What is an insolvency process?
An insolvency process is a set of legal measures to:
- Restore the solvency of the insolvency entity and protect the interests of the creditor pool through reconciliation or reorganization;
- Protect the interests of the creditors by applying bankruptcy proceedings.
What are the Signs of Insolvency?
- By enforcing enforcement measures, it has not been possible to enforce the court’s decision to recover the debt from the debtor.
- The debtor has not settled one or more debts, of which the principal amount, separately or in aggregate, exceeds EUR 4268, and has a due date.
- The debtor has not paid the employee full wages, damages due to an accident at work or an occupational disease, or has not made compulsory social insurance contributions.
- The debtor is unable to settle debts that have matured and his debts exceed assets.
What types of insolvency are there?
- Insolvency of debtor (debtor).
- Insolvency for yourself (natural person).
- Insolvency for your company (legal entity).
Each process is different, you have to choose what you need, you can get to know the Lawyer ABC homepage in the section “Services”, as well as by calling or writing and asking yourself some obscure questions.
When is it possible to start insolvency proceedings?
The insolvency procedure in Latvia is governed by the Insolvency Law. Its purpose is to promote the fulfillment of the obligations of a debtor in financial difficulties and, if possible, to restore solvency by applying the principles and legal solutions laid down by law. The law applies to the insolvency of both legal and natural persons.
In which cases is it not possible to start insolvency proceedings?
The insolvency proceedings of a natural person are not applicable or terminated by a person:
- Which, within the last 3 years prior to the announcement of such a process, has knowingly provided false information to its creditors;
- Which has used the assigned credit for non-contractual purposes and has been subject to a decision of a competent authority in a criminal case;
- Who has already been proclaimed in such a process over the last 10 years and has been extinguished;
- Which, within the last 5 years before the proclamation of this process or during the proceedings, has entered into force a decision of a competent institution in a criminal case and found that the debtor has evaded tax.
Limitations on filing an insolvency application for a legal person:
- An application for insolvency proceedings by a legal person may not be submitted by a secured creditor;
- If the claim is not fully secured, the secured creditor may submit the application for insolvency proceedings of the legal person only in the amount of the unsecured part of the claim;
- An unsecured creditor is not entitled to file an application for legal person insolvency if a legal protection process is initiated or is being implemented for the debtor.
What is the meaning and benefits of insolvency?
The insolvency process can take months (especially in difficult cases, even years), and its meaning is that the claims of his creditors are extinguished from the debtor’s assets. This process begins with a court decision on the declaration of insolvency and ends with a court decision on the completion of the proceedings. Insolvency can be initiated by the company itself, its creditor, or an employee of the company (if he has not been paid a salary). Despite the complexity of this process, sometimes its creditor has the last exit and has its own advantages:
- The amount of debt no longer grows, the amounts without default interest are taken into account;
- Your account will not be blocked; You will keep at least two thirds of your salary;
- Comparatively small payments will only be made for a controlled period of time. If the debt is average, it is usually between 6 and 12 months.
Lawyer ABC – What to Consider and Why Choose Us?
It must be carefully assessed whether the opening of insolvency proceedings is the most beneficial, the simplest or the most necessary option for you. Our experience shows that it is often cheaper to agree with creditors on the distribution of amounts in smaller payments or to find a way to combine payments. It should be remembered that initiating the process costs ~ 1800 EUR, as well as you will have to pay 1/3 of your salary to an administrator who can last up to 2 years. Lawyer ABC will help you understand what is the best option for you and will provide full service quality services:
- Advise before insolvency process;
- We recognize risks and benefits;
- Preparing documents;
- Representative in court proceedings;
- We agree to pay the debt;
- We make a creditor’s claim if the insolvency is declared.
Lawyer ABC has a vast experience, with over 400 insolvency proceedings filed last year alone. By handing it over to our hands, you will be sure that your insolvency process will be completely brought to an end – from the beginning to the end. Lawyer ABC will take care of everything you no longer need to do.