Company Insolvency Procedure
Description of the service
Insolvency procedure is a set of measures of legal character with the purpose of:
- Restoration of the solvency of the subject of insolvency procedure and protection of the interests of a pool of creditors by applying a settlement of company recovery procedures;
- Protection of the interests of the pool of creditors by applying the bankruptcy procedure.
The insolvency procedure in Latvia is governed by the Insolvency Law. The purpose of the law is to promote the honouring of the obligations of a debtor in financial difficulties and, where possible, the renewal of solvency by applying the principles and lawful solutions specified in the Law. The law applies to the insolvency of natural persons, as well as legal entities.
How does the process occur?
The insolvency procedure of a natural person consists consecutively of the bankruptcy procedure and clearing of liabilities.
- All property of the debtor is sold within the bankruptcy procedure and the funds raised from the sales of property are diverted for the settling of creditors’ claims, except for the property that the debt recovery may not be directed against in accordance with the provisions of the Civil Procedure Law.
- Within the framework of the procedure of clearing of liabilities, a fixed share of the debtor’s income is diverted for the satisfaction of creditors’ claims and, after the expiry of the period of the clearing of liabilities, the liabilities that have not been settled within this period shall be cleared.
Thus, we receive the desired result – all liabilities are cleared. The regulatory enactments provide that not all liabilities, for instance criminal punishments and administrative fines, may be cleared by initiating the insolvency procedure.
What has to be considered?
To initiate the procedure, the following requirements must be met:
- The company has been a taxpayer in the Republic of Latvia for the period of the last six months, and has not been declared insolvent during the period of the last ten years;
- The company is incapable of settling their debt liabilities that have reached maturity and the total sum of debt liabilities exceeds EUR 4,268;
If you intend to initiate an insolvency procedure for another company (your debtor), the same sum of the debt remains in effect (EUR 4,268). Only state duties can differ in both cases.
We recommend applying the for a consultation, where, upon review of your particular situation, we will be able to find the best solution.
How much does it cost?
- State duty – EUR 70.
- Administrator deposit – EUR 860.
- Drafting of documents – EUR 500 + VAT (the cost of the initial consultation amounting to EUR 100 is also included).