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Sunday 24.09.2017 | Name days: Agris, Agrita

Raimonds Rupeiks and Natalija Jansone applied for personal insolvency last year

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUThe number of launched insolvency cases in Latvia has been variable in the past several years – a rapid decline was experienced after 2010, which then brought an increase in the number of insolvency cases in years that followed. Last year, there was a slight decline again.

A total of 2,240 insolvency cases had been launched in Latvia last year, which is 6.35% less than one year before. This decline was likely caused at the expense of the increase in the number of legal protection processes, the number of which had risen to 205 in 2014 (an increase of 23.49%), as reported by Lursoft.

The majority of insolvency cases launched last year were in relation to companies working in wholesale trade, retail trade and construction.

Although in some cases insolvency processes resulted in liquidation of compnanies, there have been some cases in which insolvency processes had ended in a positive way. For example, the legal protection launched for Ķekava poultry factory in 2011 concluded in January 2014. Under Lithuanian Linas Agro Group, it has been given a second life. Its turnover reached EUR 20.715 million in the first six months of 2014. The first six months of 2014 concluded with EUR 1.684 million in profit.

Lursoft notes that insolvency process of Kurzemes finieris could conclude successfully as well, because it was reported by the media several weeks after the launch of this process that the factory has managed to recover production as a result of cooperation with Altum, Stiga RM, Kuldiga Council and the company’s insolvency administrator.

With the decline in the number of launched insolvency processes, there was also a decline in the number of insolvency processes launched in relation to private persons. Compiled data shows that a total of 1,288 insolvency processes had been launched in relation to private persons in 2014, which makes up 57.50% of the total number of processes launched that year. Compared to 2013, the number of insolvency processes launched in relation to private persons has declined by 18.07%.

Last year, insolvency applications had been submitted by publicly popular figures in Latvia, including Raimonds Rupeiks and Natalija Jansone.

The fact that insolvency processes are often launched by persons who had previously been successful in business is proven by data compiled by Lursoft. This data shows that one quarter of insolvency processes launched for all private persons in 2014 were officials in Latvian companies. Out of 1,288 persons who had applied for insolvency in 2014, 307 of them worked as officials in 517 companies and 293 persons owned shares in 421 companies.

One of the most controversial matters related to Insolvency Law in 2014 was the principle of ‘handing over keys’, which had been initially planned to be introduced in January 1st, 2015, but was then pushed to March 1st.

Whether or not amendments to the Insolvency Law manage to come into force and what impact they may have on the dynamics of insolvency cases will become clear after a couple of years. However, even now it is clear that the ranks of insolvent companies could be added with multiple companies working in food production, who will have not been able to withstand the impact caused by the Russian embargo, predicts Lursoft.


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