterprise Restructuring) Main features: Confirmation by the court of the creditor approved restructuring plan, implementation of which is supervised by a court-appointed insolvency practitioner |
In summary: Partially compliant with the Directive’s contents. See below for more details: |
| Partial compliance with article 5: Debtor remains in control of assets and activities, but the appointment by a judicial authority of a practitioner in the field of restructuring is mandatory in every case. |
|
| Compliance with article 6 Debtor negotiating a restructuring plan with its creditors may benefit from a stay of individual enforcement actions |
|
| Compliance with article 7 No bankruptcy (liquidation) proceeding can be opened while a restructuring proceeding is initiated |
|
| Partial compliance with article 8 Some minimum content of the plan proposed by the Directive is not mandatory under the current legislation, e.g. there are no strict requirement/guidelines for the valuation of the present value of the debtor, no obligation to have different classes of creditors. |
|
| Partial compliance with article 9 Any affected creditors have a right to vote on the adoption of a restructuring plan, however there is no voting by creditor classes (voting rights depend only on the approved claim volume). |
|
| Partial compliance with article 10 Restructuring plan as a final step is confirmed by the court. The court’s right to refuse confirmation is in essence limited to procedural infringements. |
|
| |
Noncompliance with article 11 There is no cross-call cram down under Lithuanian law, as the current law and practice does not separate creditors in different class groups. |
| Noncompliance with article 12 There are no mechanisms to prevent unreasonable Equity holder’ actions to prevent adoption or implementation of a restructuring plan |
|
| Not clear if compliant with article 14 The law is not clear, whether a restructuring plan confirmed by the court would be binding only on the parties that participated in the proceedings or also on parties that are mentioned in the plan but did not participate. There is not reliable court practice, so this issues remains open. |
|
| Noncompliance with article 15 E.g. Court ruling confirming the restructuring plan is final and cannot be appealed |
|
| Partial compliance with articles 16 and 17 Creditors providing certain DIP financing enjoy priority over certain other creditors which they would otherwise not enjoy. |
|
| Partial compliance with article 18 There is a specific duty for directors (and other responsible persons defined by law) to initiate bankruptcy proceedings if the company becomes insolvent. Failure to file for bankruptcy in due time might trigger liability and other sanctions. The idea of this obligation is to incentivize early filing, including early filing for restructuring proceedings while the business is still viable. On the other hand, this filing obligation is embedded in the Law on Enterprise Bankruptcy, no similar direct incentive/obligation can be found in the Enterprise Restructuring Law. |
| Proceedings | Elements of the Directive which may be included into the national legislation |
| General insolvency procedures | There are initiatives to introduce a new insolvency code during 2019. No reliable bill of this new law is publicly available at the moment. |