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Insolvency Law to doom businesses to bankruptcy

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RU, The new Insolvency Law that came into force in November last year is not favourable to businessmen, as their chances to resume solvency are limited. Consequently, also companies strong enough to survive are doomed to bankruptcy.

Insolvency proceedings administrator Aigars Lūsis told in the business portal Nozare.lv organized discussion the new law does not provide businessmen many opportunities but to go bankrupt, thus they are struggling all by themselves, which in turn does not promote neither claiming insolvency, nor business environment getting rid of insolvent companies.

Despite the law provisions an option to initiate legal protection process or out of court legal protection process, trying to restore solvency in two years time, Lusis believes the term is too short, as various objective obstacles intervening with the activities of the companies will not have become non-existent only in two years time.

Once a business faces solvency problems, there are two options either to sell the company or initiate legal protection process at an early stage of a bankruptcy proceeding. However, this is of little practicality, because the tem – two years- is too short. Five years would be optimal for businessmen to restore their solvency and not to drop out of the economic movement, Lusis explains.

Optimus divi A, a company that has just started a bankruptcy procedure, representative Reinis Bērziņš agrees that the new law takes the side of creditors and does not help businesses survive.

Conceptually, I agree to every word the law states, however, the it empowers the already leading economic force even more, which basically leaves businessmen with nothing, Berzins says, adding that the new regulation depends fully on the creditor – you will live if he wants you to live, otherwise you go bankrupt.

Lusis adds it is impossible to create a law in the interests of both debtors and creditors. At least regarding legal matters, the law makers have opted for the interest of creditors. I am not saying it is bad. It is maybe even good, as assets return to the economic movement faster, he says, stressing that the law does not, though, add to the business environment clearing up from insolvent companies, because, since it came into force, legal persons no longer claim insolvency.

Insolvency administration deputy director on legal matters Helmuts Jauja argues, saying that the new law also requires a new way of thinking and it is yet too early to judge its effects, because there are still ongoing discussions to grasp what it provisions.

 


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  1. eminem says:

    Businessmen barely have any tools to protect themselves..

    Thumb up 0 Thumb down 0

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