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Wednesday 23.08.2017 | Name days: Valgudis, Ralfs, Vitālijs
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EC asks Latvia for explanations about Palink insolvency case

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European Commission officials asked the Latvian Minister of Justice Gaidis Berzins to give explanations about the case of Palink’s, IKI and Cento store network operator, insolvency.

On Friday the 3rd of February, Palink made an announcement in many newspapers, which notes that, there may be possible sanctions from EU against Latvia because of Palink’s insolvency case.

EC Vice president and judicial commissar Viviane Reding and internal market and service commissar Michel Barnier sent a letter to Berzins, asking him to explain the current insolvency process situation in Latvia and its possible contradictions of EU Laws.

According to Palink, the commissars gave the minister time until the 14th of February, to answer whether or not Latvian Law allows for enterprises to defend their rights if they are declared insolvent. Also the minister has to answer the question as whether or not it is normal for an enterprise to be declared insolvent, if in parallel to that the Courts deal with commercial disputes and auditor conclusions do not give any reason to doubt the enterprises solvency.

After receiving the answer, EC can decide what sanctions to use, «including discussing about whether or not EU can change its program of financial help for Latvia», Palink states.

«Latvian Law of Insolvency has already been violated, and it created notable difficulties to the enterprise», Palink Director Marcel Harasti notes. «Along with the Court’s decision to declare a completely solvent enterprise insolvent, its activities have been troubled. We hope that the reaction of the international community and EC will speed up the processes, which will allow Palink to continue its work, as well as this process would improve legislation, so that other investors in Latvia can feel safe from such incidents in the future.»

The investments of the enterprise in Latvia were endangered after Kurzeme District Court declared Palink insolvent in relation to the 30 000 EUR (21 000 LVL) lawsuit issued by another court. The main Palink investor, a German REWE Group enterprise, handed an official request to EC about Latvian Law of Insolvency and related Court processes.

As reported, the Court proclaimed Palink insolvency has paralyzed the management of the enterprise, which is why this year’s 3 million LVL of investment plans for Latvia were cancelled. The Court proclaimed Palink insolvency costs the enterprise no less than 300 000 LVL of losses per week.

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