PART I

GENERAL PROVISIONS

Article 1. Purpose and scope of the Law

1. The purpose of this Law shall- be to facilitate an effective process of insolvency of legal persons by ensuring a balance of interests of creditors and the legal persons.

2. This Law shall govern legal persons’ restructuring and bankruptcy processes as well as the profession of insolvency administrators and supervision of the activities thereof.

3. This Law shall not apply to budgetary institutions, political parties, trade unions, religious communities and associations.

4. The provisions of this Law governing the process of restructuring of legal persons shall not apply to credit institutions, payment institutions, electronic money institutions, insurance and reinsurance undertakings, management companies, investment companies, intermediaries of public trading in securities and other entities referred to in Article 1(2) of the Law of the Republic of Lithuania on Financial Sustainability.

5. The laws governing the activities of legal persons may stipulate specificities of legal persons’ restructuring and bankruptcy processes.

6. This Law shall apply to the extent it does not contradict the Law of the Republic of Lithuania on Financial Collateral Arrangements and the Law of the Republic of Lithuania on Settlement Finality in Payment and Securities Settlement Systems.

7. The provisions of this Law shall implement the legal act of the European Union referred to in the Annex to this Law.

Article 2. Definitions

1. ‘Legal person in bankruptcy’ means a legal person against which a bankruptcy proceeding has been opened or the bankruptcy process of which is conducted out of court and the procedures of the legal person’s liquidation because of bankruptcy as specified by this Law have not been initiated.

2. ‘Current payments by a legal person’ (hereinafter: ‘current payments’) means all payments required to ensure economic and commercial activities of a legal person, including taxes administered in accordance with the procedure laid down in the Law of the Republic of Lithuania on Tax Administration (hereinafter: ‘taxes’).

3. ‘Legal person’s bankruptcy proceeding’ (hereinafter: ‘bankruptcy proceeding’) means a civil proceeding heard by a court in respect of the legal relations of the bankruptcy of a legal person.

4. ‘Legal person’s bankruptcy process’ (hereinafter: the ‘bankruptcy process’) means the entirety of the procedures specified by this Law and aimed liquidating a legal person in court or out of court by satisfying creditors’ claims from the legal person’s assets.

5. ‘Legal person’s financial difficulties’ (hereinafter: ‘financial difficulties’) means a situation when a legal person is insolvent or there is a substantial likelihood of becoming insolvent within the next three months.

6. ‘Viability of a legal person’ means the state of a legal person when the legal person pursues economic and commercial activities enabling it to discharge its obligations in the future.

7. ‘Insolvency of a legal person’ (hereinafter: ‘insolvency’) means the state of a legal person when the legal person is unable to discharge its property obligations in due time or when liabilities of the legal person exceed the value of its assets.

8. ‘Legal person’s restructuring proceeding’ (hereinafter: ‘restructuring proceeding’) means a civil proceeding heard by a court in respect of the legal relations of the restructuring of a legal person.

9. ‘Creditor affected by a legal person’s restructuring plan’ (hereinafter: a ‘creditor affected by a restructuring plan’) means a creditor whose civil rights and/or obligations are directly created, changed or revoked by a legal person’s restructuring plan due to assistance provided to the legal person to overcome financial difficulties.

10. ‘Legal person’s restructuring process’ (hereinafter: the ‘restructuring process’) means the entirety of the procedures specified by this Law and aimed at overcoming a legal person’s financial difficulties, preserving its viability and preventing bankruptcy by receiving creditors’ assistance to overcome financial difficulties, applying economic, technical, organisational and other measures.

11. ‘Other Member State’ means a state of the European Economic Area, with the exception of the Republic of Lithuania, and the Swiss Confederation.

12. ‘Commercial account’ means a legal person’s account the funds accumulated wherein are intended to effect settlements relating to economic and commercial activities pursued in the course of the bankruptcy process.

13. ‘Creditors’ account’ means a legal person’s deposit account the funds accumulated wherein are intended to satisfy creditors’ claims, to cover the administrative expenses of the bankruptcy process and a variable portion of the remuneration for an insolvency administrator for the outcomes of the administration of the bankruptcy process.

14. ‘Legal person in liquidation because of bankruptcy’ means a legal person against which a bankruptcy proceeding has been opened or in respect of which the bankruptcy process is being conducted out of court and a legal person’s liquidation procedures laid down by this Law have been initiated.

15. ‘New financing of a legal person’ (hereinafter: ‘new financing’) means provision of additional funds, as approved in a legal person’s restructuring plan, of an existing or new creditor to the legal person as assistance to overcome the legal person’s financial difficulties.

16. ‘Computer programme for the selection of insolvency administrators’ (hereinafter: ‘selection computer programme’) means a computer programme for selecting an insolvency administrator from the List of Insolvency Administrators for the administration of a legal person’s bankruptcy proceeding.

17. ‘Insolvency administrator’ means a natural or legal person having the right to administer insolvency processes.

18. ‘Assistance to overcome financial difficulties of a legal person’ (hereinafter: ‘assistance to overcome financial difficulties’) means assistance provided by creditors to a legal person to overcome financial difficulties, including deferral of a time limit for the discharge of an obligation, waiver of a claim to discharge an obligation or part thereof, replacement of an obligation with another obligation, etc.

19. ‘Supervisory authority’ means a state institution designated by the Government of the Republic of Lithuania and responsible for supervision of activities of insolvency administrators and performance of other functions specified in this Law.

20. ‘Interim financing of a legal person’ (hereinafter: ‘interim financing’) means provision to a legal person of additional funds of an existing or new creditor that are reasonably and immediately necessary to enable the legal person to continue its activities or to remain viable or to prevent a decrease in the value of the legal person pending the approval of a restructuring plan.

21. ‘Economic and commercial activities’ means industrial, commercial, financial and professional activities aimed at earning income to cover the administrative expenses of the bankruptcy process and to settle with creditors.

22. ‘Chief accountant (accountant)’ (hereinafter: an ‘accountant’) means a person as defined in the Law of the Republic of Lithuania on Accounting. For the purposes of this Law, a legal person providing accounting services, an employee authorised by it or a person providing accounting services independently shall also be considered to be an accountant.

23. Where the provisions of this Law apply both to a legal person’s restructuring process and to a legal person’s bankruptcy process, the term ‘insolvency process’ shall be used.

24. Where the provisions of this Law apply both to a legal person’s restructuring proceeding and to a legal person’s bankruptcy proceeding, the term ‘insolvency proceeding’ shall be used.

25. Other concepts used in this Law shall be interpreted as they are defined in the Civil Code of the Republic of Lithuania, the Code of Civil Procedure of the Republic of Lithuania, the Law of the Republic of Lithuania on Services, the Law of the Republic of Lithuania on Recognition of Regulated Professional Qualifications and the Law on Tax Administration.

Article 3. Principles of the insolvency process

The principles of the insolvency process shall be as follows:

1) the principle of efficiency, meaning that in the course of insolvency process a balance must be maintained between the interests of a legal person in financial difficulties and the interests of creditors with a view to maximising satisfaction of the creditors’ claims within a reasonable minimum period of time;

2) the principle of equality of creditors, meaning that creditors with similar claims shall be given equal opportunities to participate in the insolvency process in order to satisfy their claims and to protect their other rights and legitimate interests;

3) the principle of transparency, meaning that information on the insolvency process shall be made available in a timely manner to all persons involved in the insolvency process in order to ensure the safeguarding of the rights and legitimate interests of these persons, except for the cases when it is necessary to protect personal data protected by legal acts or information comprising a commercial/industrial secret;

4) the principle of judicial leading in the process, meaning that the court may, of its own motion, obligate participants in the insolvency process to conduct procedural actions, collect evidence and control the actions of the parties to the insolvency process in order to ensure the effective course of the in-court insolvency process and the public interest;

5) the principle of professionalism, meaning that the persons administering insolvency processes must perform their duties professionally, ensuring a high level of their professional knowledge and ability and acting in such a way as to ensure the good repute of a representative of the profession.

PART II

INSOLVENCY PROCESS

CHAPTER I

BEGINNING OF THE INSOLVENCY PROCESS

SECTION ONE

INITIATION OF THE INSOLVENCY PROCESS

Article 4. Persons having the right to initiate the insolvency process

1. The following persons shall have the right to initiate the insolvency process:

1) the manager of a legal person or, where under the law governing the appropriate legal form of a legal person the legal person does not have a single-person management body, another person having the right, within his remit, to apply for initiation of the insolvency process (hereinafter: the ‘manager of a legal person’), where the legal person is in financial difficulties but is not yet insolvent;

2) a creditor for whom a time limit for discharge of an obligation has expired.

2. The creditor referred to in point 2 of paragraph 1 of this Article shall have the right to initiate the restructuring process only if his claims to a legal person, where they have been overdue, exceed ten amounts of the minimum monthly wage (hereinafter: ‘MMW’) approved by the Government.

Article 5. Persons under the duty to initiate the insolvency process

The following persons shall be under the duty to initiate the insolvency process:

1) the manager of a legal person, where the legal person is insolvent;

2) the liquidator of a legal person, where it transpires in the course of liquidation of the legal person that the legal person is insolvent.

Article 6. Duties of the manager of a legal person in the event of insolvency of the legal person

In the event of insolvency of a legal person, the manager of the legal person must carry out the following actions:

1) inform without delay the participants of the legal person about the insolvency of the legal person and propose to resolve the issue of restoration of solvency of the legal person;

2) initiate without delay the insolvency process;

3) initiate the insolvency process not later than within five working days from the day on which it became known or should have been known that an agreement on assistance to overcome financial difficulties (hereinafter: an ‘agreement on assistance’) is not being implemented or is being implemented improperly.

Article 7. Duties of the liquidator in the event of insolvency of a legal person

In the event of insolvency of a legal person, the liquidator of the legal person must carry out the following actions:

1) suspend all payments;

2) initiate without delay the legal person’s bankruptcy process in accordance with the provisions of Article 8 of this Law.

Article 8. Initiation of the insolvency process when initiated by a legal person

1. The manager or the liquidator of a legal person shall initiate the insolvency process by submitting a notice to creditors at their home address or at the address of their registered office by registered mail, through bailiffs or courier service providers or by submitting a notice by means of electronic communications, provided that the security of transmitted information is ensured and a person’s identity can be determined. Where the insolvency process is initiated by means of electronic communications, acknowledgement of receipt of the notice must be obtained. The notice shall be deemed to have been served after the lapse of seven days from dispatch thereof, unless it has been submitted by means of electronic communications.

2. The notice shall specify the obligation not discharged by the legal person and state that, in the absence of an agreement on assistance or a decision to conduct the bankruptcy process out of court within a time limit fixed in the notice, the legal person will apply to a court for opening a restructuring or bankruptcy proceeding.

3. For concluding the agreement on assistance or for adopting the decision to conduct the bankruptcy process out of court, a time limit of not less than 15 days and not more than 30 days from the service of the notice upon a creditor shall be fixed.

4. The provisions of paragraphs 2 and 3 of this Article regarding a proposal to conclude an agreement on assistance or adopt a decision to conduct the bankruptcy process out of court may be omitted if either of the following conditions is met:

1) a previously concluded agreement on assistance is not being implemented or is being implemented improperly;

2) a liquidator initiates the bankruptcy process on account of a legal person being insolvent;

3) a bailiff has returned enforceable documents to a creditor on account of a legal person having no assets or income from which claims may be satisfied.

Article 9. Initiation of the insolvency process when initiated by a creditor

1. A creditor shall initiate the insolvency process by submitting a notice to a legal person by registered mail, through bailiffs or courier service providers at the address of its registered office, or by submitting a notice by means of electronic communications, provided that the security of transmitted information is ensured and the identity of the person can be determined. Where the insolvency process is initiated by means of electronic communications, acknowledgement of receipt of the notice must be obtained. The notice shall be deemed to have been served after the lapse of seven days from dispatch thereof, unless it has been submitted by means of electronic communications.

2. The notice shall indicate the uncontested obligation not discharged by the legal person and state that if the obligation is not discharged, or in the absence of an agreement on assistance or a decision to conduct the bankruptcy process out of court within a time limit fixed in the notice, a creditor will apply to a court for opening a restructuring or bankruptcy proceeding against the legal person.

3. For discharging the obligation, for concluding the agreement on assistance or for adopting the decision to conduct the bankruptcy process out of court, a time limit of not less than 15 days and not more than 30 days from the service of the notice upon the legal person shall be fixed.

1) a previously concluded agreement on assistance is not being implemented or is being implemented improperly;

2) a bailiff has returned enforceable documents to a creditor on account of the legal person having no assets or income from which claims may be satisfied.

Article 10. Agreement on assistance

1. An agreement on assistance shall be concluded between a legal person and the creditors whose civil rights and/or duties arising out of assistance provided by them to the legal person in overcoming financial difficulties are directly created, changed or revoked by this agreement.

2. A person intending to conclude an agreement on assistance shall have the right to apply to a court for imposing and/or lifting interim measures.

Article 11. Out-of-court bankruptcy process

1. The bankruptcy process may be conducted out of court if, on the day of adoption of a decision to conduct the bankruptcy process out of court, the following conditions are met:

1) no proceedings have been opened in courts or no preliminary out-of-court settlement of disputes is being conducted in which pecuniary claims, including claims relating to employment relationships, have been lodged against a legal person;

2) no execution has been levied against the legal person’s assets according to the enforceable documents issued by courts or other institutions;

3) no tax investigation or tax inspection is being carried out in accordance with the procedure laid down by the Law on Tax Administration.

2. Where the conditions specified in paragraph 1 of this Article are not met, the bankruptcy process may be conducted out of court only with the consent of the tax administrator, the claimant and/or the recoveror.

3. A decision to conduct the bankruptcy process out of court shall be deemed adopted if approved by the creditors the amount of whose claims, as on the day of adoption of the decision, accounts in value terms for at least 3/4 of the total amount of liabilities held by the legal person, including those for which payment deadlines have not expired.

Article 12. Conduct of the bankruptcy process out of court

1. When conducting the bankruptcy process out of court, the issues lying with the competence of a court shall be decided a creditors’ meeting.

2. An insolvency administrator shall be appointed by a creditors’ meeting.

3. When conducting the bankruptcy process out of court, the provisions of this Law governing the in-court bankruptcy process shall apply mutatis mutandis, with the exception of the provisions on the selection of an insolvency administrator and procedural penalties imposed by a court.

Article 13. Liability of the manager of a legal person

1. The manager of a legal person must compensate for the damage resulting from non-performance or improper performance of the duties specified in this Law.

2. A court shall have the right to restrict the right of the manager of a legal person to hold the post of the manager of a public and/or private legal person or to be a member of a collegial management body for a period from one to five years if he:

1) has failed to initiate the legal person’s insolvency process where this was required under this Law;

2) has caused bankruptcy fraud by his act or omission;

3) after the coming into effect of a court ruling to open a bankruptcy proceeding against the legal person, he has failed to transfer assets, documents and/or information to an insolvency administrator.

3. A decision to restrict a person’s right to hold the post of the manager of a public and/or private legal person or to be a member of a collegial management body shall be taken by a court of its own motion upon a reasoned request of an insolvency administrator, a creditors’ meeting or a creditor.

4. A court shall, not later than on the next working day following the coming into effect of a ruling to restrict a person’s right to hold the post of the manager of a public and/or private legal person or to be a member of a collegial management body, submit to the data processor of the Register of Legal Entities the person’s forename, surname, personal number, the date of the coming into effect of the court ruling, the period during which the person may not hold the post of the manager of the public and/or private legal person or to be a member of the collegial management body and a copy of this ruling.

Article 14. List of Persons Whose Right to Hold the Post of the Manager of a Public and/or Private Legal Person or to Be a Member of a Collegial Management Body Has Been Restricted

1. In order to ensure the safeguarding of interests of the parties concerned, the data processor of the Register of Legal Entities shall draw up a list of natural persons whose right to hold the post of the manager of a public and/or private legal person or to be a member of a collegial management body has been restricted in accordance with the procedure laid down by this Law (hereinafter: the ‘List of Persons Whose Right to Hold the Post of the Manager Has Been Restricted’).

2. Persons shall be entered on the List of Persons Whose Right to Hold the Post of the Manager Has Been Restricted not later than on the next working day following the receipt of a court ruling to restrict a person’s right to hold the post of the manager of a public and/or private legal person or to be a member of a collegial management body.

3. The List of Persons Whose Right to Hold the Post of the Manager Has Been Restricted shall contain the following data:

1) the forename, surname and date of birth of a natural person;

2) the date of the coming into effect of a court ruling;

3) the period during which the person may not hold the post of the manager of a public and/or private legal person or to be a member of a collegial management body.

4. The List of Persons Whose Right to Hold the Post of the Manager Has Been Restricted shall be published on the website of the data processor of the Register of Legal Entities.

5. The information referred to in paragraph 3 of this Article shall be published until the end of the period during which a person may not hold the post of the manager of a public and/or private legal person or be a member of a collegial management body.

SECTION TWO

OPENING OF AN INSOLVENCY PROCEEDING

Article 15. Jurisdiction of proceedings and examination of petitions

1. Legal persons’ insolvency proceedings shall be opened with regional courts according to the location of the registered office of a legal person. Where Regulation (EU) 2015/848 applies, the main insolvency proceedings shall be opened with the regional courts of the centre of the legal person’s main interests, and territorial insolvency proceedings shall be opened with the regional courts of the place where the legal person has an establishment within the meaning of Regulation (EU) 2015/848.

2. Bankruptcy proceedings shall be heard in contentious proceedings as prescribed by the Code of Civil Procedure, except for the cases specified by this Law.

3. Where several petitions for the opening of a bankruptcy and/or insolvency proceeding against the same legal person are filed with a court, they must be examined jointly.

4. Where, upon appointment of a specific judge for examination of a petition for the opening of an insolvency proceeding, a court receives petitions for the opening of an insolvency proceeding against the same legal person from other persons, all of these petitions shall be examined by the judge appointed for examination of the petition which was filed with the court first.

5. Where a petition for the opening of a restructuring proceeding is filed with a court against a legal person against whom a bankruptcy proceeding has been opened, the petition for the opening of a restructuring proceeding shall not be examined.

Article 16. Emergence of the right to apply to a court for the opening of an insolvency proceeding

1. The right to apply to a court for the opening of an insolvency proceeding shall emerge from:

1) the expiry of a time limit for the discharge of an obligation, conclusion of an agreement on assistance or adoption of a decision to conduct the bankruptcy process out of court;

2) the service of a creditor’s or legal person’s notice of the initiation of the insolvency process, where the previously concluded assistance agreement is not being implemented or is being implemented improperly;

3) the service of a liquidator’s notice of the initiation of the bankruptcy process upon creditors;

4) the service of a creditor’s notice of the initiation of the bankruptcy process upon a legal person where a bailiff has returned enforceable documents to the creditor on account of the legal person having no assets or income from which claims may be satisfied.

2. After the lapse of three months from the emergence of the right referred to in paragraph 1 of this Article, the provisions of Articles 8 and 9 of this Law shall apply to the initiation of the insolvency process.

Article 17. Petition filed with a court for the opening of an insolvency proceeding

1. A petition filed with a court for the opening of an insolvency proceeding shall contain the following information:

1) the insolvency proceeding (restructuring or bankruptcy proceeding) whose opening is requested;

2) the reasons for requesting the opening of the insolvency proceeding.

2. The following shall be appended to a petition for the opening of an insolvency proceeding filed with a court by a legal person:

1) documents confirming the emergence of the right of the legal person to apply to the court for the opening of an insolvency proceeding;

2) documents confirming that the legal person meets the conditions for the opening of a restructuring or bankruptcy proceeding;

3) lists of the legal person’s creditors (including creditors of a participant of the legal person of unlimited civil liability) and debtors, indicating the forename and surname of the person, if it is a natural person, or the name and registration number, if it is a legal person, the home address or the address of the registered office, amounts of claims, time limits for discharge and ways of securing;

4) a set of financial statements of the legal person for the period from the beginning of the reporting financial year until the filing with the court of the petition for the opening of an insolvency proceeding and a set of financial statements for the previous financial year, where it has not been submitted to the data processor of the Register of Legal Entities;

5) information on proceedings opened before courts and out-of-court recoveries;

6) information on the pledged assets and obligations secured by pledge or mortgage;

7) a list of accounts of the legal person, including seized accounts;

8) other documents which, in the opinion of the legal person, may be of importance for the opening of the insolvency proceeding.

3. Where a legal person requests to open a restructuring proceeding, the following shall be appended to a petition for the opening of an insolvency proceeding filed with a court:

1) a draft restructuring plan and a decision of a meeting of participants of the legal person on approval of the draft restructuring plan;

2) a list of current payments to be made by the legal person within each calendar month, indicating the specific maximum amount of funds which may be used to make these payments within one calendar month, and supporting documents;

3) a list of payments to creditors from the coming into effect of a court decision to open a restructuring proceeding until the coming into effect of a court decision to approve a restructuring plan, where the legal person requests not to apply all or part of the provisions of Article 28(1) of this Law;

4) information on the planned interim financing, indicating the amount, terms and conditions of the loans to be received, ways of securing discharge and other sources of financing until the approval of the restructuring plan;

5) in the case of application for the appointment of an insolvency administrator, the forename and surname of the proposed insolvency administrator, if it is a natural person, or the name and registration number, if it is a legal person, its sequence number in the List of Insolvency Administrators, contact details (address, telephone number, e-mail address, etc.) and the insolvency administrator’s declaration of consent.

4. The following shall be appended to a petition for the opening of an insolvency proceeding filed with a court by a creditor:

1) documents confirming the emergence of his/its right to apply to the court for the opening of an insolvency proceeding;

2) in the case of application for the appointment of an insolvency administrator in a restructuring proceeding, the forename and surname of the proposed insolvency administrator, if it is a natural person, or the name and registration number, if it is a legal person, its sequence number in the List of Insolvency Administrators, contact details (address, telephone number, e-mail address, etc.) and the insolvency administrator’s declaration of consent;

3) other documents which, in the opinion of the creditor, may be of importance for the opening of an insolvency proceeding.

Article 18. Informing participants of a legal person about filing of a petition with a court

The manager or the liquidator of a legal person shall, not later than on the next working day following the receipt of information on a petition for the opening of an insolvency proceeding admitted by a court, notify thereof participants of the legal person.

Article 19. Admission of a petition filed with a court for the opening of an insolvency proceeding

1. A court shall issue a ruling regarding the admission of a petition filed with the court for the opening of an insolvency proceeding.

2. A petition for the opening of an insolvency proceeding may be withdrawn before a court issues a ruling regarding the opening of the insolvency proceeding.

3. A court shall, not later than on the next working day following the issue of a ruling to admit a petition for the opening of an insolvency proceeding, send a copy thereof to:

1) a legal person;

2) a creditor who has filed with the court the petition for the opening of an insolvency proceeding;

3) bailiffs to whom enforceable documents have been submitted in relation to recovery from a legal person or the seizure of its assets;

4) the Bank of Lithuania, where the insolvency proceeding has been opened against a financial market participant under supervision as referred to in Article 42(1) of the Law of the Republic of Lithuania on the Bank of Lithuania, entities referred to in points 4 and 5 of Article 1(2) of the Law on Financial Sustainability or a legal person entered on the list of system participants published by the Bank of Lithuania under the Law on Settlement Finality in Payment and Securities Settlement Systems;

5) the Register of Property Seizure Acts, where it is ordered to make payments from a seized account.

4. As of the admission of a petition filed with a court for the opening of an insolvency proceeding, creditors shall be considered to have legal interest in the proceeding and shall have the right to apply to the court to be included in the proceeding as third parties not lodging separate claims. The application to the court must be accompanied by evidence of a creditor’s right of claim in respect of a legal person.

5. Upon admission by a court of a petition for the opening of an insolvency proceeding, where enforceable documents have been issued in respect of a legal person or orders have been given to seize, write down or terminate the payment of funds from an account of the legal person, the assets of the legal person may be seized under these enforceable documents and orders, however the realisation and/or recovery of such assets shall be suspended, except for the case referred to in Article 30(3) of this Law where the court has authorised a bailiff to complete the sale of the assets in accordance with the procedure laid down by the Code of Civil Procedure.

Article 20. Examination of a petition filed with a court for the opening of an insolvency proceeding

1. Upon admission of a petition for the opening of an insolvency proceeding, a court shall have the right:

1) to obligate the creditors, participants of the legal person, members of the management bodies of the legal person, the accountant, other responsible employees to file with the court additional documents necessary for conducting the legal person’s insolvency proceeding;

2) to summon creditors, participants of the legal person, members of the management bodies of the legal person, the accountant, other responsible employees and request from them written explanations relating to the legal person’s insolvency proceeding.

2. The manager of a legal person shall, not later than within five working days from the receipt of a notice of admission of a creditor’s petition for the opening of an insolvency proceeding, provide to the court information referred to in points 3-7 of Article 17(2) of this Law.

Article 21. Conditions for the opening of an insolvency proceeding

1. A restructuring proceeding shall be opened if all of the following conditions are met:

1) a legal person is in financial difficulties;

2) the legal person is viable;

3) the legal person is not in liquidation because of bankruptcy.

2. A bankruptcy proceeding shall be opened where a legal person is insolvent and no restructuring proceeding has been opened against it.

Article 22. Refusal to open an insolvency proceeding

1. A court shall refuse to open a bankruptcy proceeding if at least one of the following circumstances exists:

1) a legal person does not meet at least one of the conditions referred to in Article 21(1) of this Law;

2) a draft restructuring plan, if such had to be submitted, does not meet the requirements referred to in Article 104(2) of this Law;

3) the measures provided for in a draft restructuring plan, if such had to be submitted, would manifestly not help the legal person overcome financial difficulties, preserve viability and prevent bankruptcy.

2. A court shall issue a ruling to refuse to open a restructuring proceeding and to open a bankruptcy proceeding where it makes a reasoned conclusion that a legal person is insolvent and there exists at least one of the circumstances referred to in paragraph 1 of this Article.

3. A court shall refuse to open a bankruptcy proceeding if at least one of the following circumstances exists:

1) prior to the issue by the court of a ruling to open a bankruptcy proceeding, a legal person satisfies the claims of a creditor who filed with the court a petition for the opening of a bankruptcy proceeding;

2) a legal person is not insolvent;

3) a restructuring proceeding has been opened against a legal person;

4) during the examination of a petition for the opening of a bankruptcy proceeding, the court establishes that a legal person’s assets are insufficient to cover the administrative expenses of the bankruptcy process, except for the cases provided for in Article 23(1) of this Law.

4. A court shall, not later than on the next working day following the issue of a ruling to refuse to open an insolvency proceeding, send a copy of the ruling to the persons referred to in Article 19(3).

Article 23. Opening of a bankruptcy proceeding where a legal person’s assets are insufficient to cover the administrative expenses of the bankruptcy process

1. Where a legal person’s assets are insufficient to cover the administrative expenses of the bankruptcy process, a court shall open a bankruptcy proceeding only if one of the following conditions is met:

1) a person who has filed with the court a petition for the opening of a bankruptcy proceeding pays into the deposit account of the court an amount fixed by the court and required to cover the administrative expenses of the bankruptcy process;

2) an insolvency administrator agrees to take the risk of the administrative expenses of the bankruptcy process, that is, the risk that, in the course of the bankruptcy process, funds will not be received to cover the administrative expenses of the legal person’s bankruptcy process according to an estimate approved by the court or the amount received will be insufficient and these expenses will be covered from the funds of the appointed insolvency administrator.

2. Upon establishing that a legal person’s assets are insufficient to cover the administrative expenses of the bankruptcy process, a court shall propose to a person who has filed a petition to open a bankruptcy proceeding to pay into the deposit account of the court within a period not exceeding 14 days from the making of this proposal an amount fixed by the court and required to cover the administrative expenses of the bankruptcy process.

3. If the amount fixed is not paid into a court’s deposit account, the court shall, not later than on the next working day following the expiry of the time limit for the payment into the court deposit account of the amount fixed by the court and required to cover the administrative expenses of the bankruptcy process, notify insolvency administrators in accordance with the procedure laid down in the Rules for Selection of Insolvency Administrators approved by the Government of the possibility to administer the bankruptcy process at the risk of covering the administrative expenses of the bankruptcy process.

4. If no bankruptcy administrator submits to the court a declaration of consent within 30 days from the provision of a court notice of the possibility to administer the bankruptcy process at the risk of covering the administrative expenses of the bankruptcy process, the court shall issue a ruling to refuse to open a bankruptcy proceeding against an insolvent legal person and to order to initiate the liquidation of the legal person of the motion of the data processor of the Register of Legal Entities. This ruling shall not be subject to appeal.

5. A court shall send a copy of a ruling to refuse to open a bankruptcy proceeding against an insolvent legal person and to order the initiation of liquidation of the legal person of the motion of the data processor of the Register of Legal Entities not later than on the next working day following its issue to the data processor of the Register of Legal Entities and to the administrator of the Guarantee Fund.

6. Where a court issues a ruling to refuse to open a bankruptcy proceeding against an insolvent legal person and to order the initiation of liquidation of the legal person of the motion of the data processor of the Register of Legal Entities, the claims of employees of the legal person shall be satisfied in accordance with the procedure laid down by the Law of the Republic of Lithuania on Guarantees for Employees in the Event of the Insolvency of Their Employer and Long-term Employee Benefits.

7. A bankruptcy proceeding opened in accordance with the procedure laid down in this Article shall be conducted in accordance with the simplified procedure where a legal person does not pursue economic and commercial activities.

Article 24. Opening of a restructuring proceeding concurrently with the approval of a restructuring plan

1. A restructuring proceeding shall be opened concurrently with the approval of a restructuring plan, where a court, under the same ruling, opens the restructuring proceeding and approves the restructuring plan.

2. A court may open a restructuring proceeding concurrently with the approval of a restructuring plan, provided that a draft restructuring plan approved by the meeting of participants of a legal person and creditors in accordance with the procedure laid down in Articles 106 and 107 of this Law is appended to a petition for the opening of an insolvency proceeding.

3. Where a court has adopted a decision to terminate a restructuring proceeding and less than five years have lapsed from the coming into effect of this decision, a restructuring proceeding may be opened against a legal person only upon the concurrent approval of a restructuring plan.

Article 25. Court ruling on an insolvency proceeding

1. A court shall, not later than within 30 days from the admission of a petition for the opening of an insolvency proceeding, issue a ruling on the opening of an insolvency proceeding. This ruling may be appealed against to the Court of Appeal of Lithuania.

2. A court shall have the right, for compelling reasons, to extend the time limit referred to in paragraph 1 of this Article, but not longer than for 30 days.

3. If a court ruling to refuse to open an insolvency proceeding is appealed against, the Court of Appeal of Lithuania may not, upon overturning this ruling, issue a ruling to open an insolvency proceeding.

4. Upon the coming into effect of a court ruling to refuse to open an insolvency proceeding, recovery and realisation of assets shall be resumed.

5. A court shall also decide, under a ruling to refuse to open an insolvency proceeding, on the interim measures taken and other orders given by the court.

6. A court must, under a ruling to open a bankruptcy proceeding, impose seizure of the fixed assets of a legal person, of immovable property attached to current assets or of property rights valid until the coming into effect of the ruling to open a bankruptcy proceeding.

7. Upon the coming into effect of a court ruling to open a restructuring proceeding, a legal person shall acquire the status of a legal person under restructuring.

8. Upon the coming into effect of a court ruling to open a bankruptcy proceeding, a legal person shall acquire the status of a legal person in bankruptcy.

Article 26. Contents of a court ruling to open an insolvency proceeding

1. A court ruling to open an insolvency proceeding shall contain the following information:

1) the name, address of the registered office, registration number of a legal person against whom the insolvency proceeding is opened (and its contact address, where it differs from the address of the registered office);

2) the grounds on which the court’s jurisdiction is based, where Regulation (EU) 2015/848 applies;

3) an insolvency administrator (the forename and surname of the insolvency administrator, if it is a natural person, or the name and registration number, if it is a legal person), his/its sequence number in the List of Insolvency Administrators, contact details (address, telephone number, e-mail address, etc.), if such has been appointed;

4) the period referred to in Article 41(1) of this Law within which creditors must lodge their claims with an insolvency administrator.

2. Where a court opens restructuring proceeding, a court ruling shall additionally contain the following information:

1) the amount of the remuneration for an insolvency administrator, if such has been appointed, for the administration of the restructuring process;

2) a permission not to apply all or part of the provisions of Article 28(1) of this Law;

3) accounts of the legal person from which current payments and the payments specified in Article 17(3)(4) of this Law may be made, irrespective of the fact that the accounts have been seized or are subject to other restrictions on disposal, and the specific maximum amount of funds in each account which may be used to make such payments within one calendar month.

3. Where a court opens a bankruptcy proceeding, a court ruling shall additionally contain the following information:

1) the amount of the basic remuneration for an insolvency administrator for the administration of the bankruptcy process;

2) time limits for the transfer of assets, documents and information as provided for in Article 57 of this Law;

3) the fixed assets seized until the coming into effect of the ruling to open a bankruptcy proceeding, immovable property attached to current assets or property rights.

Article 27. Notice of the opening of an insolvency proceeding

1. A court shall, not later than on the next working day following the issue of a ruling to open an insolvency proceeding, send a copy thereof to:

1) a legal person;

2) an appointed insolvency administrator;

3) a creditor who has filed with the court a petition for the opening of an insolvency proceeding against the legal person;

4) the Bank of Lithuania, where the insolvency proceeding has been opened against a financial market participant under supervision as referred to in Article 42(1) of the Law on the Bank of Lithuania, entities referred to in points 4 and 5 of Article 1(2) of the Law on Financial Sustainability or a legal person entered on the list of system participants published by the Bank of Lithuania under the Law on Settlement Finality in Payment and Securities Settlement Systems.

2. A court shall, not later than on the next working day following the coming into effect of a ruling to open an insolvency proceeding, send a copy thereof to:

1) the data processor of the Register of Legal Entities;

2) the bailiffs to whom enforceable documents have been submitted in relation to recovery from the legal person concerned or the seizure of its assets;

3) other courts hearing cases in which pecuniary claims have been lodged against the legal person concerned or in which pecuniary claims have been lodged by the legal person itself;

4) the Register of Property Seizure Acts, where it is ordered to make payments from a seized account;

5) pre-trial investigation institutions, the prosecutor’s office or courts, where civil claims have been brought in criminal proceedings by creditors of the legal person or the assets of the legal person have been seized;

6) the administrator of the Guarantee Fund.

3. An insolvency administrator shall, not later than within three working days following the receipt of an effective ruling to open an insolvency proceeding, send a copy thereof to:

1) creditors (including the creditors of a participant of a legal person of unlimited civil liability);

2) persons to whom the legal person has secured the proper discharge of its obligations or those of third parties by suretyship, guarantee or other means of securing the discharge of obligations;

3) persons who have provided a guarantee or other means of securing the discharge of obligations in respect of the legal person;

4) all persons who have leased, borrowed or have the assets of the legal person in custody or use or manage them on other grounds;

5) state institutions or agencies charged with the collection of taxes;

6) credit institutions, financial brokerage firms and insurance undertakings with which the legal person has entered into contracts;

7) participants of the legal person;

8) the Bank of Lithuania, where the insolvency proceeding has been opened against a financial market participant under supervision as referred to in Article 42(1) of the Law on the Bank of Lithuania, entities referred to in points 4 and 5 of Article 1(2) of the Law on Financial Sustainability or a legal person entered on the list of system participants published by the Bank of Lithuania under the Law on Settlement Finality in Payment and Securities Settlement Systems;

9) the institution administering a loan, where the insolvency proceeding has been opened against a legal person who is the borrower of a state on-lent loan or a state guaranteed loan.

SECTION THREE

CONSEQUENCES OF THE OPENING OF AN INSOLVENCY PROCEEDING

Article 28. Discharge of obligations of a legal person upon the opening of an insolvency proceeding

1. From the coming into effect of a court ruling to open an insolvency proceeding until the coming into effect of a court ruling to approve a restructuring plan or to terminate an insolvency proceeding, it shall be prohibited:

1) to discharge the financial obligations of a legal person not discharged prior to the coming into effect of the court ruling to open an insolvency proceeding, including the payment of taxes, interest and penalties;

2) to recover debts from the legal person;

3) to offset claims other than homogeneous counter-claims which satisfy both of the following conditions: they arose before the coming into effect of the court ruling to open an insolvency proceeding and such set-off is possible under the provisions of set-off of tax overpayment (difference) laid down in tax legislation;

4) to compute penalties and interest for the obligations of the legal person incurred prior to the coming into effect of the court ruling to open an insolvency proceeding;

5) to establish compulsory mortgage, servitudes, usufruct;

6) to pledge assets, to grant guarantees, to provide surety or to secure the discharge of obligations of other persons in any other way;

7) to sell or to otherwise transfer the assets of a legal person under restructuring necessary for the preservation of its viability.

2. A court may allow waiver of all or part of the provisions of paragraph 1 of this Article in so far as this would facilitate the adoption of a decision on a restructuring plan and is requested by a legal person, an insolvency administrator or a pledgee. This court ruling shall be enforced as a matter of urgency and may be appealed against, however, appealing against the ruling shall not have suspensory effect on its enforcement.

3. Upon the opening of an insolvency proceeding, a legal person shall make all current payments.

4. Current payments may be recovered in accordance with the procedure laid down by the Code of Civil Procedure, the Law on Tax Administration and the Law of the Republic of Lithuania on State Social Insurance.

Article 29. Disputes settled in courts and by arbitration

1. The civil cases in courts in which pecuniary claims have been lodged against a legal person or pecuniary claims have been lodged by a legal person itself shall be transferred to a court which has opened an insolvency proceeding, where a ruling ordering the hearing of a case at a court session has not yet been issued in respect of these cases.

2. Civil claims lodged in criminal proceedings by creditors of a legal person and documents related to these claims shall be transferred to a court which has opened an insolvency proceeding in accordance with the procedure laid down by the Code of Criminal Procedure of the Republic of Lithuania.

3. Courts shall transfer civil cases to a court which has opened an insolvency proceeding not later than within 14 days from the coming into effect of a court ruling to open an insolvency proceeding.

4. Where a civil case is not transferred to a court hearing an insolvency proceeding, the court shall, in accordance with the procedure laid down by the Code of Civil Procedure, notify the court which has opened the insolvency proceeding of an effective decision in this case not later than within three working days from the coming into effect of the decision.

5. The provisions of the Law of the Republic of Lithuania on Commercial Arbitration shall apply to the examination of pecuniary claims lodged with arbitral bodies against a legal person or claims lodged by the legal person itself.

Article 30. Seizure of assets and enforceable documents

1. Issues concerning the assets of a legal person which were seized prior to the opening of an insolvency proceeding shall be decided by a court which opened the insolvency proceeding.

2. A bailiff shall, not later than within seven days from the coming into effect of a court ruling to open an insolvency proceeding, transfer to the court hearing the insolvency proceeding writs of seizure of the assets of a legal person not sold prior to the opening of the insolvency proceeding and enforceable documents and shall notify thereof the custodian of the assets and the relevant recoveror.

3. Where a bailiff has announced the sale of the assets of a legal person prior to the opening of a bankruptcy proceeding against the legal person, the court hearing the insolvency proceeding may allow the bailiff to complete the sale of the assets in accordance with the procedure laid down by the Code of Civil Procedure and transfer the proceeds from the sale to a creditors’ account after deducting the costs of execution of the decision.

4. Pending the lifting of seizure, the custodian of assets shall have all the rights and duties related to the protection of these assets.

5. Where a bailiff fails to file with a court writs of seizure of assets and enforceable documents within the time limit specified in paragraph 2 of this Article, the court may impose upon him a fine in the amount of up to 10 MMWs.

Article 31. Disputes in the course of the insolvency process

1. Decisions and/or acts/omissions of a court and other participants in the insolvency process (a legal person, creditors, an insolvency administrator, other persons participating in a proceeding and in the process) may be appealed against in the course of the insolvency process in accordance with the procedure laid down by the Code of Civil Procedure, except as provided for by this Law.

2. Sessions of a court shall be held in accordance with the written procedure, except as provided for by this Law and except for the cases when the court decides that oral hearing of a case is necessary.

3. When hearing disputes concerning the decisions and/or acts/omissions of other participants in the insolvency process, a decision or ruling of a court of first instance must be adopted not later than within 60 days from the admission of the claim by the court.

4. Separate appeals against rulings issued in the insolvency process must be heard by the Court of Appeal of Lithuania not later than within 30 days from their receipt by the Court of Appeal of Lithuania.

5. Statements in response to separate appeals may be filed within ten days from the dispatch of a copy of a separate appeal to the persons participating in a proceeding.

Article 32. Notification of creditors and other persons about a legal person’s insolvency process

1. The following information shall be published on the website of the supervisory authority in accordance with the procedure laid down by the supervisory authority not later than on the next working day following the receipt of such information:

1) information specified in Article 24(2) of Regulation (EU) No 2015/848;

2) the forename and surname, contact details (address, telephone number, e-mail address, etc.) of the employee specified by an insolvency administrator being a legal person and responsible for the administration of the legal person’s insolvency process;

3) court decisions and rulings effective in an insolvency proceeding.

2. The supervisory authority shall grant the right to a court and persons having the right to participate in creditors’ meetings to access the following information in the information system managed by it (hereinafter: the ‘information system’) in accordance with the procedure specified by it, without prejudice to requirements for the protection of personal data and the protection of commercial/industrial secrets:

1) notices about convened creditors’ meetings and/or sessions of a creditors’ committee;

2) decisions of the creditors’ meetings and the creditors’ committee;

3) a plan of the bankruptcy process;

4) information on assets of a legal person (list of the assets, book value, initial selling price, date of sale, method of sale, proceeds from the sale of the assets, amounts recovered and receivable by debtors of the legal person, other amounts received);

5) information on expenses of the bankruptcy process according to the structure specified in Article 73(1) and (2) of this Law;

6) information on the creditors (the forename and surname, if the creditor is a natural person, or the name and registration number, if the creditor is a legal person), the amount and satisfaction of their claims according to the ranking of creditors’ claims and stages of their satisfaction;

7) a report on the implementation of a restructuring plan;

8) a final report on the bankruptcy process;

9) a final restructuring report;

10) sets of financial statements for the commencement of liquidation and the completion of liquidation;

11) court decisions and rulings adopted in an insolvency proceeding.

3. Information referred to in paragraph 2 of this Article shall be considered to be known to the persons having the right to access this information, as referred to in that paragraph, from the submission of this information in the information system.

Article 33. Provision of information on a legal person’s insolvency process to the supervisory authority

1. A court shall, availing of the interoperability of state information systems, submit to the supervisory authority the rulings and decisions adopted as well as the effective rulings and decisions together with the following information:

1) the name of the court;

2) the number of a civil case;

3) the category of a court ruling or decision;

4) the date of adoption and/or coming into effect of the decision or ruling;

5) the status of the decision or ruling (effective or not effective).

2. An insolvency administrator shall provide to the supervisory authority the following information:

1) the information referred to in points 1 and 2 of Article 32(1) of this Law, where the bankruptcy process is conducted out of court;

2) the information referred to in points 1-10 of Article 32(2) of this Law (the provision of such information shall commence only after an initial creditors’ meeting);

3) other information specified by the supervisory institution and required for the performance of its functions.

3. A court and an insolvency administrator shall provide information referred to in paragraphs 1 and 2 of this Article, except for information referred to in points 4 and 5 of Article 32(2) of this Law, to the supervisory authority in accordance with the procedure laid down by it not later than on the next working day following the receipt of information or the emergence or change of the factual circumstances, and the information referred to in points 4 and 5 of Article 32(2) of this Law for each month – not later than by the tenth day of the next month.

4. A court and an insolvency administrator shall provide the information referred to in this Article without prejudice to requirements for the protection of personal data and the protection of commercial/industrial secrets.

SECTION FOUR

APPOINTMENT AND REMOVAL OF AN INSOLVENCY ADMINISTRATOR

Article 34. Appointment of an insolvency administrator in a bankruptcy proceeding

1. An insolvency administrator shall be appointed to administer the bankruptcy process.

2. A decision on the appointment of an insolvency administrator in a bankruptcy proceeding shall be adopted by a court.

3. A court shall appoint an insolvency administrator in accordance with the Rules for the Selection of Insolvency Administrators and using the selection computer programme.

4. The selection programme shall be used to select the person to be nominated as an insolvency administrator on the basis of the following criteria:

1) criteria defining a legal person against whom an insolvency proceeding is opened:

a) the assets of the legal person;

b) the number of creditors of the legal person;

c) the amount of claims of the creditors of the legal person;

d) applicable jurisdiction (territorial or international);

2) criteria defining the activities of an insolvency administrator:

a) workload (including out-of-court bankruptcy processes);

b) work experience (including out-of-court bankruptcy processes);

c) effective sanctions;

d) outcomes of the activities.

5. The values of the criteria defining a legal person and the activities of an insolvency administrator referred to in paragraph 4 of this Article shall be specified in the Rules for the Selection of Insolvency Administrators.

6. An effective court ruling to appoint an insolvency administrator shall serve as a basis for the appointed insolvency administrator to administer the bankruptcy process.

7. Under a ruling to open a bankruptcy proceeding, a court shall concurrently appoint an insolvency administrator.

Article 35. Appointment of an insolvency administrator in a restructuring proceeding

1. An insolvency administrator may be appointed to administer the restructuring process.

2. A decision on the appointment of an insolvency administrator in a restructuring proceeding shall be adopted by a court.

3. The following persons shall have the right to apply to a court for the appointment of an insolvency administrator and to nominate him from among the persons entered on the List of Insolvency Administrators:

1) a legal person;

2) a creditors’ meeting;

3) a creditor initiating restructuring by filing a petition with the court for the opening of a restructuring proceeding.

4. An application for the appointment of an insolvency administrator must contain the following information:

1) the forename and surname of the insolvency administrator, if it is a natural person, or the name and registration number, if it is a legal person;

2) the sequence number of the insolvency administrator in the List of Insolvency Administrators;

3) contact details of the insolvency administrator (address, telephone number, e-mail address, etc.).

5. Upon receipt of an application for the appointment of an insolvency administrator, a court shall appoint an insolvency administrator in a restructuring proceeding, unless there are restrictions specified in Article 37 of this Law.

6. An effective court ruling to appoint an insolvency administrator shall serve as a basis for the appointed insolvency administrator to administer the restructuring process.

Article 36. Declaration of consent of an insolvency administrator

1. An insolvency administrator may be appointed to administer the insolvency process only subject to submission of his declaration of consent.

2. In his declaration of consent, an insolvency administrator shall certify that:

1) he/it agrees to be appointed insolvency administrator of a specific legal person;

2) there are no restrictions precluding his/its appointment as insolvency administrator;

3) he/it meets the requirements of good repute;

4) he/it is covered by compulsory professional indemnity insurance.

3. In a restructuring proceeding, an insolvency administrator’s declaration of consent shall be submitted together with an application for the appointment of an insolvency administrator. The declaration of consent shall also specify the amount of remuneration for which the insolvency administrator agrees to administer a legal person’s restructuring process.

4. In a bankruptcy proceeding, an insolvency administrator shall submit his declaration of consent in accordance with the procedure laid down in the Rules for the Selection of Insolvency Administrators.

Article 37. Restrictions on the appointment of an insolvency administrator

1. An insolvency administrator may not be appointed to administer a specific legal person’s restructuring process where, over the last three years prior to the opening of an insolvency proceeding, he was, in relation to that legal person:

1) the spouse of the judge hearing the insolvency proceeding, a person related by blood, marriage or partnership;

2) the spouse of the manager, a person related by blood, marriage or partnership;

3) a participant, a member of bodies, the manager, an accountant or an employee;

4) a participant, a member of bodies, the manager, an accountant, an employee of a subsidiary or a parent legal person.

2. An insolvency administrator may not be appointed to administer a specific legal person’s insolvency process where, on the day of filing with a court of a petition for the opening of an insolvency proceeding, he was a creditor of the legal person.

3. Participants, members of bodies, the manager, an accountant and employees of an insolvency administrator being a legal person, responsible for the administration of the legal person’s insolvency processes, shall be subject to the restrictions laid down in this Article.

Article 38. Impartiality of an appointed insolvency administrator

1. An appointed insolvency administrator may not:

1) have legal interest in the outcome of a proceeding;

2) purchase assets of a legal person, represent the buyer when buying them.

2. The spouse of an appointed insolvency administrator, a person related to the appointed insolvency administrator by blood, marriage or partnership may not be the buyer of the assets of a legal person or a representative of the buyer.

3. Participants, the manager, members of bodies, an accountant and employees of an appointed insolvency administrator being a legal person shall be subject to the restrictions laid down in this Article.

Article 39. Removal of an insolvency administrator

1. A court shall remove an insolvency administrator appointed in an insolvency proceeding in the presence of at least one of the following circumstances:

1) he has lost the right to administer insolvency processes;

2) he could not have been appointed insolvency administrator of a specific legal person due to the circumstances referred to in Articles 37 and/or 38 of this Law or these circumstances emerged or transpired after his appointment as insolvency administrator;

3) he files with the court an application for his resignation;

4) the court has overturned a ruling not to appoint the person selected as an insolvency administrator using the selection computer programme;

5) a creditors’ meeting or a creditor/creditors whose claims, as approved by the court, account in value terms for more than 1/2 of the amount of all creditors’ claims approved by the court submit a reasoned request for removing the insolvency administrator, and the granting of this request will not impair the public interest.

2. A court shall, not later than on the next working day following the receipt of information referred to in points 2 and 5 of paragraph 1 of this Article, notify an insolvency administrator of its intention to remove him.

3. An insolvency administrator shall have the right to provide explanations to a court within five working days from the receipt of a notice referred to in paragraph 2 of this Article.

Article 40. Court ruling on the appointment, refusal to appoint or removal of an insolvency administrator

1. A court shall issue a ruling on the appointment or removal of an insolvency administrator not later than within 14 days from the receipt of an application for the appointment of an insolvency administrator in an insolvency proceeding or from the receipt of information referred to in Article 39(1) of this Law.

2. A court ruling to appoint an insolvency administrator in a bankruptcy proceeding shall not be subject to appeal.

3. A court ruling not to appoint a person selected as an insolvency administrator using the selection computer programme may be appealed against by filing a separate appeal.

4. Upon overturning a ruling not to appoint a person selected as an insolvency administrator using the selection computer programme, the Court of Appeal of Lithuania shall remove the appointed insolvency administrator and appoint the person selected using the selection computer programme but not appointed insolvency administrator of a legal person or return the issue of the appointment of the insolvency administrator of the legal person to the court of first instance for reconsideration. The rulings of the Court of Appeal of Lithuania referred to in this paragraph shall be final and not subject to appeal under cassation review.

5. A court ruling to remove an insolvency administrator or not to appoint the person selected as an insolvency administrator using the selection computer programme must be reasoned.

6. A court ruling to remove an insolvency administrator who has lost the right to administer insolvency processes shall not be subject to appeal.

7. A court must, under a ruling to remove an insolvency administrator in a bankruptcy proceeding, appoint another insolvency administrator.

8. A court shall, under a ruling to remove an insolvency administrator in a bankruptcy proceeding and to appoint another insolvency administrator, lay down a time limit within which the removed insolvency administrator must transfer to the newly appointed insolvency administrator the assets of a legal person according to a balance sheet drawn up on the basis of the data available on the day of the removal as well as the complete documentation.

9. A court may recognise a ruling on the appointment, refusal to appoint or removal of an insolvency administrator as enforceable as a matter of urgency.

10. A court shall, not later than on the next working day following the coming into effect of a ruling on the appointment, refusal to appoint or removal of an insolvency administrator, send a copy thereof to:

1) the appointed, non-appointed and/or removed insolvency administrator;

2) the chair of a creditors’ meeting;

3) a legal person.

11. A court may impose a fine in the amount of up to 10 MMWs upon a person who prevented an appointed insolvency administrator from administering the insolvency process.

CHAPTER II

CREDITORS

Article 41. Lodging of creditors’ claims

1. Creditors shall lodge their claims and submit supporting documentation to an appointed insolvency administrator within 30 days from the publication of a court ruling to open an insolvency proceeding on the website of the supervisory authority and shall also indicate how the satisfaction of these claims will be secured.

2. An insolvency administrator shall examine the documents supporting a creditor’s right of claim and, not later than within 30 days from the expiry of a time limit for lodging claims, transfer creditors’ claims to a court for approval and attach his opinion on the reasonableness of the creditors’ claims.

3. At the request of an insolvency administrator, a court may extend the time limit referred to in paragraph 2 of this Article, but for a period not exceeding 14 days.

4. A court shall have the right to accept creditors’ claims arising prior to the opening of an insolvency proceeding and lodged after the expiry of a fixed time limit in accordance with the procedure laid down in paragraphs 1, 2 and 3 of this Article where it recognises the reasons for exceeding the time limit to be important.

5. Where civil claims of a creditor are referred to a court hearing an insolvency proceeding in accordance with the Code of Criminal Procedure or the Law on Commercial Arbitration, it shall be considered that time limits for lodging these claims have not been exceeded.

6. Where a creditor fails to lodge his claim within a fixed time limit, his right of claim shall lapse, except for the cases specified in paragraphs 4 and 5 of this Article.

7. The creditors who have lodged their claims shall have the right to familiarise themselves with the claims lodged with an insolvency administrator by other creditors at the registered office of the administrator.

Article 42. Approval of creditors’ claims

1. Creditors’ claims shall be approved by a court.

2. A court shall, not later than within 20 days from the receipt of creditors’ claims, approve creditors’ claims which are not contested.

3. A court may, at a request of an insolvency administrator, a legal person, a creditor whose claim has been contested or of its own motion, consider the issue of approval of the creditor’s claim in oral proceedings.

4. A court shall, not later than on the next working day following the coming into force of a ruling on the approval of creditors’ claims, submit a copy thereof to the administrator of the Guarantee Fund.

5. Where the bankruptcy process is conducted out of court, an insolvency administrator shall, not later than on the next working day following the expiry of a time limit for appealing against a decision of a creditors’ meeting on the approval of creditors’ claims, if the decision of the creditors’ meeting has not been appealed against, submit a copy of the decision of the creditors’ meeting to the administrator of the Guarantee Fund.

6. A court ruling or a decision of a creditors’ meeting on the approval of creditors’ claims, as regards claims related to employment relationships, must separate the amounts of these claims on the basis whereof state social insurance contributions are calculated.

Article 43. Rights of creditors

Creditors whose claims have been approved by a court shall have the right:

1) to attend and vote at creditors’ meetings;

2) to submit proposals concerning the inclusion of issues on the agenda and the issues considered at a creditors’ meeting;

3) to appeal to the court against decisions of a creditors’ meeting, a creditors’ committee;

4) to obtain information on the financial situation of a legal person, the insolvency process from the management bodies of the legal person in the course of the restructuring process and from an insolvency administrator;

5) to request compensation for damage incurred through the fault of the management bodies of the legal person or of the insolvency administrator;

6) to apply to the court for restriction of a person’s right to hold the post of the manager of a public and/or private legal person or to be a member of a collegial management body;

7) to exercise other rights provided for in this Law and other laws.

Article 44. Rights of a creditors’ meeting

A creditors’ meeting shall have the following rights:

1) to establish a creditors’ committee;

2) to remove the chair of a creditors’ meeting;

3) to establish a procedure for voting by electronic means at a creditors’ meeting;

4) to apply to a court with a reasoned request for removal of an insolvency administrator appointed by the court;

5) to decide on the participation of a legal person in the coordination process of a group of undertakings as provided for in Article 64(3) of Regulation (EU) 2015/848, where the legal person belongs to the group of undertakings;

6) to establish a procedure for providing to the creditors information on the insolvency process and the financial situation of a legal person as well as documents supporting the administrative expenses of the insolvency process;

7) to apply to a court for restriction of a person’s right to hold the post of the manager of a public and/or private legal person or to be a member of a collegial management body;

8) to permit the sale of assets by a method other than auction;

9) to apply to the court for termination of a restructuring proceeding;

10) to decide on the issue of applying to a court for compensation for the damage suffered by creditors due to non-performance or improper performance of the duties of the manager of a legal person and/or an insolvency administrator as specified in this Law;

11) to exercise other rights granted by this Law and other laws.

Article 45. Persons having the right to participate in a creditors’ meeting

1. Creditors of a legal person who are creditors thereof on the day of a creditors’ meeting and whose claims have been approved by a court shall have the right to attend and vote at the creditors’ meeting.

2. The right to participate in a creditors’ meeting without the right to vote shall be vested in:

1) members of the management bodies of a legal person under restructuring;

2) persons participating in an insolvency proceeding.

Article 46. Convening of a creditors’ meeting

1. The right to request the convening of a creditors’ meeting shall be vested in:

1) the chair of the creditors’ meeting;

2) creditors the amount of whose claims accounts, in value terms, for at least 1/10 of the amount of all creditors’ claims approved by a court;

3) the manager of a legal person under restructuring.

2. Creditors’ meetings shall be convened and attended by an insolvency administrator.

3. If an insolvency administrator fails to convene a creditors’ meeting in the cases and within the time limits specified in this Law, the creditors’ meeting shall be convened by the chair of the creditors’ meeting or the creditor/creditors whose claims, as approved by a court, account in value terms for more than 1/2 of the amount of all creditors’ claims approved by the court.

4. Persons requesting the convening of a creditors’ meeting must submit to the person convening it:

1) a request which must indicate the purposes of convening the creditors’ meeting;

2) a proposal concerning the agenda and date of the creditors’ meeting;

3) proposed draft decisions on issues on the agenda.

5. A creditors’ meeting must be held not later than within 30 days from the receipt of a request to convene the creditors’ meeting, unless a later date is reasonably proposed in the request.

Article 47. Notice of the convening of a creditors’ meeting

1. Persons having the right to attend a creditors’ meeting must be notified of the convening of the creditors’ meeting at least 14 days prior to the date of the creditors’ meeting.

2. A notice of the convening of an initial creditors’ meeting must be submitted against signature by registered mail, through bailiffs or courier service providers or by means of electronic communications, provided that the security of transmitted information is ensured and a person’s identity can be determined. Where the notice of the convening of the initial creditors’ meeting has been submitted by means of electronic communications, an acknowledgement of receipt of the notice must be obtained.

3. A notice of the convening of other creditors’ meetings shall be published in the information system.

4. Persons having the right to attend a creditors’ meeting may submit a written request to an insolvency administrator to receive a notice of the convening of the creditors’ meeting in the manner specified in paragraph 2 of this Article.

5. A notice of the convening of a creditors’ meeting must indicate:

1) the name, registered office and registration number of a legal person;

2) the date, time and venue of the creditors’ meeting;

3) the agenda of the creditors’ meeting indicating the initiators of the issues on the agenda, where the consideration of an issue has not been initiated by an insolvency administrator;

4) proposed draft decisions;

5) additional material, if any, or a reference to a website where it can be accessed;

6) a description of the procedure for voting by electronic means at a creditors’ meeting or a reference to a website where this description of the procedure can be accessed, where such a procedure has been established by the creditors’ meeting;

7) a model document for early voting.

Article 48. Chair of a creditors’ meeting

1. The chair of a creditors’ meeting must be elected at at initial creditors’ meeting.

2. Only a creditor may be elected chair of a creditors’ meeting.

3. A creditor may not be the chair of a creditors’ meeting if, over the last three years prior to the opening of an insolvency proceeding, he was:

1) a participant, a member of bodies, the manager, an accountant, an employee of a legal person against whom the insolvency proceeding has been opened, its subsidiary or parent legal person;

2) the spouses of the persons referred to in point 1 of this paragraph, a person related by blood, marriage or partnership.

4. Where one candidate for the chair of a creditors’ meeting is nominated, he shall be deemed elected if receiving votes of the creditors the amount of whose claims approved by a court accounts for more than one half of the total amount of claims, as approved by the court, of all the creditors attending the meeting.

5. Where the chair of a creditors’ meeting is elected from among a number of candidates, the person who receives the votes of the creditors whose claims, as approved by a court, account for the largest amount shall be deemed elected chair of the creditors’ meeting.

6. If the chair of a creditors’ meeting is not present at the creditors’ meeting, the creditors’ meeting shall elect a person to preside over the creditors’ meeting.

Article 49. Quorum of a creditors’ meeting

1. Creditors attending a creditors’ meeting shall be registered in a list of registration of creditors.

2. A list of registration of creditors must indicate the number of votes (part of the claims approved by a court) granted to each creditor by the amount of his claims approved by the court.

3. A list of registration of creditors shall be signed by an insolvency administrator.

4. A creditors’ meeting shall be deemed to have been held if the creditors’ meeting has a quorum.

5. A creditors’ meeting shall have a quorum, provided that the creditors’ meeting is attended by creditors, including the creditors who voted early, the amount of whose claims accounts, in value terms, for more than one half of the total amount of all creditors’ claims approved by a court.

6. After the presence of a quorum has been established, the quorum shall be deemed to be present throughout a creditors’ meeting.

7. If a creditors’ meeting has no quorum, the creditors’ meeting shall be deemed not to have been held and a repeat creditors’ meeting must be convened.

Article 50. Repeat creditors’ meeting

1. A notice of the convening of a repeat creditors’ meeting shall be given at least seven days prior to the date of the creditors’ meeting.

2. A repeat creditors’ meeting must be held not later than within 14 days from the date of the failed creditors’ meeting.

3. The quorum requirement shall not apply to a repeat creditors’ meeting.

4. A repeat creditors’ meeting shall have the right to adopt decisions only in relation to the agenda of the failed creditors’ meeting.

Article 51. Procedure for adopting decisions of a creditors’ meeting

1. A decision of a creditors’ meeting shall be deemed adopted if voted in favour by the creditors the amount of whose claims exceeds, in value terms, one half of the total amount of claims, as approved by a court, of all the creditors attending the creditors’ meeting, except for the cases specified in this Law.

2. Decisions of a creditors’ meeting shall be binding on all creditors from their adoption.

3. Creditors shall be entitled to early voting on each draft decision entered on the agenda of a creditors’ meeting.

4. Early voting shall be held in writing or, where such a possibility is provided, by means of electronic communications.

5. A possibility may be provided for creditors to attend a creditors’ meeting and vote by means of electronic communications, provided that the security of transmitted information is ensured and a creditor’s identity can be determined.

6. A creditors’ meeting shall not be authorised to adopt decisions on the issues not entered on the agenda, except for the cases when all creditors attend the creditors’ meeting and no creditor objects thereto.

Article 52. Decisions of a creditors’ meeting

1. Decisions of a creditors’ meeting shall be recorded in the minutes of the creditors’ meeting.

2. The minutes of a creditors’ meeting shall be signed by the person who presided over the creditors’ meeting.

3. The following must be attached to the minutes of a creditors’ meeting:

1) a list of registration of creditors;

2) authorisation letters and other documents confirming a persons’ right to vote;

3) voting documents of the creditors who voted early;

4) documents evidencing that the creditors were informed about the convening of the creditors’ meeting in due time.

4. An insolvency administrator shall draw up the minutes of a creditors’ meeting and must submit them together with the accompanying documents for signature to the person who presided over the creditors’ meeting not later than within three working days from the creditors’ meeting.

5. The person who presided over a creditors’ meeting shall sign the minutes of the creditors’ meeting not later than within one working day from the receipt thereof.

6. If the person who presided over a creditors’ meeting fails to sign the minutes of the creditors’ meeting within the time limit laid down in paragraph 5 of this Article, they shall be signed by an insolvency administrator.

Article 53. Formation of a creditors’ committee

1. A creditors’ meeting may form a creditors’ committee and determine its functions.

2. A creditors’ committee must comprise at least five members.

3. Only creditors and a person representing the interests of employees may be members of a creditors’ committee. A creditor may nominate only one member of the creditors’ committee.

4. When restructuring a legal person, a creditors’ committee must have at least one representative of each class of creditors.

5. Where a legal person must satisfy the claims of employees, compensate for damage resulting from accidents at work or contraction of an occupational disease, a creditors’ committee must include a person representing the interests of employees.

6. The chair of a creditors’ meeting shall also be a member of a creditors’ committee and the chair of the creditors’ committee.

7. When restructuring a legal person, voting shall be held in classes of creditors regarding the formation of a creditors’ committee and the determination of its functions. A decision shall be deemed adopted if voted in favour by the creditors in each class the amount of whose claims approved by a court accounts for more than one half of the amount of the claims, as approved by the court, of the creditors in each class attending a creditors’ meeting.

Article 54. Decisions of a creditors’ committee

1. Meetings of a creditors’ committee shall be convened by the chair of the creditors’ committee or by an insolvency administrator.

2. A notice of the convening of a meeting of a creditors’ committee shall be published in the information system at least 14 days prior to the date of the meeting of the creditors’ committee.

3. Meetings of a creditors’ committee shall be considered valid if attended by more than 1/2 of its members.

4. One member of a creditors’ committee shall have one vote.

5. Decisions adopted by a creditors’ committee shall be valid if more than one half of all the members of the creditors’ committee vote in favour thereof. In the event of a tie, the chair of the creditors’ committee shall have the casting vote.

6. Decisions of a creditors’ committee shall be recorded in the minutes of a meeting of the creditors’ committee, which shall be signed by the person who presided over the meeting of the creditors’ committee.

7. An insolvency administrator and persons referred to in Article 45(2) of this Law may participate in meetings of a creditors’ committee without the right to vote.

8. A person presiding over a meeting of a creditors’ committee must, not later than within three working days from the meeting of the creditors’ committee, submit the minutes of the meeting of the creditors’ committee to an insolvency administrator.

Article 55. Appeal against and annulment of decisions of a creditors’ meeting or a creditors’ committee

1. A decision of a creditors’ meeting or a creditors’ committee may be appealed against to a court hearing the insolvency proceeding within 14 days from the day on which the persons referred to in paragraphs 2 and 3 of this Article became aware or should have become aware of its adoption.

2. The following persons shall have the right to appeal to a court against a decision of a creditors’ meeting:

1) a creditor who voted against the decision of the creditors’ meeting;

2) a creditor who did not attend the creditors’ meeting, if he was not properly informed about it;

3) an insolvency administrator;

4) a legal person under restructuring.

3. All persons participating in an insolvency proceeding shall have the right to appeal to a court against a decision of a creditors’ committee.

4. A court may overturn a decision of a creditors’ meeting or a creditors’ committee if it has been adopted in violation of the provisions of this Law and this violation may have affected the content of the decision, also if the decision of the creditors’ meeting or the creditors’ committee contradicts laws or violates the rights and legitimate interests of creditors or other persons who voted against this decision.

CHAPTER III

LEGAL PERSON’S BANKRUPTCY PROCESS

SECTION ONE

CONDUCT OF THE BANKRUPTCY PROCESS

Article 56. Management of a legal person

1. The management bodies of a legal person shall lose their powers as of the coming into effect of a court ruling to open a bankruptcy proceeding.

2. The rights and duties of the management body of a legal person in the course of the bankruptcy process shall be exercised by an insolvency administrator.

3. Transactions entered into in violation of the provisions of this Article shall be null and void.

Article 57. Duties of the management bodies of a legal person upon the opening of a bankruptcy proceeding

1. Upon the opening of a bankruptcy proceeding, the management bodies of a legal person which have lost their powers or, where the bankruptcy proceeding has been opened against a general partnership, its general partners who perform the duties of the management bodies specified in Article 2.67 and Article 2.82(3) of the Civil Code must, within a time limit laid down by a court, transfer to an appointed insolvency administrator:

1) the assets managed and used by the legal person on the basis of the data available on the day of the coming into effect of a ruling to open a bankruptcy proceeding;

2) all documents of the legal person, accounting registers and other information of the legal person related to its activities (hereinafter: ‘information of the legal person’).

2. Where a bankruptcy proceeding has been opened against a legal person of unlimited civil liability, the owner thereof, general partners of a general partnership must, within a time limit laid down by a court, submit to an appointed insolvency administrator a list of all the assets held by them, including the assets which are held by the right of joint community ownership.

3. Where the persons referred to in paragraphs 1 and 2 of this Article fail to transfer the specified assets and/or information to an insolvency administrator within a time limit fixed by a court, the court may impose upon them a fine in the amount of up to one MMW for each day of breach of the duty.

Article 58. Duties of other persons upon the opening of a bankruptcy proceeding

1. Upon the opening of a bankruptcy proceeding, persons who have leased, borrowed, have in custody the assets of a legal person or use or manage them on any other grounds shall be prohibited from entering into transactions relating to these assets with third parties.

2. Transactions entered into in violation of the provisions of this Article shall be null and void.

Article 59. Duties of an insolvency administrator upon the opening of a bankruptcy proceeding

Upon the coming into effect of a court ruling to open a bankruptcy proceeding, an insolvency administrator shall perform the following duties:

1) organise without delay the takeover and protection of the assets and documents of a legal person;

2) open without delay a creditors’ account with a credit institution;

3) decide on the further discharge of obligations of the legal person, having regard to their economic advantage for the legal person and its creditors;

4) address the issue of release/dismissal and recruitment of employees;

5) assess the compliance of the pursuit of economic and commercial activities with the requirements set out in Article 63(1) of this Law, the possibility of the sale of a legal person in compliance with the provisions of the Ninth Section of Chapter XXIII of Part IV of Book Six of the Civil Code governing the sale of enterprises (hereinafter: the ‘sale of a legal person’), restructuring of the legal person or entry into an arrangement with creditors;

6) verify transactions of a legal person and decide on application to a court for avoidance of the transactions and establishment of bankruptcy fraud;

7) apply for interim financing, if required;

8) apply for payment under the obligation to compensate for damage resulting from accidents at work or contraction of an occupational disease;

9) perform other duties specified in this Law.

Article 60. Information for an initial creditors’ meeting

1. An initial creditors’ meeting must be convened not later than within 45 days from the coming into effect of a court ruling under which the approved amount of creditors’ claims exceeded one half of the amount of creditors’ claims lodged with the court for approval.

2. A court may decide that an initial creditors’ meeting must be convened not later than within 45 days from the coming into effect of a court ruling under which the approved amount of creditors’ claims does not exceed one half of the amount of creditors’ claims lodged, upon establishing that the contested creditors’ claims may not have a decisive influence on decisions of the initial creditors’ meeting.

3. An insolvency administrator must provide an initial creditors’ meeting with the following information:

1) information on the amount of the capital of a legal person, where it is formed under a law governing the legal form of the legal person;

2) the balance sheet drawn up on the basis of the data available on the day of the coming into effect of a ruling to open a bankruptcy proceeding;

3) a list of members of the legal person indicating their forenames and surnames, if the participants are natural persons, and their names and registration numbers, if the participants are legal persons;

4) a list of assets of the legal person drawn up on the basis of the data available on the day of the coming into effect of the ruling to open a bankruptcy proceeding, indicating the balance-sheet values of and restrictions on the assets;

5) a list of debtors indicating the forenames and surnames of debtors, if they are natural persons, and their names and registration numbers, if they are legal persons, amounts of claims, ways of securing the discharge of obligations, ongoing disputes or enforced debt recoveries;

6) a list of creditors indicating the forenames and surnames of the creditors, if they are natural persons, and their names and registration numbers, if they are legal persons, amounts of lodged/approved/contested claims and ways of securing the discharge of obligations;

7) an estimate of the administrative expenses of the bankruptcy process and calculations substantiating the expenses;

8) a bankruptcy process plan indicating:

a) the estimated amount of proceeds from the bankruptcy process;

b) the provisional time limits for the realisation of the assets and the proposed initial selling price;

c) the expected possibilities of satisfaction of creditors’ claims in value terms according to the ranking of creditors’ claims and stages of their satisfaction;

d) the expected duration of the bankruptcy process;

9) an opinion of the insolvency administrator regarding the possibility of the sale of the legal person;

10) an opinion of the insolvency administrator regarding the compliance of the pursuit of economic and commercial activities with the requirements set out in Article 63(1) of this Law, based on an assessment of the income and costs of the economic and commercial activities;

11) an opinion of the insolvency administrator regarding the possibility of restructuring of the legal person or entry into an arrangement with creditors;

12) the number of employees of the legal person on the day of the opening of the bankruptcy proceeding and the number of employees recruited in the course of the bankruptcy process;

13) information on the obligations whose discharge has been notified by the insolvency administrator to the other party to the obligation;

14) information on the sold assets that are perishable and susceptible to devaluation (hereinafter: ‘assets that are susceptible to devaluation’) and the selling price thereof;

15) information on the purchase, sale and writing off of fixed assets within a period of at least three years prior to the opening of the bankruptcy proceeding;

16) information on the number of transactions to be verified, entered into within a period of at least three years prior to the opening of the bankruptcy proceeding;

17) information on the use of the amount of the initial administrative expenses of the bankruptcy process approved by a court;

18) other information which is relevant in his/its opinion.

Article 61. Discharge of obligations

1. From the coming into effect of a court ruling to open a bankruptcy proceeding, it shall be considered that the time limits for the discharge of all obligations of a legal person have expired, except for the cases when:

1) having regard to the economic advantage of an obligation for the legal person and its creditors, an insolvency administrator shall, within 30 days from the coming into effect of the court ruling, notify the other party to the obligation that it will discharge the obligation;

2) the obligations arise from the continuing economic and commercial activities which the insolvency administrator decides to carry out until an initial creditors’ meeting having regard to the economic advantage of the continuation for the legal person and its creditors.

2. The other party to an obligation may suspend the discharge of its obligations until it has received a notice from an insolvency administrator that a legal person will discharge the obligation.

Article 62. Regulation of employment relationships

1. Upon the coming into effect of a court ruling to open a bankruptcy proceeding, employment contracts with employees of a legal person shall be terminated in accordance with the procedure laid down by the Labour Code of the Republic of Lithuania.

2. Employees of a legal person who pursue economic and commercial activities in the course of the bankruptcy process shall be compensated from the funds held in a commercial account.

3. Employees of a legal person who are engaged in the administration of the bankruptcy process shall be compensated from the funds held in a creditors’ account.

Article 63. Economic and commercial activities of a legal person

1. In the course of the bankruptcy process, a legal person shall have the right to pursue economic and commercial activities only where the outcome of such activities would reduce the amount of creditors’ claims more than the sale or transfer of the assets used for those economic and commercial activities in accordance with the procedure laid down by this Law.

2. A decision on the pursuit of economic and commercial activities shall be adopted by a creditors’ meeting.

3. When pursuing economic and commercial activities, a legal person shall make all current payments.

4. Current payments shall be made and may be recovered only from the income received from economic and commercial activities.

5. Where pledged assets are used in economic and commercial activities, the costs of the maintenance of such assets shall be considered to be costs of the economic and commercial activities.

6. Claims arising out of economic and commercial activities and relating to undischarged obligations shall be satisfied in accordance with the procedure laid down in the Seventh Section of Chapter III of Part II of this Law.

Article 64. Challenge of transactions

1. Upon the coming into effect of a court ruling to open a bankruptcy proceeding, an insolvency administrator shall, not later than within six months from the receipt of documents about the entry into transactions by a legal person, verify the transactions entered into by the legal person within a period of at least three years prior to the opening of the bankruptcy proceeding and apply to a court:

1) for avoidance of the transactions which are contrary to the purposes of activities of the legal person and which could have affected the legal person’s inability to settle with creditors, where the transactions could be declared avoidable on the grounds specified in Article 1.82 of the Civil Code;

2) for the establishment of bankruptcy fraud, if he/it makes a presumption that there are indications of bankruptcy fraud;

3) regarding the transactions entered into by the legal person, where it was not bound to enter into them and where they violate the rights of a creditor, while the legal person was aware or should have been aware thereof (actio Pauliana).

2. At the request of an insolvency administrator, a court may extend the time limit of six months referred to in paragraph 1 of this Article once for a period not exceeding six months.

3. Transactions whereby new financing and/or interim financing has been provided to a legal person may not be declared avoidable, except for the cases when they have been entered into in violation of laws or by deceit.

4. An insolvency administrator shall submit to a creditors’ meeting information on the outcomes of verification of the transactions entered into within a period of at least three years prior to the opening of a bankruptcy proceeding.

Article 65. Examination of documents of a legal person

1. Upon the receipt of a reasoned request, a court may allow a creditor seeking to appeal to the court against decisions of a creditors’ meeting, a creditors’ committee of a legal person against whom a bankruptcy proceeding has been opened, to challenge the transactions entered into by the legal person (actio Pauliana) or to apply to the court for the establishment of bankruptcy fraud, to carry out examination of the documents of the legal person.

2. Verification of documents of a legal person may not last longer than three months from the coming into effect of a court ruling permitting to carry out verification of documents of the legal person.

3. From the coming into effect of a court ruling permitting to carry out examination of documents of a legal person, an insolvency administrator must:

1) provide a creditor with access to the documents of the legal person;

2) submit to the creditor copies of the requested documents.

4. For the working time spent on the examination of documents of a legal person and for the submission of copies of the documents, an insolvency administrator may request from the creditors carrying out examination of the documents of the legal person a reasonable consideration.

5. A creditor shall have the right to access information comprising a commercial/industrial secret and information containing personal data only upon signing a pledge not to disclose it.

Article 66. Functions and rights of an appointed insolvency administrator in the course of the bankruptcy process

1. In the course of the bankruptcy process, an appointed insolvency administrator shall perform the following functions:

1) exercise the rights and duties of the management body of a legal person;

2) manage, use and dispose of the assets of the legal person in accordance with the procedure laid down by this Law;

3) safeguard the rights and legitimate interests of all creditors as well as the legal person;

4) convene creditors’ meetings and represent the legal person thereat;

5) convene meetings of participants of the legal person, where their decisions are necessary;

6) direct economic and commercial activities of the legal person, if such activities are pursued;

7) recruit and release/dismiss employees;

8) take measures to recover debts from debtors of the legal person;

9) contest unjustified claims of creditors;

10) represent the legal person in court;

11) sell the assets of the legal person or transfer them to creditors in accordance with the procedure laid down by this Law;

12) satisfy claims of creditors in accordance with the procedure laid down by this Law;

13) execute decisions of a court and/or a creditors’ meeting and a creditors’ committee;

14) ensure the protection of the assets of the legal person;

15) organise the management of waste, contaminated soil and subsoil;

16) transfer documents of the legal person for storage to an archive;

17) organise the management of accounting of the legal person;

18) ensure the drawing up of sets of annual and interim financial statements, if they are drawn up, of the commencement of liquidation and the completion of liquidation;

19) provide information to the data processor of the Register of Legal Entities;

20) provide information in accordance with the procedure laid down in this Law;

21) perform other administrative works of the bankruptcy process and perform other functions specified by this Law and other laws.

2. An appointed insolvency administrator shall have the right:

1) to enter the premises of a legal person, to verify the legal person’s information;

2) to obtain from state and municipal agencies and enterprises as well as other natural and legal persons information required for the performance of their functions, including personal data, without prejudice to requirements for the protection of personal data and the protection of commercial/industrial secrets;

3) to obtain information on all the decisions adopted by a creditors’ meeting, a creditors’ committee;

4) to obtain copies of all the documents which the chair of a creditors’ meeting files with a court;

5) to exercise other rights granted to an insolvency administrator by this Law

SECTION TWO

BANKRUPTCY PROCESS IN ACCORDANCE WITH THE SIMPLIFIED PROCEDURE

Article 67. Conditions of the bankruptcy process in accordance with the simplified procedure

1. A court may issue a ruling to conduct the bankruptcy process in accordance with the simplified procedure only until the coming into effect of a court ruling to liquidate a legal person because of bankruptcy and only if both of the following conditions are met:

1) a legal person does not pursue economic and commercial activities;

2) the legal person’s assets are insufficient to cover the administrative expenses of the bankruptcy process.

2. A court may issue a ruling to conduct the bankruptcy process in accordance with the simplified procedure:

1) of its own motion in the course of the opening of a bankruptcy proceeding, or

2) upon a reasoned request of an insolvency administrator and subject to the approval of a creditors’ meeting, where a bankruptcy proceeding has already been opened.

3. Provisions of Article 27 of this Law shall apply mutatis mutandis to notices of the conduct of the bankruptcy process in accordance with the simplified procedure.

Article 68. Specificities of the bankruptcy process in accordance with the simplified procedure

1. Upon the coming into effect of a court ruling to conduct the bankruptcy process in accordance with the simplified procedure, the liquidation of a legal person shall commence.

2. A legal person shall acquire the legal status of a legal person in liquidation because of bankruptcy as of the coming into effect of a court ruling to conduct the bankruptcy process in accordance with the simplified procedure.

3. In the course of the bankruptcy process conducted in accordance with the simplified procedure, the issues assigned to the remit of a creditors’ meeting shall be resolved by a court. Creditors’ meetings shall not be convened.

4. In the course of the bankruptcy process conducted in accordance with the simplified procedure, only sets of financial statements for the commencement of liquidation of a legal person and the completion of liquidation shall be drawn up.

5. The provisions of Article 75 of this Law shall apply mutatis mutandis to the determination of the administrative expenses of the bankruptcy process in accordance with the simplified procedure. A court ruling on the approval of an estimate of the administrative expenses of the bankruptcy process in accordance with the simplified procedure shall not be subject to appeal.

Article 69. Termination of the bankruptcy process in accordance with the simplified procedure

1. A court may, of its own motion or upon a reasoned request of an insolvency administrator, issue a ruling to terminate the conduct of the bankruptcy process in accordance with the simplified procedure where the amount of funds accumulated in a creditors’ account is significantly greater than the amount required for making the following payments:

1) to cover the expenses included in an estimate of the administrative expenses of the bankruptcy process approved by the court;

2) to repay the sum of money paid into the deposit account of the court to the person who has paid it.

2. A significantly greater amount of funds shall be the amount which would allow, in the course of the in-court bankruptcy process, to satisfy at least 10% of the amount of creditors’ claims approved by the court.

3. An insolvency administrator must, not later than within five working days from the coming into effect of a court ruling to terminate the conduct of the bankruptcy process in accordance with the simplified procedure, repay the sum of money paid into the deposit account of the court to the person who has paid it.

4. Upon the coming into effect of a court ruling to terminate the conduct of the bankruptcy process in accordance with the simplified procedure, the bankruptcy process shall continue in accordance with the procedure laid down by this Law. The legal status of a legal person shall not change.

SECTION THREE

BANKRUPTCY FRAUD

Article 70. Establishment of bankruptcy fraud

1. A court shall establish bankruptcy fraud where it determines that the insolvency of a legal person was due to deliberately poor management of the legal person (act and/or omission) and/or transactions entered into on behalf of the legal person, where it became known or should have been known that the entry into the transactions violates the rights and/or legitimate interests of creditors.

2. When issuing a ruling on the establishment of bankruptcy fraud, a court may have regard, inter alia, to the following indications:

1) transactions, including transactions relating to the purchase, sale and/or transfer of shares or other financial assets, which are loss-making or economically disadvantageous for a legal person have been entered into, or other decisions which are loss-making or economically disadvantageous for the legal person have been adopted;

2) assets have been sold at a price lower than the market price, the assets have been transferred gratuitously, settlement of the assets has been postponed for a period economically disadvantageous for a legal person or settlement with the legal person has been effected by shares of the legal persons which do not pursue activities and/or the legal persons which have failed to submit sets of financial statements to the data processor of the Register of Legal Entities;

3) creditors have been restricted or denied the possibility to levy execution against the assets of a debtor of a legal person on grounds of settlements of the legal person being carried out prior to the opening of a bankruptcy proceeding in violation of the order of settlements in cash and non-cash as specified in Article 6.930¹ of the Civil Code;

4) the accounting of the legal person has been managed fraudulently or negligently, the data processor of the Register of Legal Entities has not submitted or submitted incorrect sets of financial statements and/or the fact of tax evasion has been established in the tax administrator’s inspection report;

5) the activities and/or assets have been transferred to another legal person, while financial liabilities or a part thereof have been retained by the legal person which has transferred the activities and/or assets.

3. Having established bankruptcy fraud, a court shall, under the same ruling, identify the person/persons whose act or omission has caused bankruptcy fraud.

Article 71. Procedure for establishing bankruptcy fraud

1. A court may establish bankruptcy fraud of its own motion or at the request of a creditor or an insolvency administrator.

2. A court shall, not later than on the next working day following the issue of a ruling on the admission of a petition to establish bankruptcy fraud, send a copy thereof to the members of the management bodies of a legal person who have lost their powers.

3. Creditors and the management bodies of a legal person who have lost their powers shall have the duty to provide to a court the information requested by it, which may be relevant to the establishment of bankruptcy fraud.

4. A court shall, not later than on the next working day following the coming into effect of a ruling to establish bankruptcy fraud, submit a copy of this ruling to a prosecutor for the opening of a pre-trial investigation.

Article 72. Challenge of transactions upon establishment of bankruptcy fraud

1. Within six months from the coming into effect of a court ruling to establish bankruptcy fraud, an insolvency administrator shall have the right to apply to the court:

1) for avoidance of the transactions entered into by a legal person which are contrary to the purposes of its activities and/or could have affected the legal person’s inability to settle with creditors;

2) for avoidance of the transactions entered into by the legal person, where it was not bound to enter into them and where they violate the rights of a creditor, while the legal person was aware or should have been aware thereof (actio Pauliana).

2. In the case referred to in paragraph 1 of this Article, the statute of limitations to apply to court shall be deemed not to have expired.

SECTION FOUR

EXPENSES OF THE BANKRUPTCY PROCESS

Article 73. Expenses of the bankruptcy process and composition thereof

1. The expenses of the bankruptcy process shall comprise:

1) the administrative expenses of the bankruptcy process;

2) the costs of economic and commercial activities;

3) the variable remuneration for an insolvency administrator for the outcomes of the administration of the bankruptcy process (hereinafter: ‘variable remuneration for the outcomes of the administration of the bankruptcy process’).

2. The administrative expenses of the bankruptcy process shall comprise:

1) basic remuneration for the administration of the bankruptcy process to an insolvency administrator (hereinafter: ‘basic remuneration for the administration of the bankruptcy process’);

2) payments related to employment relationships (including taxes calculated on payments relating to employment relationships) to the employees of a legal person participating in the administration of the bankruptcy process, with the exception of the employees participating in the economic and commercial activities of the legal person;

3) costs of the management of accounting of a legal person, audit of financial statements, valuation of assets or business, provision of legal and other expert or professional services;

4) costs of the maintenance, search, recovery, storage, sale and transfer of assets, except for the assets used in economic and commercial activities;

5) costs of the liquidation of assets, management of waste, contaminated soil and subsoil;

6) costs of the handling of documents of a legal person and/or its assets and transfer of the documents of the legal person for storage to an archive;

7) litigation and enforcement costs;

8) costs of the preparation of a restructuring plan;

9) postal, communications, organisational costs;

10) other costs required for the administration of the bankruptcy process.

3. The costs of economic and commercial activities shall comprise the costs related to economic and commercial activities of a legal person.

4. The variable remuneration for the outcomes of the administration of the bankruptcy process shall comprise the costs referred to in Article 77(5) of this Law.

Article 74. Initial administrative expenses of the bankruptcy process

1. An appointed insolvency administrator must, not later than within 20 days from the coming into effect of a ruling to open a bankruptcy proceeding, submit to the court for approval an estimate of the initial administrative expenses of the bankruptcy process, i.e. costs required for the administration of the bankruptcy process prior to the approval of the estimate of the administrative expenses of the bankruptcy process referred to in Article 75(1) of this Law. It must be accompanied by the calculations substantiating the expenses.

2. An estimate of the initial administrative expenses of the bankruptcy process shall be approved by a reasoned ruling of a court upon assessing the necessity and reasonableness of the expenses.

3. A court ruling on the approval of an estimate of the initial administrative expenses of the bankruptcy process shall not be subject to appeal.

4. Where, in the event of emergence of new circumstances, urgent action is to be taken to safeguard the interests of a legal person and its creditors, an insolvency administrator shall have the right to apply to a court for amendment of an estimate of the initial administrative expenses of the bankruptcy process. The application must be accompanied by the calculations substantiating the expenses.

Article 75. Determination of the administrative expenses of the bankruptcy process

1. An appointed insolvency administrator must submit to an initial creditors’ meeting an estimate of the administrative expenses of the bankruptcy process, which shall also include the initial administrative expenses of the bankruptcy process incurred. It must be accompanied by the calculations substantiating the expenses.

2. An estimate of the administrative expenses of the bankruptcy process shall be approved and amended by a creditors’ meeting upon assessing the necessity and reasonableness of the expenses.

3. If a creditors’ meeting does not approve an estimate of the administrative expenses of the bankruptcy process, an insolvency administrator shall have the right to apply to a court for approval of the estimate of the administrative expenses of the bankruptcy process. When approving the estimate of the administrative expenses of the bankruptcy process, a court shall assess the necessity and reasonableness of the expenses. A court ruling on the approval of an estimate of the administrative expenses of the bankruptcy process shall not be subject to appeal.

4. An insolvency administrator may not exceed an approved estimate of the administrative expenses of the bankruptcy process and/or assume, on behalf of a legal person, obligations in excess of the estimate, except for the cases where new circumstances require urgent action to be taken to safeguard the interests of the legal person and its creditors.

5. In the case referred to in paragraph 4 of this Article, upon exceeding an estimate of the administrative expenses of the bankruptcy process and/or assuming, on behalf of a legal person, obligations in excess of this estimate, an insolvency administrator must convene a creditors’ meeting. The creditors’ meeting must be held not later than within 20 days after exceeding the estimate of the administrative expenses of the bankruptcy process or assuming the obligations in excess of the estimate.

6. An insolvency administrator must submit to a creditors’ meeting reasoned explanations regarding the fact of exceeding an estimate of the administrative expenses of the bankruptcy process and/or assuming obligations on behalf of a legal person in excess of the estimate and a draft estimate of the administrative expenses of the bankruptcy process as amended accordingly.

7. If a creditors’ meeting does not approve an amended estimate of the administrative expenses of the bankruptcy process, the provisions of paragraph 3 of this Article shall apply.

8. If a creditors’ meeting or a court does not approve an amended estimate of the administrative expenses of the bankruptcy process, the costs exceeding the estimate and/or the obligations assumed on behalf of a legal person shall be covered from the funds of an insolvency administrator.

Article 76. Covering of the expenses of the bankruptcy process

1. In the course of the bankruptcy process, a legal person shall hold the following accounts:

1) a creditors’ account;

2) a commercial account, where a legal person pursues economic and commercial activities in the course of the bankruptcy process.

2. The funds held in accounts may not be used for purposes which are not consistent with the purpose of the accounts.

3. The funds of a commercial account shall be transferred to a creditors’ account only upon termination of economic and commercial activities and making of all current payments related to economic and commercial activities.

4. An insolvency administrator must provide the number of a creditors’ account and/or a commercial account to creditors being tax administrators not later than within three working days from the opening of the account.

5. In the course of the bankruptcy process, settlements may not be effected in cash.

Article 77. Remuneration for an insolvency administrator

1. The remuneration for an insolvency administrator shall comprise the basic remuneration for the administration of the bankruptcy process, the variable remuneration for the outcomes of the administration of the bankruptcy process and the remuneration for the pursuit of economic and commercial activities, if any.

2. The basic remuneration for the administration of the bankruptcy process shall be a part of the remuneration for an insolvency administrator for the entire period of the administration of the bankruptcy process and the amount thereof shall be fixed by a court on the basis of the rates of remuneration for the administration of the bankruptcy process as approved by the Government and having regard to the criteria defining a legal person as referred to in Article 34(4)(1) of this Law.

3. In the event of transpiration of new circumstances regarding the criteria defining a legal person, a court shall, upon a reasoned request of an insolvency administrator or a creditors’ meeting, have the right to modify the fixed amount of the basic remuneration for the administration of the bankruptcy process.

4. The basic remuneration for the administration of the bankruptcy process shall be paid to an insolvency administrator in accordance with the procedure established by a creditors’ meeting in proportion to the volume of work performed.

5. The variable remuneration for the outcomes of the administration of the bankruptcy process shall be a part of the remuneration to an insolvency administrator the amount whereof shall be calculated by multiplying the difference between proceeds from the bankruptcy process and the administrative expenses of the bankruptcy process by a percentage fixed by the Government which is inversely proportionate to the amount of this difference.

6. Proceeds from the bankruptcy process shall be equal to the difference between the amount paid into a creditors’ account and the amount paid to the pledgee in accordance with Article 98(3) of this Law.

7. Amounts paid into a creditors’ account to satisfy claims of agricultural entities in relation to payment for the agricultural products sold shall not be included in the calculation of the variable remuneration for the outcomes of the administration of the bankruptcy process referred to in paragraph 5 of this Article.

8. Upon issuing a ruling to terminate a bankruptcy proceeding, a court shall, under the same ruling, determine the portion of the variable remuneration for the outcomes of the administration of the bankruptcy process which is due to an insolvency administrator in proportion to the volume of work performed.

9. Where a bankruptcy proceeding has been terminated due to the opening of a restructuring proceeding or entry into an arrangement with creditors, an insolvency administrator shall be paid the full amount of the basic remuneration for the administration of the bankruptcy process as determined by a court.

10. Remuneration for the pursuit of economic and commercial activities shall be a part of the remuneration for an insolvency administrator which shall be paid from proceeds from economic and commercial activities and the amount whereof shall be determined by a creditors’ meeting.

SECTION FIVE

TERMINATION OF A BANKRUPTCY PROCEEDING

Article 78. Grounds for terminating a bankruptcy proceeding

1. A court shall issue a ruling to terminate a bankruptcy proceeding on the following grounds:

1) all creditors waive their claims;

2) the legal person settles with all the creditors;

3) an arrangement is approved;

4) a restructuring proceeding is opened.

2. A bankruptcy proceeding may be terminated prior to the coming into effect of a court decision on the termination of a legal person, except for the case specified in point 4 of paragraph 1 of this Article.

3. A decision to open a restructuring proceeding and to terminate a bankruptcy proceeding may be adopted only prior to the coming into effect of a court ruling to liquidate a legal person because of bankruptcy.

4. Provisions of Article 27 of this Law shall apply mutatis mutandis to notices of the termination of a bankruptcy proceeding.

Article 79. Proposal to restructure a legal person or to enter into an arrangement

1. A proposal to restructure a legal person or to enter into an arrangement with creditors may be submitted to a creditors’ meeting by the following persons:

1) an appointed insolvency administrator;

2) a creditor;

3) participants of a legal person in accordance with the procedure laid down by a law governing the legal form of an appropriate legal person or, where such a law does not provide for this procedure, in accordance with the procedure laid down in the founding documents of legal persons, that is, by a majority of two thirds of votes of the participants of the legal person attending a meeting of participants.

2. An insolvency administrator must, not later than within 30 days from the coming into effect of a ruling to open a bankruptcy proceeding, notify participants of a legal person of unlimited civil liability of their right to propose to enter into an arrangement or to initiate restructuring.

3. A proposal to restructure a legal person or to enter into an arrangement must accompanied by a justification that the proposed measures will enable the legal person to overcome financial difficulties, preserve viability and prevent bankruptcy.

4. A proposal to restructure a legal person or to enter into an arrangement must be accompanied by a draft restructuring plan or a draft arrangement.

Article 80. Termination of a bankruptcy proceeding upon entry into an arrangement

1. A ruling on the approval of an arrangement with creditors and termination of a bankruptcy proceeding shall be issued by a court.

2. In the case of the out-of-court bankruptcy process, an arrangement with creditors shall be attested by a notary.

3. An arrangement shall be deemed entered into if signed by all creditors and an insolvency administrator subject to the approval of participants of a legal person.

4. An arrangement must be approved by participants of a legal person in accordance with the procedure laid down by a law governing the legal form of an appropriate legal person or, where such a law does not provide for this procedure, by a majority of two thirds of votes of the participants of the legal person attending a meeting of participants.

5. An insolvency administrator shall, not later than within five working days from the entry into an arrangement, submit to a court a request for approval of the arrangement and termination of a bankruptcy proceeding. The request must be accompanied by the arrangement signed in accordance with the procedure laid down by this Law.

6. An arrangement shall enter into force as of the coming into effect of a court ruling to terminate a bankruptcy proceeding.

Article 81. Termination of a bankruptcy proceeding upon opening of a restructuring proceeding

1. A ruling to open a restructuring proceeding and to terminate a bankruptcy proceeding shall be issued by a court.

2. In the case referred to in paragraph 1 of this Article, a restructuring proceeding may be opened only subject to the concurrent approval of a restructuring plan.

3. An insolvency administrator shall, not later than within five working days from the adoption of a decision by a creditors’ meeting to approve a draft restructuring plan, submit to a court a request for the opening of a restructuring proceeding and termination of a bankruptcy proceeding. The request must be accompanied by a draft restructuring plan approved by a meeting of participants of a legal person and creditors in accordance with the procedure laid down by this Law.

4. The provisions of Chapter IV of Part II of this Law shall apply mutatis mutandis to a restructuring plan and the adoption of a decision thereon.

5. Upon the opening of a restructuring proceeding, approved creditors’ claims in a bankruptcy proceeding shall be considered to be claims in the restructuring proceeding.

6. Upon the termination of a bankruptcy proceeding and the opening of a restructuring proceeding, participation of an insolvency administrator shall be mandatory throughout the restructuring process.

7. An insolvency administrator appointed in a bankruptcy proceeding shall be appointed an insolvency administrator in a restructuring proceeding.

8. Where an insolvency administrator appointed in a bankruptcy proceeding does not agree to act as an insolvency administrator in a restructuring proceeding, another insolvency administrator shall be appointed in accordance with the procedure laid down in Article 35 of this Law.

Article 82. Consequences of termination of a bankruptcy proceeding

1. As of the coming into effect of a court ruling to terminate a bankruptcy proceeding, calculation of interest and penalties, running of time limits for the discharge of obligations of a legal person as well as recoveries shall be resumed.

2. All expenses of the bankruptcy process shall be covered not later than within seven days from the coming into effect of a court decision to terminate a bankruptcy proceeding, unless otherwise provided for in an arrangement or in a restructuring plan.

3. A legal person shall lose the legal status of a legal person in bankruptcy or in liquidation because of bankruptcy as of the coming into effect of a court ruling to terminate a bankruptcy proceeding.

SECTION SIX

LIQUIDATION OF A LEGAL PERSON BECAUSE OF BANKRUPTCY

Article 83. Decision on the liquidation of a legal person because of bankruptcy

1. A court shall issue a ruling to liquidate a legal person because of bankruptcy after the lapse of three months from the coming into effect of a court ruling to approve creditors’ claims, unless an insolvency administrator submits, within that period, to the court a request for terminating a bankruptcy proceeding and opening a restructuring proceeding or for approving an arrangement.

2. A court shall have the right to extend the time limit referred to in paragraph 1 of this Article once for a period not exceeding three months where a reasoned request therefor has been submitted by an insolvency administrator or a creditors’ meeting.

3. A court may, upon a reasoned request of a creditors’ meeting, issue a ruling to liquidate a legal person because of bankruptcy prior to the lapse of three months from the coming into effect of a court ruling to approve creditors’ claims.

4. In a ruling to liquidate a legal person because of bankruptcy, a court shall indicate the amount of claims approved for each creditor as well as the transactions which the legal person in liquidation because of bankruptcy may enter into.

5. A legal person shall acquire the legal status of a legal person in liquidation because of bankruptcy as of the coming into effect of a court ruling to liquidate the legal person because of bankruptcy.

6. Provisions of Article 27 of this Law shall apply mutatis mutandis to notices of the liquidation of a legal person because of bankruptcy.

Article 84. Liquidation of a legal person because of bankruptcy

1. The functions of the liquidator of a legal person shall be performed by an insolvency administrator in accordance with the procedure laid down by this Law.

2. A legal person in liquidation because of bankruptcy may enter into only those transactions which:

1) are related to the cessation of activities of the legal person;

2) are related to the continuation of economic and commercial activities, provided that a creditors’ meeting has adopted a decision on the sale of the legal person;

3) are provided for in a court ruling to liquidate the legal person because of bankruptcy.

3. Liquidation of a legal person because of bankruptcy may not last longer than one year from the coming into effect of a court ruling to liquidate the legal person because of bankruptcy.

4. A court shall have the right to extend the time limit referred to in paragraph 3 of this Article where a reasoned request therefor has been submitted by an insolvency administrator or a creditors’ meeting.

Article 85. Principles of the sale of assets of a legal person

The assets of a legal person shall be sold in compliance with the following principles:

1) the market price principle, meaning that the selling price of the assets must be determined on the basis of the selling prices of similar assets on the market;

2) the highest price principle, meaning that the sale of the assets must be sought at the highest possible price;

3) the principle of velocity of asset circulation, meaning that the assets must be sold in such a way as to ensure their earliest possible return to circulation and preservation of value.

Article 86. Sale of assets of a legal person

1. The assets of a legal person may be sold only from the coming into effect of a court ruling to liquidate the legal person because of bankruptcy.

2. The assets of a legal person shall be sold in accordance with the procedure specified by a creditors’ meeting, with the exception of the assets sold by auction.

3. An insolvency administrator shall propose to a creditors’ meeting the initial selling price of assets together with a justification of the proposed selling price of the assets.

4. The initial selling price of the assets of a legal person shall be approved by a creditors’ meeting.

5. The assets of a legal person shall be sold only with the prior approval of a creditors’ meeting as regards the sale of the assets, with the exception of the assets sold by auction.

Article 87. Sale of a legal person

1. An insolvency administrator must submit to an initial creditors’ meeting an opinion on the sale of a legal person.

2. An insolvency administrator must provide a creditors’ meeting with the following information:

1) a list of the assets, property and non-property rights of a legal person;

2) a justification that the benefit to creditors would be greater when selling the legal person than when selling separate assets of the legal person;

3) information on the preliminary offers to buy the legal person, if any.

3. A decision regarding the sale of a legal person shall be adopted by a creditors’ meeting.

4. Where assets of a legal person include pledged assets, the legal person may be sold only with the consent of the pledgee, the mortgage creditor (hereinafter: the ‘pledgee’).

5. The provisions of the Civil Code shall apply to the sale of a legal person to the extent that this Law does not provide otherwise.

6. A legal person’s purchase and sale contract shall transfer to the buyer the title to all of the legal person as a set of assets complex or an essential part thereof, with the exception of the obligations arising prior to the sale of the legal person a default whereon has resulted in the approval of claims of creditors of the legal person and the rights and duties which the seller has no right to transfer to other persons under other laws.

7. A legal person’s purchase and sale contract may provide that the obligations arising prior to the sale of the legal person a default whereon has resulted in the approval of claims of creditors of the legal person shall be transferred to the buyer only where the buyer agrees to take over these obligations and the creditors whose claims to be satisfied are taken over by the buyer agree to the discharge of these obligations for the legal person or to the satisfaction of claims arising from the default thereon by the buyer.

8. The right of ownership to a legal person shall be transferred to the buyer after the buyer pays the full price.

Article 88. Sale of assets of participants of a legal person of unlimited civil liability in the course of the bankruptcy process

1. Assets of participants of a legal person of unlimited civil liability may be sold only after the coming into effect of a court ruling to recover from the assets of the participants of the legal person of unlimited civil liability.

2. Assets of participants of a legal person of unlimited civil liability shall be sold by an insolvency administrator in compliance mutatis mutandis with the provisions of this Section governing the sale of assets.

Article 89. Sale of assets that are susceptible to devaluation

1. The selling price of assets that are susceptible to devaluation shall be determined by an insolvency administrator.

2. Where assets that are susceptible to devaluation have been pledged, an insolvency administrator shall agree the selling price of these assets with the pledgee.

3. In the case referred to in paragraph 2 of this Article, an insolvency administrator shall, in writing and/or by means of electronic communications, present the price to the pledgee for agreement by providing a justification of the price.

4. In the absence of a response from the pledgee within five working days from the receipt of information referred to in paragraph 3 of this Article, the selling price of the pledged assets that are susceptible to devaluation as determined by an insolvency administrator shall be deemed to have been agreed.

5. If the selling price of the assets that are susceptible to devaluation is not agreed with the pledgee, these assets shall be offered for sale at the selling price offered by the pledgee.

6. If it is not possible to sell the assets that are susceptible to devaluation at the selling price offered by the pledgee, the selling price of the assets shall be determined by an insolvency administrator.

7. The provisions of Article 86 of this Law and the requirement for the sale of assets by auction shall not apply to the sale of assets that are susceptible to devaluation.

Article 90. Assets of a legal person sold by auction

1. The following assets of a legal person in liquidation because of bankruptcy must be sold by auction:

1) immovable property;

2) other assets the initial selling price whereof is not less than 10 MMWs.

2. A creditors’ meeting may, upon a reasoned request of an insolvency administrator, adopt a decision to allow the sale of the assets referred to in paragraph 1 of this Article other than by auction, where in the event of such a sale the expected benefit to creditors would be greater than when selling the assets by auction.

3. A creditors’ meeting may adopt a decision to sell by auction also the assets not referred to in paragraph 1 of this Article.

Article 91. Sale of assets by auction

1. The provisions of the Code of Civil Procedure regulating the sale of assets by auction shall apply mutatis mutandis to the sale of assets by auction to the extent that this Law does not provide otherwise.

2. A procedure for selling assets by auction shall be specified by the Government.

3. The functionally related assets of several legal persons in liquidation because of bankruptcy may be sold jointly by auction subject to the approval of creditors’ meetings of these legal persons and the appointment of an insolvency administrator to carry out the sale of the assets. The amount of proceeds and expenses of the sale of the assets incurred by the legal persons shall be distributed among the legal persons in proportion to the set initial selling prices of the assets sold.

4. An insolvency administrator shall, not later than within three working days from the announcement of an auction, notify the pledgee about the sale of the pledged assets by auction indicating the initial selling price of the assets.

5. If an auction does not take place, an insolvency administrator shall reduce the initial selling price of assets in each subsequent auction by the percentage fixed by a creditors’ meeting, except for the cases where the auction does not take place on account of the buyer not paying the entire selling price of the assets within a fixed time limit. In that case, the initial selling price of the assets shall not be reduced in subsequent auctions.

6. Where the initial selling price of the assets referred to in Article 90(1)(2) of this Law which have not been sold by auction falls below the amount of 10 MMWs, these assets shall be sold in accordance with the procedure specified by a creditors’ meeting.

7. At a request of the successful bidder:

1) the assets sold by auction may be pledged by way of contractual mortgage or pledge to secure the discharge of an obligation intended for the acquisition of the assets;

2) the successful bidder may transfer to the lessor the right to purchase the assets offered for sale, where the lessor acquires the assets with a view to transferring them to the successful bidder.

Article 92. Writing off of unsold assets

1. The unsold assets of a legal person in liquidation because of bankruptcy shall be written off by a decision of a creditors’ meeting.

2. A written-off movable property shall be liquidated by an insolvency administrator not later than within 30 days from the write-off thereof in compliance with the requirements set out in the legal acts governing the liquidation of assets.

3. An insolvency administrator shall transfer the immovable property written off not later than within 30 days from the write-off thereof free of charge by the right of ownership to the municipality in the territory whereof the immovable property is located, and the municipality must take it over. The right of ownership of the municipality to the transferred property shall arise from the signing of an act of property transfer and acceptance.

SECTION SEVEN

SATISFACTION OF CREDITORS’ CLAIMS

Article 93. Assets of a legal person for the satisfaction of creditors’ claims

1. Creditors’ claims shall be satisfied from the assets of a legal person which remain after covering expenses of the bankruptcy process.

2. The assets of a legal person from which creditors’ claims are satisfied shall comprise the following assets:

1) the assets belonging to the legal person by the right of ownership on the day of the coming into effect of a ruling to open a bankruptcy proceeding;

2) the assets recovered from debtors of the legal person in the course of the bankruptcy process;

3) other assets acquired legitimately in the course of the bankruptcy process.

3. The assets of a legal person which remain after satisfying creditors’ claims and covering the expense of the bankruptcy process shall be transferred by an insolvency administrator to participants of the legal person in compliance with a law governing the legal form of a specific legal person.

Article 94. Ranking of creditors’ claims

1. When liquidating a legal person because of bankruptcy, the claims of the pledgee shall be satisfied first from the pledged assets.

2. Claims of other creditors shall be satisfied based on the following ranking:

1) the following claims shall be satisfied as first priority:

a) claims of creditors who have granted new and/or interim financing not secured by pledge and/or mortgage, where a legal person fails to repay loans within the time limits laid down in the loan agreements;

b) claims of employees related to employment relationships;

c) claims relating to state social insurance, compulsory health insurance contributions and contributions to the Guarantee Fund and the Long-term Employee Benefit Fund;

d) claims for undischarged obligations arising out of economic and commercial activities pursued in the course of bankruptcy;

2) all remaining creditors’ claims shall be satisfied as second priority.

3. Creditors’ claims shall be satisfied in two stages in accordance with the ranking specified in this Article. In the first stage, creditors’ claims excluding calculated interest and penalties shall be satisfied. In the second stage, the remaining part of the creditors’ claims (interest and penalties) shall be satisfied.

4. During each stage, creditors’ claims of each successive rank shall be satisfied subject to satisfaction of higher ranking creditors’ claims of a relevant stage. If funds are insufficient to satisfy all the claims of one rank of one stage in full, the said claims shall be satisfied in proportion to the amount due to each creditor.

5. Where, in the course of a legal person’s insolvency process, a creditor’s claims are transferred to another creditor or person, the ranking of these claims shall not change.

Article 95. Procedure for satisfying creditors’ claims

1. Creditors’ claims shall be satisfied not later than within 14 days from the approval of a final bankruptcy report, except for the satisfaction of claims of the pledgee from the pledged assets and the cases specified in paragraphs 2, 3 and 4 of this Article.

2. Claims related to employment relationships of employees shall be satisfied in accordance with the procedure laid down in the Law on Guarantees for Employees in the Event of the Insolvency of Their Employer and Long-term Employee Benefits.

3. Employees’ claims for compensation for damage resulting from accidents at work or contraction of an occupational disease shall be satisfied in accordance with the procedure laid down in the Provisional Law of the Republic of Lithuania on Damage Compensation in Accident at Work or Occupational Disease Cases.

4. Claims of entities engaged in agricultural activities shall be satisfied in accordance with the procedure laid down in Commission Regulation (EU) No 1408/2013 of 18 December 2013 on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to de minimis aid in the agriculture sector (OJ 2013 L 352, p. 9) and by the Government.

5. Claims of the persons referred to in paragraphs 2, 3 and 4 of this Article shall be reduced by the amount paid to them, whereas recourse claims of the administrator of the Guarantee Fund and/or institutions representing the State arising therefrom shall be satisfied as second priority.

6. In the cases of a set-off between a legal person and a creditor provided for in this Law, the creditor’s claims shall be reduced by the amount of the set off, including the calculated interest and penalties. Where the amount of the set off is insufficient to satisfy all of the creditor’s claims, the portion of the claim excluding the interest and the penalties shall be satisfied first.

Article 96. Satisfaction of claims of the pledgee

1. Claims of the pledgee shall be satisfied from the pledged assets.

2. Where pledged assets are sold or transferred at a price higher than the amount of claims secured by pledge and/or mortgage and the amount of administrative expenses of the bankruptcy process is covered from those assets, the balance of these funds shall be allocated for the payment of the variable remuneration for the outcomes of the administration of the bankruptcy process and for the satisfaction of claims of other creditors.

3. Where pledged assets are sold or transferred at a price lower than the amount of claims secured by pledge and/or mortgage, the remaining claims of the pledgee shall be satisfied in compliance with the provisions of Article 94 of this Law.

Article 97. Transfer of pledged assets to the pledgee

1. At a request of the pledgee, the pledged assets shall be transferred to the pledgee prior to the issue of a court ruling to liquidate a legal person because of bankruptcy, provided that the following conditions are met:

1) the pledged assets are not used for the pursuit of economic and commercial activities;

2) the pledged assets are transferred at the market value determined by an independent property valuer;

3) a creditors’ meeting approves, without the pledgee voting at the creditors’ meeting, of the market value of the pledged assets determined by an independent property valuer.

2. Upon the coming into effect of a court ruling to liquidate a legal person because of bankruptcy, the pledged assets may be transferred to the pledgee if an auction in which the pledged assets were sold is declared as not having taken place.

3. The pledgee shall have the right to apply to an insolvency administrator with a proposal to take over the pledged assets not sold by auction not later than within 20 days from the declaration of an auction as not having taken place.

4. In the case referred to in paragraph 2 of this Article, the pledged assets shall be transferred to the pledgee at the initial selling price set at an auction in which they were sold or, where no auction took place on account of the buyer failing to pay the full amount within a fixed time limit, at the price at which they were bought at an auction declared as not having taken place.

5. Claims of the pledgee who has taken over the pledged assets shall be satisfied by the amount for which the assets have been taken over, less the amount of the administrative expenses of the bankruptcy process covered from those assets.

Article 98. Settlement through the sale and transfer of pledged assets

1. Upon the sale or transfer of the pledged assets, the following expenses shall be deducted from the value thereof:

1) the administrative expenses of the bankruptcy process incurred in respect of the pledged assets;

2) the portion of the administrative expenses of the bankruptcy process remaining after deduction of the expenses referred to in point 1 of this paragraph;

3) the portion of the variable remuneration for the outcomes of the administration of the bankruptcy process.

2. The amount of the expenses referred to in points 2 and 3 of paragraph 1 of this Article shall be determined by a creditors’ meeting. It must be proportionate to the value of respectively pledged and non-pledged assets and may not exceed the amount of 15% of the value of the assets sold or taken over, where this amount remains after deducting the expenses referred to in point 1 of paragraph 1 of this Article.

3. Upon the sale of pledged assets, an insolvency administrator shall, not later than within seven days from the adoption of a decision by a creditors’ meeting referred to in paragraph 2 of this Article, transfer to the account indicated by the pledgee the amount due to him.

4. An insolvency administrator shall transfer the pledged assets to the pledgee not later than within 14 days from the transfer, by the pledgee, to the creditors’ account of a legal person the amount of the expenses referred to in paragraph 1 of this Article and, where the pledgee’s claim is less than the value of the assets taken over, the difference between the value of the assets taken over and the claim.

5. An insolvency administrator shall transfer to a notary or a court (where compulsory mortgage has been established) data on the end of the mortgage/pledge.

SECTION EIGHT

TERMINATION OF A LEGAL PERSON

Article 99. Final bankruptcy report

1. A final bankruptcy report shall be prepared by an insolvency administrator.

2. An insolvency administrator must file a final bankruptcy report with a court not later than within 30 days from the last receipts into a creditors’ account.

3. A final bankruptcy report must indicate the following amounts:

1) the amount of proceeds from the bankruptcy process;

2) the total amount of administrative expenses of the bankruptcy process;

3) amounts allocated for the satisfaction of creditors’ claims according to the ranking of creditors’ claims and stages of their satisfaction;

4) the amount allocated to the variable remuneration for the administration of the bankruptcy process.

4. A final bankruptcy report shall be signed by an insolvency administrator and the chair of a creditors’ meeting subject to the approval of the creditors’ meeting.

5. A final bankruptcy report shall be approved by the court not later than within five working days from the expiry of a time limit for appealing against a decision of a creditors’ meeting, unless the decision of the creditors’ meeting has been appealed against.

6. A court ruling on the approval of a final bankruptcy report shall not be subject to appeal.

7. An approved final bankruptcy report shall serve as a basis for an insolvency administrator to settle with creditors and to pay out the variable remuneration for the administration of the bankruptcy process.

Article 100. Decision on the termination of a legal person

1. A decision on the termination of a legal person shall be adopted by a court.

2. An insolvency administrator shall, not later than within 30 days from the approval of a final bankruptcy report, submit to a court a request for adopting a decision on the termination of a legal person.

3. A request referred to in paragraph 2 of this Article shall be accompanied by:

1) evidence that settlement with creditors has been effected having regard to the amounts indicated in a final bankruptcy report for the satisfaction of creditors’ claims;

2) deeds of writing off, liquidation or transfer unsold assets;

3) a certificate of the institution exercising state control of environmental protection regarding the management of waste, contaminated soil and subsoil;

4) sets of financial statements for the commencement and completion of liquidation of a legal person.

4. A court shall, not later than within 14 days from the receipt of a request for adopting a decision on the termination of a legal person, adopt a decision on the termination of the legal person, except in the case referred to in Article 48(2) of Regulation (EU) 2015/848.

5. Provisions of Article 27 of this Law shall apply mutatis mutandis to notices of the termination of a legal person.

Article 101. De-registration of a legal person

An insolvency administrator shall, not later than within 14 days from the coming into effect of a court decision on the termination of a legal person, apply to the data processor of the Register of Legal Entities in accordance with the procedure laid down by the legal acts governing its activities for de-registration of the legal person.

CHAPTER IV

LEGAL PERSON’S RESTRUCTURING PROCESS

SECTION ONE

CONDUCT OF THE RESTRUCTURING PROCESS

Article 102. Management of a legal person

1. Activities of a legal person in the course of the restructuring process shall be directed, the assets thereof shall be managed, used and disposed of by the manager of the legal person or, where under the legal acts governing legal persons of an appropriate legal form the legal person is not required to have the manager, by another person performing the duties of a management body in compliance with the law governing the legal form of the legal person concerned.

2. The manager of a legal person shall be responsible for the implementation of a restructuring plan.

Article 103. Functions and rights of an appointed insolvency administrator in the course of the restructuring process

1. In the course of the restructuring process, an appointed insolvency administrator shall perform the following functions:

1) safeguard the rights and legitimate interests of all creditors as well as the legal person;

2) take measures to prepare, submit for approval and implement a restructuring plan;

3) provide advice on the issues related to the preparation of a restructuring plan;

4) supervise the implementation of a restructuring plan;

5) inform the management bodies of a legal person, the a creditors’ meeting about the failure to implement or improper implementation of a restructuring plan and apply to a court for the termination of a restructuring proceeding;

6) inform a court about the coming into effect of the decisions adopted by other courts in the cases in which pecuniary claims have been lodged against a legal person;

7) convene creditors’ meetings and participate therein;

8) implement decisions of a creditors’ meeting, a creditors’ committee;

9) prepare a report on the implementation of a restructuring plan at least for each quarter of the financial year of a legal person in accordance with the procedure specified by the supervisory authority;

10) provide information in accordance with the procedure laid down in this Law;

11) perform other functions specified in this Law.

2. An appointed insolvency administrator shall have the right:

1) to enter the premises of a legal person, verify the legal person’s information. Where it contains information comprising a commercial/industrial secret, the insolvency administrator shall have the right to access such information only upon signing a pledge not to disclose the commercial/industrial secret;

3) to participate in the consideration of a draft restructuring plan;

4) to obtain information on all the decisions adopted by the management bodies of a legal person and a creditors’ meeting, a creditors’ committee of the legal person;

5) to obtain copies of all the documents which the management bodies of a legal person and the chair of a creditors’ meeting of the legal person file with a court;

6) to request, with the approval of a creditors’ meeting, that a legal person hire an auditor or an audit firm, experts;

7) to participate in meetings, sessions of the management bodies of a legal person;

8) to exercise other rights granted to an insolvency administrator by this Law.

3. Where an insolvency administrator is not appointed, his/its rights and duties shall be exercised mutatis mutandis by the manager of a legal person or, where under the legal acts governing legal persons of an appropriate legal form the legal person is not required to have the manager, by another person performing the duties of a management body in compliance with the law governing the legal form of the legal person concerned.

SECTION TWO

RESTRUCTURING PLAN

Article 104. Restructuring plan

1. The manager of a legal person shall be responsible for the preparation of a restructuring plan.

2. A restructuring plan shall indicate:

1) a brief description of a legal person (nature of activities, assets and liabilities, number of employees);

2) causes and extent of financial difficulties;

3) goals of restructuring of a legal person;

4) duration of the implementation of the restructuring plan;

5) a list of creditors of a legal person, including those party to litigation, indicating the forename and surname of a person, if it is a natural person, or the name and registration number, if it is a legal person, the home address or the address of the registered office, amounts of claims, time limits for discharge and ways of securing;

6) a list of creditors affected by the restructuring plan according to classes of creditors;

7) suretyship, guarantees and other means of securing the discharge of obligations granted by a legal person to third parties (forenames and surnames of the third parties and the persons who have granted loans to the third parties, if they are natural persons, or names and codes, if they are legal persons, home addresses or addresses of registered offices, amounts of loans granted to the third parties and amounts of suretyship, guarantees and other means of securing the discharge of obligations);

8) information on the cases in which pecuniary claims have been lodged against a legal person;

9) a list of debtors of a legal person, including those party to litigation, indicating the forename and surname of a debtor, if it is a natural person, or the name and registration number, if it is a legal person, the home address or the address of the registered office, amounts of claims, time limits for discharge and ways of securing;

10) creditors’ assistance to overcome financial difficulties;

11) information on new financing, indicating the amounts and terms of loans to be granted, ways of securing the implementation of credit agreements and other sources of financing;

12) comparison, in value terms, of the possibilities of satisfaction of creditors’ claims in the event of restructuring and bankruptcy of a legal person;

13) assessment of the economic and legal feasibility of the measures provided for in the restructuring plan, including a justification that these measures will enable the legal person to overcome financial difficulties, preserve viability and prevent bankruptcy;

14) an estimate of the administrative expenses of the restructuring process, including the amount of remuneration for an insolvency administrator, if such appointment is requested;

15) a business plan of a legal person indicating measures to overcome financial difficulties;

16) other information considered relevant by the manager of a legal person.

3. Methodological recommendations for the preparation of a restructuring plan shall be specified by the supervisory authority.

Article 105. Duration of the implementation of a restructuring plan

1. The duration of the implementation of a restructuring plan may not exceed four years from the issue of a court ruling to approve the restructuring plan.

2. Time limits for the satisfaction of the creditors’ claims indicated in a restructuring plan may not exceed a time limit for the implementation of the restructuring plan.

3. An insolvency administrator, by a decision of a creditors’ meeting, or the manager of a legal person may, not later than half a year before the end of the implementation of a restructuring plan, submit to a court a reasoned request for extending the duration of the implementation of the restructuring plan.

4. A court may extend the duration of the implementation of a restructuring plan, but not longer than for one year.

5. After the extension of the duration of the implementation of a restructuring plan, the restructuring plan must be amended.

Article 106. Approval of a draft restructuring plan by participants of a legal person

1. A draft restructuring plan must be approved by participants of a legal person.

2. Participants of a legal person shall be deemed to have approved a draft restructuring plan if the draft restructuring plan has been approved in accordance with the decision-making procedure laid down by a law governing the legal form of an appropriate legal person or, where such a law does not provide for this procedure, in accordance with the procedure laid down in documents of incorporation of legal persons, that is, by a majority of more than 1/2 of votes of the participants of the legal person attending a meeting.

Article 107. Approval of a draft restructuring plan by creditors

1. A draft restructuring plan must be approved by creditors affected by the restructuring plan in classes.

2. Creditors shall be deemed to have approved a draft restructuring plan if the draft restructuring plan has been approved by the creditors affected by the restructuring plan in each class of creditors the amount of whose claims exceeds in value terms 1/2 of the amount of all the claims, as approved by a court, of creditors in this class.

Article 108. Classes of creditors

1. In the course of the restructuring process, creditors of a legal person shall be divided into the following classes:

1) creditors whose claims are secured by a pledge and/or mortgage;

2) other creditors.

2. In the same circumstances, all creditors in the same class shall have the same rights and obligations.

Article 109. Granting of state aid to a legal person under restructuring

1. Where a draft restructuring plan, approved by participants of a legal person and creditors, provides for state aid which is to be granted to a legal person under restructuring and about which the European Commission must be notified in the cases specified by legal acts of the European Union, providers of state aid shall, within 14 days from the adoption of a decision of a creditors’ meeting to approve the draft restructuring plan, apply to the European Commission for the state aid to be provided under the draft restructuring plan.

2. Copies of documents certifying that the European Commission has received and registered the notices concerning the provision of state aid shall be submitted to an insolvency administrator and a court within three calendar days from receipt thereof.

3. Upon receipt of the documents proving that the European Commission has received and registered the notices concerning the provision of state aid, a court shall, of its own motion or at a request of creditors, an insolvency administrator or the manager of a legal person, suspend a restructuring proceeding pending a decision of the European Commission.

4. Upon the receipt of decisions of the European Commission concerning the provision of state aid, providers of state aid must submit them to a legal person under restructuring, an insolvency administrator and a court within three working days from the receipt of these decisions.

5. Where a positive decision of the European Commission is received, wherein additional conditions concerning the provision of state aid are stipulated binding on a legal person under restructuring, or a negative decision of the European Commission is received, a court shall fix an additional time limit not shorter than 45 days and not longer than 60 days for adjusting a draft restructuring plan and filing it with the court. In exceptional cases, at a request of an insolvency administrator or the manager of a legal person, the court shall have the right to extend this time limit once, but for no longer than for 30 days.

6. An adjusted draft restructuring plan shall be considered and approved in accordance with the procedure laid down by this Law.

Article 110. Filing of a restructuring plan with a court

1. An insolvency administrator or the manager of a legal person must file a draft restructuring plan approved in accordance with the procedure laid down in Articles 106 and 107 of this Law with a court not later than within four months from the coming into effect of a ruling to open a restructuring proceeding.

2. At a request of an insolvency administrator or the manager of a legal person, a court shall have the right to extend a time limit for the filing of a draft restructuring plan with the court provided that this is approved by a creditors’ meeting and there is evidence of considerable progress in the consideration of the draft restructuring plan.

3. The total time limit for filing a draft restructuring plan with a court may not exceed six months from the coming into effect of a ruling to open a restructuring proceeding.

Article 111. Approval of a restructuring plan

1. A restructuring plan shall be approved by a court.

2. A court shall issue a ruling on the approval of a restructuring plan within 14 days from the filing of the restructuring plan with the court.

3. A court shall issue a ruling to refuse to approve a restructuring plan if at least one of the following circumstances exists:

1) the requirements provided for in Articles 104-107 and 110 of this Law have not been implemented;

2) due to the measures provided for in the draft restructuring plan, the extent of satisfaction of claims of the creditors who did not support the draft restructuring plan would be smaller than in the event of bankruptcy;

3) the new financing measures provided for in a draft restructuring plan are not necessary for the implementation of the restructuring plan and unreasonably restrict the interests of creditors who did not support the draft restructuring plan;

4) the measures provided for in a draft restructuring plan will manifestly not help a legal person overcome financial difficulties, preserve viability and prevent bankruptcy;

5) a draft restructuring plan does not meet the requirements for the granting of state aid;

6) a legal person does not pay taxes from the issue of the court ruling to open a restructuring proceeding.

4. A court shall, not later than on the next working day following the issue of a ruling on the approval of a restructuring plan, send a copy of the ruling to the following persons:

1) a legal person under restructuring;

2) an appointed insolvency administrator;

3) creditors.

5. Appeals against a court ruling to approve a restructuring plan shall not have suspensory effect on the implementation of the restructuring plan.

Article 112. Amendment to a restructuring plan

Amendments to a restructuring plan shall be considered and approved in accordance with the same procedure as the restructuring plan.

Article 113. Satisfaction of creditors’ claims

1. Creditors’ claims shall be satisfied in accordance with the procedure and within the time limits laid down in a restructuring plan on the basis of the ranking of creditors’ claims and stages of their satisfaction specified in Article 94 of this Law.

2. Claims of creditors for whom time limits for the discharge of obligations have not expired prior to opening of a restructuring proceeding shall be satisfied not earlier than after the expiry of those time limits.

3. Where a restructuring plan provides for the sale of pledged assets, a time limit for the discharge of an obligation secured by pledge or mortgage of these assets shall be deemed to have expired from the sale thereof.

4. In the cases of a set-off between a legal person and a creditor provided for in this Law, the creditor’s claims shall be reduced by the amount of the set-off, including the calculated interest and penalties. Where the amount of the set-off is insufficient to satisfy all of the creditor’s claims, the portion of the claim excluding the interest and the penalties shall be satisfied first.

SECTION THREE

CLOSURE OF RESTRUCTURING

Article 114. Termination of a legal person’s restructuring proceeding

1. A court shall terminate a restructuring proceeding if at least one of the following grounds exists:

1) a restructuring plan is not filed within fixed time limits;

2) the court does not approve a restructuring plan;

3) a restructuring plan is not being implemented or is being implemented improperly;

4) a legal person fails to pay all or part of taxes;

5) a final restructuring report is not filed.

2. A court shall terminate a restructuring proceeding on the grounds referred to in points 3 and 4 of paragraph 1 of this Article if the circumstances mentioned in these points last for not less than three months.

3. A court shall terminate a restructuring proceeding and, under the same ruling, open a bankruptcy proceeding where it makes a reasoned conclusion that a legal person is insolvent and there exists at least one of the grounds referred to in paragraph 1 of this Article.

4. Provisions of Article 27 of this Law shall apply mutatis mutandis to notices of the termination of a restructuring proceeding.

Article 115. Consequences of termination of a legal person’s restructuring proceeding

1. From the coming into effect of a court ruling to terminate a restructuring proceeding, all agreements on assistance of creditors to overcome financial difficulties as provided for in a restructuring plan shall cease to have effect, unless a legal person and the creditors agree otherwise.

2. Calculation of interest and penalties as well as recoveries, with the exception of the obligations already discharged, shall be resumed from the beginning of suspension of calculation thereof.

3. A legal person shall lose the legal status of a legal person under restructuring as of the coming into effect of a court ruling to terminate a restructuring proceeding.

Article 116. Final restructuring report

1. An insolvency administrator shall be responsible for preparing a final restructuring report.

2. An insolvency administrator must file a final restructuring report with a court not later than within 30 days from the expiry of a time limit for the implementation of a restructuring plan.

3. A final restructuring report must indicate:

1) information on the implementation of the measures provided for in a restructuring plan;

2) the amount of the administrative expenses of the restructuring process;

3) amounts allocated for the satisfaction of creditors’ claims according to the ranking of creditors’ claims and stages of their satisfaction.

4. A final restructuring report shall be signed by the manager of a legal person and the chair of a creditors’ meeting subject to the approval of the creditors’ meeting.

5. A creditors’ meeting shall be deemed to have approved a final restructuring report if it has been approved by the creditors affected by the restructuring plan in each class the amount of whose claims exceeds in value terms 1/2 of the amount of all the claims, as approved by a court, of creditors in each class.

6. A final restructuring report shall be approved by a court.

7. A court ruling on the approval of a final restructuring report shall not be subject to appeal.

Article 117. Closure of a legal person’s restructuring proceeding

1. A court shall take a decision to close a restructuring proceeding if at least one of the following grounds exists:

1) all creditors waive their claims;

2) the legal person settles with all the creditors;

3) a final restructuring report is approved.

2. A legal person shall lose the legal status of a legal person under restructuring as of the coming into effect of a court decision to close a restructuring proceeding.

3. Provisions of Article 27 of this Law shall apply mutatis mutandis to notices of the closure of a restructuring proceeding.

PART III

INSOLVENCY ADMINISTRATOR

CHAPTER I

REQUIREMENTS FOR PERSONS SEEKING TO ACQUIRE THE RIGHT TO MANAGE INSOLVENCY PROCESSES

Article 118. Requirements for a natural person seeking to acquire the right to administer insolvency processes

The right to administer insolvency processes shall be granted to a natural person provided that he meets the following requirements:

1) is of good repute;

2) holds at least a Master’s qualification degree or an equivalent higher education qualification;

3) has at least two years of work experience as an assistant insolvency administrator over the last three years or has been recognised as a lawyer or appointed bailiff or has at least five years of work experience as the manager of an enterprise over the last seven years;

4) has passed insolvency administrators’ qualifying examinations within a period not exceeding three years from the passing of the first qualifying examination.

Article 119. Requirements for a legal person seeking to acquire the right to administer insolvency processes

The right to administer insolvency processes shall be granted to a legal person provided that it meets the following requirements:

1) is of good repute;

2) is a private legal person;

3) has a manager who has acquired the right to administer insolvency processes in the Republic of Lithuania or, where legal acts governing legal persons of an appropriate legal form do not require a legal person to have employees, a participant who has acquired the right to administer insolvency processes in the Republic of Lithuania.

Article 120. Good repute

1. A natural person shall not be considered to be of good repute if:

1) he has been convicted of a premeditated crime against property, property rights, property interests, the economy, the order of business, the financial system, the civil service and public interests and his conviction has not expired or has not been expunged;

2) he has been found guilty of a premeditated crime referred to in point 1 of this paragraph but has been released from criminal liability, and less than two years have lapsed from the coming into effect of the judgment;

3) he has been dismissed from work, from a post for violations of professional activity or has lost the right to pursue the relevant activity due to non-compliance with the requirement of good repute set out in laws or due to a breach of ethics, and less than two years have lapsed from the dismissal from work, from the post or loss of the right to pursue the relevant activity;

4) he has violated the requirements set out in Article 130(1)(1) of this Law, and less than four years have lapsed from the supervisory authority becoming aware of this circumstance;

5) he was the manager of an insolvency administrator being a legal person whose right to administer insolvency processes has been revoked on the grounds specified in points 2 and 4 of Article 127(2) of this Law at the time of emergence of the circumstances leading to the revocation of the legal person’s right to administer insolvency processes, and less than two years have lapsed from the revocation of the right;

6) he abuses narcotic, toxic, psychotropic substances or alcohol.

2. A legal person shall not be considered to be of good repute if:

1) a judgment of conviction has become effective against it for a premeditated crime against property, property rights, property interests, the economy, the order of business, the financial system, the civil service and public interests and its conviction has not expired or has not been expunged;

2) it has been found guilty of a premeditated crime referred to in point 1 of this paragraph but has been released from criminal liability, and less than two years have lapsed from the coming into effect of the judgment;

3) it has violated the requirements set out in Article 130(1)(1) of this Law, and less than four years have lapsed from the supervisory authority becoming aware of this circumstance.

Article 121. Assistant insolvency administrator

1. A natural person of good repute who has entered into an employment contract with an insolvency administrator having at least three years of work experience in the capacity of an insolvency administrator may be an assistant insolvency administrator.

2. The work of a natural person in the field of supervision of the activities of insolvency administrators shall be held equivalent to the work experience of an assistant insolvency administrator.

3. A procedure for calculating the work experience of assistant insolvency administrators (commencement, suspension, cessation of employment) shall be specified by the Chamber of Insolvency Administrators upon coordination with the supervisory authority.

Article 122. Qualifying examinations and a professional aptitude test of insolvency administrators

1. Qualifying examinations (hereinafter: ‘qualifying examinations’) and a professional aptitude test of insolvency administrators shall be organised and conducted by the Chamber of Insolvency Administrators at least once per calendar year. Natural persons must be provided with an opportunity to take qualifying examinations not later than within three months from the day when the number of persons who intend to take qualifying examinations reaches at least ten.

2. The tasks of qualifying examinations and a professional aptitude test shall be prepared by the Chamber of Insolvency Administrators according to the Programme for Qualifying Examinations of Insolvency Administrators.

3. Qualifying examinations shall be taken in writing and orally, in the official language.

4. The number of retakes of qualifying examinations shall not be limited.

5. The Chamber of Insolvency Administrators shall, upon coordination with the supervisory authority:

1) approve the Programme for Qualifying Examinations of Insolvency Administrators;

2) establish a procedure for organising, conducting and assessing the results of qualifying examinations and a professional aptitude test;

3) approve a list of qualifying examinations;

4) approve the amount of a fee for taking qualifying examinations and a professional aptitude test.

6. The amount of a fee for taking qualifying examinations and a professional aptitude test may not exceed the costs of organisation and conduct of the qualifying examinations and the professional aptitude test.

Article 123. Examination Commission

1. The Commission for Qualifying Examinations of Insolvency Administrators (hereinafter: the ‘Examination Commission’) shall consist of five members, with the Ministry of Finance of the Republic of Lithuania, the Ministry of Justice of the Republic of Lithuania and the supervisory authority each delegating one member and the Chamber of Insolvency Administrators delegating two members.

2. The composition of the Examination Commission and the chair thereof shall be approved by the Minister of Finance of the Republic of Lithuania.

3. Members of the Examination Commission must have at least three years of work experience in the fields of insolvency, law and/or finance. Representatives of the Chamber of Insolvency Administrators must have at least three years of work experience in the capacity of an insolvency administrator.

4. The term of office of a member of the Examination Commission shall be three years. The same individual may act as a member of the Examination Commission for two consecutive terms of office.

5. The Examination Commission shall perform the following functions:

1) approve the tasks of qualifying examinations and a professional aptitude test and their assessment methodology;

2) approve the results of the qualifying examinations and the professional aptitude test.

6. The Examination Commission shall be provided with material and technical support by the Chamber of Insolvency Administrators.

CHAPTER II

GRANTING AND REVOCATION OF THE RIGHT TO ADMINISTER INSOLVENCY PROCESSES

SECTION ONE

GRANTING OF THE RIGHT TO ADMINISTER INSOLVENCY PROCESSES

Article 124. Adoption of a decision to grant to a natural person the right to administer insolvency processes, recognition of an insolvency administrator’s professional qualification and administration of insolvency processes on a temporary basis

1. A decision on the granting of the right to administer insolvency processes to the persons meeting the requirements set out in Article 118 of this Law, namely, a natural person, also a natural person who has acquired the right to administer insolvency processes in another Member State (hereinafter in this Article: a ‘natural person of another Member State’), shall be adopted by the supervisory authority in accordance with the procedure specified by the Government or an institution authorised by it.

2. The professional qualification of a natural person of another Member State seeking to administer insolvency processes in the Republic of Lithuania must be recognised in the Republic of Lithuania in compliance with the provisions of the Law on Recognition of Regulated Professional Qualifications.

3. A natural person of another Member State having the right to administer insolvency processes in that Member State may administer insolvency processes in the Republic of Lithuania on a temporary and occasional basis (hereinafter: ‘on a temporary basis’) in accordance with the procedure laid down by the Law on Recognition of Regulated Professional Qualifications and by the Government or an institution authorised by it.

Article 125. Adoption of a decision to grant to a legal person the right to administer insolvency processes and administration of insolvency processes on a temporary basis

1. A decision on the granting of the right to administer insolvency processes to the persons meeting the requirements set out in Article 119 of this Law, namely, a legal person, also a legal person or another organisation having the right to administer insolvency processes in another Member State which may acquire in its name and hold rights and duties, be a claimant or a defendant in court, a division thereof (hereinafter in this Article: a ‘legal person of a Member State’), shall be adopted by the supervisory authority in accordance with the procedure specified by the Government or an institution authorised by it.

2. A legal person of another Member State may administer insolvency processes in the Republic of Lithuania on a temporary basis in accordance with the procedure laid down by the Law on Services and by the Government or an institution authorised by it.

Article 126. Procedure for granting the right to administer insolvency processes

1. The supervisory authority shall, not later than within 14 days from the receipt of all required documents, adopt a decision on the granting of the right to administer insolvency processes.

2. The supervisory authority shall notify the person of a decision adopted on the right to administer insolvency processes on the next working day following the adoption of such a decision at the contact address provided by him.

3. Where the supervisory authority fails to adopt a decision on the granting of the right to administer insolvency processes within the time limit laid down in paragraph 1 of this Article, the supervisory authority shall not be considered to have adopted a decision to grant the right to administer insolvency processes.

4. The supervisory authority shall enter the person on the List of Insolvency Administrators on the day of adoption of a decision to grant the right to administer insolvency processes.

5. A person shall acquire the right to administer insolvency processes from his entry on the List of Insolvency Administrators and shall be considered to be an insolvency administrator.

SECTION TWO

REVOCATION OF THE RIGHT TO ADMINISTER INSOLVENCY PROCESSES

Article 127. Grounds for the lapse of the right to administer insolvency processes

1. A decision to revoke the right of an insolvency administrator to administer insolvency processes shall be adopted by the supervisory authority in accordance with the procedure specified by the Government or an institution authorised by it.

2. The right to administer insolvency processes shall lapse on the following grounds:

1) at a request of an insolvency administrator;

2) where it transpires that, in order to acquire the right to administer insolvency processes, false and/or misleading data and/or information specified in Articles 118 and 119 of this Law have been provided;

3) where it transpires that an insolvency administrator does not meet the requirements set out in point 1 of Article 118 or in Article 119 of this Law;

4) upon the imposition upon an insolvency administrator of the sanction referred to in Article 136(3)(3) of this Law;

5) where an insolvency administrator loses membership of the Chamber of the Insolvency Administrators;

6) where a bankruptcy proceeding is opened against an insolvency administrator being a legal person or the bankruptcy process is conducted out of court or the bankruptcy process is initiated under the legal acts of another Member State or where it is being liquidated or has terminated;

7) where an insolvency administrator being a natural person dies;

8) where it transpires that the person of another Member State administering insolvency processes by possessing an establishment in the Republic of Lithuania or administering insolvency processes on a temporary basis has lost the right to administer insolvency processes acquired under legal acts of another Member State.

3. An insolvency administrator whose right to administer insolvency processes has lapsed on the grounds referred to in paragraph 2 of this Article and who seeks to re-acquire the right to administer insolvency processes shall not be subject to the requirement set out in point 3 of Article 118 of this Law provided that not more than five years have lapsed from adoption of a decision to revoke the right to administer insolvency processes.

4. An insolvency administrator whose right to administer insolvency processes has lapsed on the grounds referred to in points 2, 4 and 5 of paragraph 2 of this Article may re-apply for the granting of the right to administer insolvency processes not earlier than after the lapse of two years from the coming into effect of a decision of the supervisory authority to revoke the right to administer insolvency processes.

5. Natural persons who re-apply to the supervisory authority for the granting of the right to administer insolvency processes must pass qualifying examinations.

Article 128. Procedure for revoking the right to administer insolvency processes

1. The supervisory authority shall adopt a decision to revoke the right to administer insolvency processes within three working days from transpiration of the ground for the lapse of the right to administer insolvency processes referred to in points 1, 2, 3 and 5 to 8 of Article 127(2) of this Law.

2. An insolvency administrator shall be removed from the List of Insolvency Administrators on the next working day following the adoption of a decision to revoke the right to administer insolvency processes.

3. Upon adoption of a decision to revoke the right to administer insolvency processes, the Chamber of Insolvency Administrators, a court hearing an insolvency proceeding and an insolvency administrator shall be notified thereof not later than on the next working day.

4. In the cases referred to in points 2, 3, 6 and 8 of Article 127(2) of this Law, grounds for the lapse of the right to administer insolvency processes shall arise after a person fails, within 20 days from the receipt of a written warning from the supervisory authority regarding the possible revocation of the right to administer insolvency processes, to provide new information and/or documentary evidence that there were no circumstances which could have resulted in the revocation of the right to administer insolvency processes or that such circumstances have disappeared. The warning shall be considered delivered after the lapse of seven days from dispatch thereof.

5. Persons shall lose the right to administer insolvency processes from their removal from the List of Insolvency Administrators.

CHAPTER III

RIGHTS AND DUTIES OF AN INSOLVENCY ADMINISTRATOR

Article 129. Rights of an insolvency administrator

1. An insolvency administrator shall have the right:

1) to participate in the selection of insolvency administrators being legal persons carried out in compliance with the Rules for the Selection of Insolvency Administrators;

2) to be appointed insolvency administrator in out-of-court bankruptcy processes;

3) to be appointed insolvency administrator in restructuring proceedings;

4) to be appointed insolvency administrator in personal bankruptcy proceedings;

5) to obtain information related to his/its activities from the supervisory authority and the Chamber of Insolvency Administrators;

6) to have other rights specified in this Law.

2. An insolvency administrator being a natural person may engage in one of the following forms of activities:

1) pursue individual activity;

2) be employed with a legal person having the right to administer insolvency processes or, where legal acts governing legal persons of an appropriate legal form do not require the legal person to have employees, be a participant of the legal person.

3. An insolvency administrator being a natural person shall have the right to change the form of activities.

Article 130. Duties of an insolvency administrator

1. An insolvency administrator must:

1) be of good repute and, where he no longer meets the requirements of good repute, notify the supervisory authority within three working days of becoming aware thereof;

2) ensure that the manager of the insolvency administrator being a legal person or a participant thereof, where legal acts governing legal persons of an appropriate legal form do not require the legal person to have employees, is a person having the right to administer insolvency processes;

3) take out compulsory professional indemnity insurance cover;

4) comply with the Code of Ethics for Insolvency Administrators;

5) be a member or an associate member of the Chamber of Insolvency Administrators;

6) continuously improve his professional qualification in accordance with the procedure laid down by the Chamber of Insolvency Administrators and coordinated with the supervisory authority:

a) 40 academic hours per calendar year – for persons having the right to administer insolvency processes for a period of less than 5 years;

b) 35 academic hours per calendar year – for persons having the right to administer insolvency processes for a period from 5 to 10 years;

c) 30 academic hours per calendar year – for persons having the right to administer insolvency processes for a period from 10 to 15 years;

d) 24 academic hours per calendar year – for persons having the right to administer insolvency processes for a period of more than 15 years;

7) notify the supervisory authority of any changes in the data required for the management of the List of Insolvency Administrators not later than within three working days from the change in the data;

8) notify the supervisory authority that he has been granted the right to administer insolvency processes in another Member State not later than within 14 days from the granting of this right;

9) provide conditions for the supervisory authority to exercise supervision of his activities;

10) provide the supervisory authority and the Chamber of Insolvency Administrators with information specified in this Law;

11) perform other duties specified in this Law.

2. An insolvency administrator being a legal person must also:

1) indicate to the supervisory authority the employee having the right to administer insolvency processes and responsible for the administration of insolvency processes of the legal person not later than on the next working day following the appointment of the insolvency administrator;

2) indicate to the supervisory authority a new employee responsible for the administration of insolvency processes of the legal person and provide the reason for such a replacement not later than on the next working day following the replacement of the responsible employee;

3) establish a work organisation and control procedure for the insolvency administrator and for the employees whose work is related to the administration of insolvency processes and ensure compliance therewith. This provision shall not apply to persons administering insolvency processes on a temporary basis.

3. The requirements set out in point 6 of paragraph 1 of this Article shall apply only to an insolvency administrator being a natural person.

4. In the cases referred to in points 1 and 2 of paragraph 2 of this Article, an employee of an insolvency administrator being a legal person who is responsible for the administration of a legal person’s insolvency processes shall commence the administration of insolvency processes from the publication of information on the website of the supervisory authority as specified in Article 32(1)(2) of this Law.

Article 131. Compulsory professional indemnity insurance

1. The object of compulsory professional indemnity insurance of an insolvency administrator shall be civil liability of the insolvency administrator for damage caused during the period of validity of an insurance contract to a natural or legal person and/or creditors and/or third parties by unlawful actions (act or omission) of the insolvency administrator in the course of administration of insolvency and personal bankruptcy processes.

2. The minimum amount insured under compulsory professional indemnity insurance shall be EUR 60 000 for one insured event and EUR 150 000 for all insured events per year. Upon payment of an insurance benefit in the case of an insured event and reduction of the minimum insured amount, an insolvency administrator must, within one month, take out professional indemnity insurance cover in order to restore the compulsory minimum amount insured.

3. An insured event shall be unlawful actions (acts or omissions) carried out by an insolvency administrator during the period of validity of an insurance contract in administering insolvency and personal bankruptcy processes which are the basis for emergence of civil liability of the insolvency administrator and lodging of a claim for damages in accordance with the Description of the Procedure for Compulsory Professional Indemnity Insurance of an Insolvency Administrator.

4. The policyholder of compulsory professional indemnity insurance of an insolvency administrator shall be an insolvency administrator.

5. The Description of the Procedure for Compulsory Professional Indemnity Insurance of an Insolvency Administrator shall be approved by the Government.

6. An insolvency administrator shall not have the right to administer the insolvency process unless he is covered by compulsory professional indemnity insurance.

CHAPTER IV

SUPERVISION OF ACTIVITIES OF INSOLVENCY ADMINISTRATORS

SECTION ONE

SUPERVISORY AUTHORITY

Article 132. Supervision of activities of insolvency administrators

1. The activities of insolvency administrators in the course of their administration of insolvency processes shall be supervised by the supervisory authority by applying the entirety of measures aimed at ensuring the quality and soundness of the insolvency process.

2. The supervisory authority shall supervise activities of insolvency administrators and impose sanctions in compliance with the Law of the Republic of Lithuania on Public Administration, to the extent that this Law does not provide otherwise, and in accordance with the procedure laid down by the Government or an institution authorised by it.

Article 133. Insolvency Supervisory Committee

1. The Insolvency Supervisory Committee shall act as a collegial advisory body to the supervisory authority on the issues of supervision of activities of insolvency administrators.

2. The Insolvency Supervisory Committee shall consist of five members, who must have at least three years of work experience in the fields of insolvency, law and/or finance. The composition of the Insolvency Supervisory Commission shall be approved by the Minister of Finance.

3. The Ministry of Finance, the Ministry of Justice, the Ministry of Economy and Innovation of the Republic of Lithuania, the Bank of Lithuania and the Chamber of Insolvency Administrators shall each delegate one representative to the Insolvency Supervisory Committee.

4. The Insolvency Supervisory Committee shall give an opinion to the supervisory authority on:

1) legal acts adopted by the supervisory authority relating to supervision of activities of insolvency administrators;

2) sanctions to restrict the right to be appointed insolvency administrator for the purpose of administering insolvency processes of new legal persons and revoke the right to administer insolvency processes.

5. The Insolvency Supervisory Committee shall act in compliance with this Law and the regulations of the Insolvency Supervisory Committee approved by an institution authorised by the Government.

6. The Insolvency Supervisory Committee shall be provided with material and technical support by the supervisory authority.

Article 134. Functions of the supervisory authority

The supervisory authority shall perform the following functions:

1) in accordance with the procedure laid down by it and coordinated with the Ministry of Finance, manage the List of Insolvency Administrators published on its website in order to safeguard the interests of the parties involved;

2) supervise activities of insolvency administrators;

3) verify whether insolvency administrators comply with the requirements set out in points 1, 2, 3 of Article 130(1) and points 1 and 2 of Article 130(2) of this Law;

4) collect, process and publish information on insolvency administration processes;

5) where necessary, cooperate, exchange information required for the supervision of insolvency administrators with state institutions of the Republic of Lithuania, supervisory authorities of other Member States, the Bank of Lithuania and the Chamber of Insolvency Administrators;

6) perform other functions specified in this Law for the supervisory authority.

Article 135. Rights of the supervisory authority

In performing its functions, the supervisory authority shall have the right:

1) to obtain information required for the performance of the functions specified in this Law;

2) to involve experts (professionals) with appropriate knowledge for addressing the issues arising in the course of inspections of activities of insolvency administrators;

3) to participate in meetings of members and sessions of collegial bodies of the Chamber of Insolvency Administrators without the right to vote;

4) to refer to the Chamber of Insolvency Administrators with a view to examining whether the insolvency administrator complies with the Code of Ethics for Insolvency Administrators;

5) to inspect the performance by the Chamber of Insolvency Administrators of the functions assigned thereto and related to qualifying examinations of insolvency administrators, ensuring compliance with the Code of Ethics for Insolvency Administrators and improvement of professional qualifications;

6) to issue instructions to the Chamber of Insolvency Administrators regarding the improvement of performance of the functions assigned thereto;

7) other rights specified in this Law.

SECTION TWO

SANCTIONS

Article 136. Instructions and sanctions

1. In exercising supervision of activities of insolvency administrators, the supervisory authority shall, upon detecting infringements of this Law and other legal acts governing the insolvency process, with the exception of the infringements related to compliance with the Code of Ethics for Insolvency Administrators and improvement of professional qualifications, adopt a decision on the issue of one or more instructions and/or imposition of a sanction.

2. The supervisory authority may issue the following instructions:

1) to instruct an insolvency administrator being a natural person to additionally improve his professional qualification (to fix the number of hours which may not exceed 12 academic hours during a one-year period). Compliance with this instruction shall be controlled by the Chamber of Insolvency Administrators;

2) to instruct an insolvency administrator to remedy, within a fixed time limit, the deficiencies identified in the performance of the functions specified in this Law and other legal acts governing the insolvency process.

3. Where the requirements set out in this Law and other legal acts governing the insolvency process are not complied with and/or where an insolvency administrator fails to comply with the instructions specified in paragraph 2 of this Article, the supervisory authority may impose upon the insolvency administrator, having regard to provisions of Article 137(1), (2) and (3) of this Law, one of the following sanctions:

1) a warning;

2) restriction of the right to be appointed insolvency administrator for the purpose of administering insolvency processes of new legal persons for a period from six months up to two years;

3) revocation of the right to administer insolvency processes.

4. In exercising supervision of activities of insolvency administrators being legal persons and upon identifying infringements of this Law and other legal acts governing the insolvency process, the supervisory authority may also issue instructions and/or impose a sanction upon the manager of an insolvency administrator being a legal person and/or the employee responsible for the administration of the process under inspection.

5. The sanction referred to in point 1 of paragraph 3 of this Article shall be effective for a period of one year from its imposition.

6. The instructions and sanctions specified in this Article may be applied not later than within five years from the commission of an infringement.

7. Where, in exercising supervision of activities of insolvency administrators, the supervisory authority identifies any infringements related to compliance with the Code of Ethics for Insolvency Administrators and improvement of professional qualifications, it shall forward this information for examination to the Chamber of Insolvency Administrators.

Article 137. Procedure for imposing sanctions

1. When adopting a decision on the imposition of a sanction, the supervisory authority shall have regard to the following circumstances:

1) the significance and duration of an infringement of the set requirements;

2) aggravating or mitigating circumstances.

2. The following circumstances shall be considered as mitigating circumstances:

1) an insolvency administrator voluntarily prevents adverse consequences of an infringement;

2) no infringements have been identified in activities of an insolvency administrator over the last three years;

3) an insolvency administrator compensates for losses and/or eliminates the adverse consequences caused by an infringement.

3. The following circumstances shall be considered as aggravating circumstances:

1) an insolvency administrator commits an infringement intentionally;

2) an insolvency administrator does not cooperate with the supervisory authority in carrying out its inspection of activities;

3) evidence has been collected that an insolvency administrator conceals a committed infringement;

4) an infringement has caused adverse consequences for the property interests of persons;

5) an insolvency administrator repeatedly commits an infringement for which he has been imposed a sanction specified in this Law within three years from the imposition of the sanction.

4. Prior to adopting a decision to impose the sanctions to restrict the right to be appointed insolvency administrator for the purpose of administering insolvency processes of new legal persons and/or revoke the right to administer insolvency processes, the supervisory authority must obtain the opinion of the Insolvency Supervisory Committee.

5. The supervisory authority shall notify an insolvency administrator of a decision on the issue of an instruction or imposition of a sanction within three working days from the adoption of the decision.

6. The supervisory authority shall notify the Chamber of Insolvency Administrators and courts of a decision on the revocation of the right to administer insolvency processes not later than on the next working day following the adoption of the decision.

7. In order to safeguard third parties’ interests, the effective sanctions as imposed by the supervisory authority shall be published on the website of the supervisory authority and on the List of Insolvency Administrators.

Article 138. Appeal against decisions of the supervisory authority

Decisions of the supervisory authority may be appealed against in accordance with the procedure laid down in the Law of the Republic of Lithuania on Administrative Proceedings.

CHAPTER V

CHAMBER OF INSOLVENCY ADMINISTRATORS

Article 139. Organisation of activities of the Chamber of Insolvency Administrators

1. The Chamber of Insolvency Administrators shall be a public legal person whose legal form is an association and which exercises professional self-governance of insolvency administrators.

2. In its activities, the Chamber of Insolvency Administrators shall act in compliance with the Law of the Republic of Lithuania on Associations to the extent that this Law does not provide otherwise.

Article 140. Members of the Chamber of Insolvency Administrators

1. Members of the Chamber of Insolvency Administrators shall be insolvency administrators being natural persons.

2. Associate members of the Chamber of Insolvency Administrators shall be insolvency administrators being legal persons.

3. An associate member of the Chamber of Insolvency Administrators shall have all rights of a member, except for the right to vote and the right of membership of the bodies of the Chamber of Insolvency Administrators.

4. Other rights and duties of members and associate members of the Chamber of Insolvency Administrators shall be specified by this Law, the Law on Associations and the statutes of the Chamber of Insolvency Administrators.

Article 141. Rights of the Chamber of Insolvency Administrators

The Chamber of Insolvency Administrators shall have the right:

1) to manage, use and dispose of funds, as well as to acquire, use and dispose of other assets belonging thereto;

2) to provide services in accordance with the procedure specified in the statutes of the Chamber of Insolvency Administrators;

3) to collect, accumulate and summarise information on insolvency administrators, assistant insolvency administrators;

4) to obtain from state institutions and the supervisory authority information required for the performance of its functions;

5) to represent interests of insolvency administrators before state institutions, foreign and international organisations;

6) to cooperate with international and foreign organisations, join international and foreign organisations;

7) other rights specified by law.

Article 142. Duties of the Chamber of Insolvency Administrators

The duties of the Chamber of Insolvency Administrators shall be as follows:

1) to organise and to conduct qualifying examinations of insolvency administrators and a professional aptitude test;

2) to draft and to approve the Code of Ethics for Insolvency Administrators;

3) to control compliance, by insolvency administrators, with the Code of Ethics for Insolvency Administrators;

4) to set out requirements for the content of training courses for the improvement of qualifications of insolvency administrators being natural persons upon coordination with the supervisory authority and to organise, on the basis thereof, training courses for the improvement of qualifications of insolvency administrators;

5) to establish a procedure for recognising the improvement of qualifications of insolvency administrators being natural persons by attending training courses other than those organised by the Chamber of Insolvency Administrators;

6) to control the improvement of professional qualifications by insolvency administrators being natural persons;

7) to establish the Procedure for Calculating the Duration of Work Experience of Assistant Insolvency Administrators coordinated with the supervisory authority;

8) to draft and to approve the methodology for establishing a procedure for organising and controlling the work of insolvency administrators;

9) to control whether an insolvency administrator being a legal person has established a procedure for organising and controlling its work and whether it complies therewith;

10) to provide the supervisory authority with information required for the performance of its functions without delay but not later than within three working days from the disclosure of such information;

11) to notify the supervisory authority of receipt of information on infringements of this Law and other legal acts governing insolvency processes;

12) other duties specified in this Law.

Article 143. Bodies of the Chamber of Insolvency Administrators

1. The bodies of the Chamber of Insolvency Administrators shall be as follows:

1) the General Meeting of Members of the Chamber of Insolvency Administrators;

2) the Presidium of the Chamber of Insolvency Administrators;

3) the Head of the Chamber of Insolvency Administrators;

4) the Court of Honour of Insolvency Administrators.

2. Other bodies may also be formed in the Chamber of Insolvency Administrators.

Article 144. General Meeting of Members of the Chamber of Insolvency Administrators

The General Meeting of Members of the Chamber of Insolvency Administrators shall perform the following functions:

1) approve the Code of Ethics for Insolvency Administrators;

2) approve the regulations of the Court of Honour of Insolvency Administrators;

3) elect members and the chair of the Presidium of the Chamber of Insolvency Administrators;

4) elect three representatives to be delegated to members of the Court of Honour of Insolvency Administrators;

5) approve, on a recommendation of the Presidium of the Chamber of Insolvency Administrators, the amounts of membership fees and associate membership fees;

6) may also decide on other matters assigned to its remit by the statutes of the Chamber of Insolvency Administrators, unless these have been assigned to the remit of other bodies and provided that, as to their substance, these are not the functions of a management body.

Article 145. Presidium of the Chamber of Insolvency Administrators

1. The Presidium of the Chamber of Insolvency Administrators shall be the collegial management body of the Chamber of Insolvency Administrators.

2. The Presidium of the Chamber of Insolvency Administrators shall consist of 11 members, including the chair of the Presidium of the Chamber of Immunity Administrators, of whom at least nine members must be members of the Chamber of Immunity Administrators and two members may be delegated by the General Meeting of Members of the Chamber of Immunity Administrators from among persons who are not members of the Chamber of Insolvency Administrators and have at least five years of work experience in the fields of insolvency, law and/or finance.

3. The members and the chair of the Presidium of the Chamber of Insolvency Administrators shall be elected by the General Meeting of Members of the Chamber of Insolvency Administrators for a period of three years for a term not exceeding two consecutive terms of office.

4. Activities of the Presidium of the Chamber of Insolvency Administrators shall be governed by the rules of procedure approved by the Presidium of the Chamber of Insolvency Administrators.

5. The Presidium of the Chamber of Insolvency Administrators shall perform the following functions:

1) approve the structure of the administration of the Chamber of Insolvency Administrators;

2) approve the composition of the Court of Honour of Insolvency Administrators;

3) approve and publish legal acts for the performance of the duties of the Chamber of Insolvency Administrators specified in this Law;

4) submit proposals to the meeting of members of the Chamber of Insolvency Administrators on the issues relating to the activities of insolvency administrators;

5) take decisions concerning the imposition of sanctions upon insolvency administrators;

6) ensure the implementation of decisions of the meeting of members of the Chamber of Insolvency Administrators and control the implementation thereof;

7) perform other functions provided for in this Law, other laws and legal acts as well as in the statutes of the Chamber of Insolvency Administrators.

Article 146. Head of the Chamber of Insolvency Administrators

1. The Head of the Chamber of Insolvency Administrators shall be the single-person management body of the Chamber of Insolvency Administrators.

2. The Head of the Chamber of Insolvency Administrators shall organise the day-to-day activities of the Chamber of Insolvency Administrators.

3. A decision on the appointment and removal of the Head of the Chamber of Insolvency Administrators, the terms and conditions of the contract or termination thereof shall be adopted by the Presidium of the Chamber of Insolvency Administrators.

4. The Head of the Chamber of Insolvency Administrators must meet the requirements of good repute set out in Article 120(1) of this Law.

5. The Head of the Chamber of Insolvency Administrators shall act on behalf of the Chamber of Insolvency Administrators and shall have the right to enter into transactions at his own discretion.

6. The statutes of the Chamber of Insolvency Administrators may specify the decisions and transactions for which the Head of the Chamber of Insolvency Administrators will require the approval of the Presidium of the Chamber of Insolvency Administrators.

7. The Head of the Chamber of Insolvency Administrators shall perform the following functions:

1) convene and organise the General Meeting of Members of the Chamber of Insolvency Administrators;

2) provide information and documents to the Presidium of the Chamber of Insolvency Administrators and the General Meeting of Members of the Chamber of Insolvency Administrators;

3) perform other functions provided for in this Law, other laws and legal acts as well as in the statutes of the Chamber of Insolvency Administrators.

Article 147. Court of Honour of Insolvency Administrators

1. The Court of Honour of Insolvency Administrators shall, on a proposal of the Presidium of the Chamber of Insolvency Administrators, examine the breaches committed by insolvency administrators and referred to in Article 148(1) of this Law.

2. The Court of Honour of Insolvency Administrators shall consist of five members, three of whom, being members of the Chamber of Insolvency Administrators, shall be delegated by the General Meeting of Members of the Chamber of Insolvency Administrators, while the Ministry of Justice and the Ministry of Finance shall each delegate one member who must have at least two years of work experience in the fields of insolvency, law and/or finance.

3. The term of office of members of the Court of Honour of Insolvency Administrators shall be three years. A person may be a member of the Court of Honour of Insolvency Administrators for not more than two consecutive terms of office.

4. For the breaches specified in Article 148(1) of this Law, the Court of Honour of Insolvency Administrators shall have the right to propose to the Presidium of the Chamber of Insolvency Administrators to impose the sanctions specified in Article 148(2) of this Law having regard to provisions of Article 137(1), (2) and (3) of this Law.

Article 148. Sanctions and procedure for imposing sanctions by the Chamber of Insolvency Administrators

1. The Presidium of the Chamber of Insolvency Administrators may impose sanctions upon an insolvency administrator for the following reasons:

1) the insolvency administrator fails to comply with the Code of Ethics for Insolvency Administrators;

2) the insolvency administrator fails to improve professional qualification;

3) the insolvency administrator being a legal person fails to comply with the requirement to establish a procedure for organising and controlling work and ensuring compliance therewith.

2. In the cases specified in paragraph 1 of this Article, the Presidium of the Chamber of Insolvency Administrators may impose upon an insolvency administrator the following sanctions:

1) give a warning;

2) instruct to address the identified deficiencies within a fixed time limit;

3) instruct to additionally improve professional qualification (to set the number of hours and a time limit within which professional qualification must be additionally improved);

4) expel from members or associate members of the Chamber of Insolvency Administrators.

3. A decision to impose a sanction shall be adopted by the Presidium of the Chamber of Insolvency Administrators, having regard to a proposal of the Court of Honour of the Insolvency Administrators.

4. In order to safeguard the interests of third parties, the effective sanction referred to in point 1 of paragraph 2 of this Article as imposed by the Presidium of the Chamber of Insolvency Administrators shall be published for a period of one year on the website of the Chamber of Insolvency Administrators.

Article 149. Loss of membership of the Chamber of Insolvency Administrators

A member or an associate member of the Chamber of Insolvency Administrators shall lose membership of the Chamber of Insolvency Administrators by a decision of the Presidium of Insolvency Administrators in accordance with the procedure laid down by the General Meeting of Members of the Chamber of Insolvency Administrators in the following cases:

1) upon revocation of the right to administer insolvency processes by a decision of the supervisory authority;

2) upon imposition of the sanction of expulsion from members or associate members of the Chamber of Insolvency Administrators.

Article 150. Funds of the Chamber of Insolvency Administrators

The funds of the Chamber of Insolvency Administrators shall be as follows:

1) membership fees specified in the statutes of the Chamber of Insolvency Administrators;

2) associate membership fees specified in the statutes of the Chamber of Insolvency Administrators;

3) proceeds from the services provided;

4) non-repayable funds;

5) other lawfully obtained funds.

Article 151. Appeal against decisions of the bodies of the Chamber of Insolvency Administrators

Decisions of the bodies of the Chamber of Insolvency Administrators may be appealed against in accordance with the procedure laid down in the Law on Administrative Proceedings.

PART IV

FINAL PROVISIONS

Article 152. Entry into force of the Law

1. This Law shall enter into force on 1 January 2020, with the exception of Article 2(19), Article 32(2), Article 33(2)(2), Article 34(4), Article 36(2), Chapter V of Part III (with the exception of points 1, 3, 6, 9 and 11 of Article 142, Article 145(5)(5), Article 147(1) and (4), Articles 148 and 149) and Articles 155 to 163.

2. Article 32(2) and Article 33(2)(2) of this Law shall enter into force on 1 January 2023.

3. Article 34(4) and Article 36(2) of this Law shall enter into force on 1 January 2021.

Article 153. Repealing of laws

Upon the entry into force of this Law, the following legal acts shall be repealed:

1) Republic of Lithuania Law No IX-218 on Restructuring of Enterprises with all amendments and supplements thereto;

2) Republic of Lithuania Enterprise Bankruptcy Law No IX-216 with all amendments and supplements thereto;

3) Republic of Lithuania Enterprise Bankruptcy Law No VIII-270 with all amendments and supplements thereto;

4) Republic of Lithuania Enterprise Bankruptcy Law No I-2880 with all amendments and supplements thereto.

Article 154. Scope of the Law

Upon the entry into force of this Law, in other legal acts:

1) the used terms ‘bankruptcy administrator’ and ‘restructuring administrator’ shall correspond to the term ‘insolvency administrator’ as used in this Law;

2) the specified legal status of a legal person ‘bankrupt’ shall correspond to the legal status of a legal person ‘in liquidation because of bankruptcy’ as specified in this Law;

3) references to the Law on Restructuring of Enterprises or the Enterprise Bankruptcy Law shall be construed as references to the Law of the Republic of Lithuania on Insolvency of Legal Persons.

Article 155. Transitional provisions on insolvency processes

1. The provisions of this Law shall apply to the legal persons’ insolvency processes initiated before 31 December 2019 in respect of those rights and duties which arise or are exercised after the entry into force of this Law, also to those insolvency procedures which are commenced after the entry into force of this Law, with the exception of the provisions of this Law governing:

1) remuneration for an insolvency administrator;

2) ranking of creditors’ claims and procedure of their satisfaction;

3) requirements for the content and duration of implementation of a restructuring plan;

4) voting by creditors on a restructuring plan;

5) appointment of an insolvency administrator in a bankruptcy proceeding.

2. The exceptions referred to in paragraph 1 of this Article shall be subject to the laws referred to in Article 153 of this Law.

Article 156. Establishment of the Chamber of Insolvency Administrators

1. The Chamber of Insolvency Administrators shall be established in accordance with the procedure laid down by the Civil Code and the Law on Associations.

2. The founders of the Chamber of Insolvency Administrators shall be natural persons having the right to provide enterprise bankruptcy administration services under the Enterprise Bankruptcy Law and/or enterprise restructuring services under the Law on Restructuring of Enterprises.

3. The establishment of the Chamber of Insolvency Administrators shall be organised by the supervisory authority.

4. The supervisory authority shall, within two months from the entry into force of this Article, submit to the founders proposals regarding the memorandum of association of the Chamber of Insolvency Administrators, draft statutes of the Chamber of Insolvency Administrators and convene the statutory meeting.

5. The founders of the Chamber of Insolvency Administrators shall, at the statutory meeting, adopt the statutes of the Chamber of Insolvency Administrators, elect chair and members of the Presidium of the Chamber of Insolvency Administrators, as well as three members of the Court of Honour of Insolvency Administrators, approve the amounts of membership fees and associate membership fees of the Chamber of Insolvency Administrators.

6. Legal persons having the right to provide enterprise bankruptcy administration services under the Enterprise Bankruptcy Law and/or enterprise restructuring services under the Law on Restructuring of Enterprises shall, as of 1 January 2020, become associate members of the Chamber of Insolvency Administrators.

Article 157. Transitional provisions on the acquisition of the right to administer insolvency processes by natural persons

1. Natural persons having the right to provide enterprise bankruptcy administration services under the Enterprise Bankruptcy Law and enterprise restructuring services under the Law on Restructuring of Enterprises and being members of the Chamber of Insolvency Administrators shall, as of 1 January 2020, be considered persons having the right to administer insolvency processes.

2. Members of the Chamber of Insolvency Administrators having the right to provide only enterprise bankruptcy administration services under the Enterprise Bankruptcy Law or only enterprise restructuring services under the Law on Restructuring of Enterprises and seeking to acquire the right to administer insolvency processes must, upon the entry into force of this Law, pass qualifying examinations under the equalisation Programme for Qualifying Examinations of Insolvency Administrators.

3. The provisions of Articles 122 and 123 of this Law concerning the organisation of qualifying examinations shall apply mutatis mutandis to the organisation of qualifying examinations under the equalisation Programme for Qualifying Examinations of Insolvency Administrators.

4. The natural persons referred to in paragraph 2 of this Article who, within two years from 1 January 2020, fail to pass qualifying examinations under the equalisation Programme for Qualifying Examinations of Insolvency Administrators shall be expelled from members of the Chamber of Insolvency Administrators.

Article 158. Transitional provisions on the acquisition of the right to administer insolvency processes by legal persons

1. Legal persons having the right to provide enterprise bankruptcy administration services under the Enterprise Bankruptcy Law and enterprise restructuring services under the Law on Restructuring of Enterprises shall, as of 1 January 2020, be considered persons having the right to administer insolvency processes.

2. Legal persons having the right to provide only enterprise bankruptcy administration services under the Enterprise Bankruptcy Law or only enterprise restructuring services under the Law on Restructuring of Enterprises and seeking to acquire the right to administer insolvency processes must, within two years from 1 January 2020, comply with the requirements set out in this Law for legal persons seeking to acquire the right to administer insolvency processes.

3. Legal persons referred to in paragraph 2 of this Article who fail, within two years from 1 January 2020, to comply with the requirements set out in this Law for legal persons seeking to acquire the right to administer insolvency processes shall be expelled from associate members of the Chamber of Insolvency Administrators.

Article 159. Transitional provisions on an insolvency administrator

1. Persons having the right to provide only enterprise bankruptcy administration services under the Enterprise Bankruptcy Law or only enterprise restructuring services under the Law on Restructuring of Enterprises may not be appointed insolvency administrators as of 1 January 2022.

2. Persons having the right to provide only enterprise bankruptcy administration services under the Enterprise Bankruptcy Law may be appointed to administer only the bankruptcy process of a legal person, and persons having the right to provide only enterprise restructuring services under the Law on Restructuring of Enterprises may be appointed to administer only the restructuring process of a legal person for two years as of 1 January 2020.

3. Persons having the right to provide only enterprise bankruptcy administration services under the Enterprise Bankruptcy Law or only enterprise restructuring administration services under the Law on Restructuring of Enterprises shall continue the administration of legal persons’ insolvency processes whose administrators they have been appointed before 31 December 2019 until the coming into effect of a court ruling to terminate a legal person’s insolvency proceeding or a court decision on the termination of the legal person or closure of restructuring of the legal person, but not longer than until 31 December 2021.

4. The requirement of good repute for a natural person as set out in Article 120(1)(5) of this Law shall apply where the right of a legal person to administer insolvency processes is revoked after 1 January 2020.

5. The requirement for an insolvency administrator being a natural person to pursue one of the activities specified in this Law shall apply in respect of the administration of insolvency processes for which he has been appointed administrator as of 1 January 2020.

Article 160. Assistant insolvency administrators

1. As of 1 January 2020, an assistant administrator under the Enterprise Bankruptcy Law shall be considered an assistant insolvency administrator.

2. The work experience of an assistant insolvency administrator shall include the period during which he was assistant administrator under the Enterprise Bankruptcy Law over the last three years before 31 December 2019.

3. The work experience of an insolvency administrator required for employing an assistant insolvency administrator shall include the period during which he had the right to provide enterprise bankruptcy administration services under the Enterprise Bankruptcy Law and/or enterprise restructuring services under the Law on Restructuring of Enterprises.

4. An insolvency administrator who does not meet the requirements set out in this Law and required for employing an assistant insolvency administrator shall have the right to continue employment contracts concluded with an assistant administrator concluded before 31 December 2019, but for a period not exceeding two years from the conclusion of such an employment contract.

Article 161. Public legal persons having the right to provide enterprise bankruptcy administration services or enterprise restructuring administration services

1. Public legal persons having the right to provide enterprise bankruptcy administration services under the Enterprise Bankruptcy Law and/or enterprise restructuring services under the Law on Restructuring of Enterprises may not be appointed insolvency administrators as of 1 January 2020.

2. Public legal persons established in the Republic of Lithuania and having the right to provide enterprise bankruptcy administration services under the Enterprise Bankruptcy Law and/or enterprise restructuring administration services under the Law on Restructuring of Enterprises shall, as of 1 January 2020, continue the administration of legal persons’ insolvency processes whose administrators they have been appointed before 31 December 2019 until the coming into effect of a court ruling to terminate a legal person’s insolvency proceeding or a court decision on the termination of the legal person or closure of restructuring of the legal person.

Article 162. Commission for Certification of Bankruptcy and Restructuring Administrators

1. Natural persons seeking to acquire, in accordance with the procedure laid down by the Law on Restructuring of Enterprises, the right to provide enterprise restructuring administration services or to acquire, in accordance with the procedure laid down by the Enterprise Bankruptcy Law, the right to provide enterprise bankruptcy administration services or the right to work in the capacity of an assistant administrator shall submit an application for admission to a qualifying examination or a professional aptitude test by 1 October 2019 at the latest.

2. The Commission for Certification of Bankruptcy and Restructuring Administrators shall perform the certification of the natural persons referred to in paragraph 1 of this Article by 31 December 2019.

Article 163. Proposal to the Government, an institution authorised by it, the supervisory authority and the Chamber of Insolvency Administrators

The Government, an institution authorised by it, the supervisory authority and the Chamber of Insolvency Administrators shall, by 31 December 2019, adopt legal acts implementing this Law.

I promulgate this Law passed by the Seimas of the Republic of Lithuania.

President of the Republic of Lithuania Dalia Grybauskaitė Dalia Grybauskaitė