Lithuania - Draft Amendments to the Law on Restructuring of Enterprises
- Lithuania
- 04/30/2009
- Raidla Lejins & Norcous
Rough economical situation, increased unemployment rate, necessity to ensure the continuity of activities of the Lithuanian enterprises in the complicated economical environment, protection of employees’ interests and the fact that credit institutions tightened the conditions for business credits prompt for the need to amend the current Law on Restructuring of Enterprises (the “Law on Restructuring of Enterprises”). As of 17 March 2009, draft amendments to the Law on Restructuring of Enterprises (the “Draft Amendments to the Law on Restructuring of Enterprises”) were proposed. The purpose of the said amendments is to enhance the existing conditions for the enterprise restructuring proceedings.
Provisions of the actual Law on Restructuring of Enterprises are more favorable to major creditors of the enterprise at issue. As a matter of fact, claims of these major creditors are usually secured by the mortgage and (or) pledge of the assets of the enterprise under restructuring. Pursuant to the Law on Restructuring of Enterprises, major creditors have the decisive role with regard to the initiation of the enterprise restructuring proceedings in court, as well as, the adoption of the enterprise restructuring plan. Whereas smaller creditors or creditors whose claims are not secured by mortgage, pledge, guarantee, or suretyship, are not granted any substantive rights to protect their interests if the enterprise at issue (i.e. debtor) becomes subject to the restructuring proceedings.
Thus, the Draft Amendments to the Law on Restructuring of Enterprises aims at granting the courts more powers while deciding on the issues of initiation of the enterprise restructuring proceedings and the adoption of the enterprise restructuring plan. After taking all aspects of the case into account, the courts would be enabled to pass a ruling on the initiation of the restructuring proceedings and the adoption of restructuring plan even in the absence of formal acquiescence of the meeting of creditors.
