As explained in previous editions, a new Insolvency Law has come into force in Lithuania since 1 January 2020. This article looks at one of the law’s most essential changes, i.e. the new definition of insolvency.
Under the new law, a company is insolvent if (i) it is unable to fulfill its proprietary obligations in due time or (ii) its liabilities exceed the value of its assets. In contrast to this, the definition of insolvency under the previous Enterprise Bankruptcy Law required that a company had (i) defaulted on its obligations and (ii) the value of overdue liabilities of the company had exceeded half the value of the assets included in the company’s balance sheet.
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