On 13 June 2019 the Parliament of Lithuania adopted the new Law on the Insolvency of Legal Entities (“Insolvency Law”). The law will come into force on 1 January 2020 and will replace two current laws, the Enterprise Bankruptcy Law and the Law on Restructuring of Enterprises.
The need for insolvency policy reform has been discussed in Lithuania for more than ten years. Reasons for the new law are plenty, foremost the cumbersome and inefficient proceedings under the current legislation, the practical non-existence of restructuring proceedings and a miniscule satisfaction rate for unsecured creditors in the prevailing (‘empty’) bankruptcy proceedings. Fortunately, the current legislator reacted to the country’s insolvency framework’s low rankings in the surveys of organizations such as the World Bank and passed the Insolvency Law with an aim to offer stakeholders a more attractive and efficient framework for corporate insolvencies with improved tools for businesses rescue. The scope of changes is broad, therefore this report can only touch on some of the core changes.