Lietuvos Respublikos įmonių restruktūrizavimo įstatymas
The Law on Restructuring of Enterprises of Lithuania
Until 2001 restructuring in Lithuania was regulated only by the bankruptcy law under which there are two possible scenarios: liquidation or bankruptcy. Despite a change in law in 2001, the perception that restructuring is synonymous with bankruptcy is still prevalent, and may pose challenges to the addition of concepts such as 'anticipation of change'. The main changes made to restructuring law in 2001 was the inclusion of a third category beyond simply bankruptcy or liquidation. This is insolvency, which seems to be close to the European concept of ‘restructuring for competitiveness’.
The law was further amended on 1 October 2010. This created more favourable conditions for business suffering financial difficulty to take advantage of restructuring to improve their financial state. Companies could avoid bankruptcy and were able to continue their activities, pay back to creditors, save jobs and simplify the termination of the business. According to the Law on Restructuring of Enterprises of Lithuania, restructuring of enterprises refers to the entirety of procedures defined by the law, the purpose of which is to preserve and develop the activities of the enterprise, pay debts and avoid bankruptcy by receiving support from the enterprise's creditors through application of economic, technical, organisational and other measures. The Law on Restructuring of Enterprises provides the guidelines of the enterprise restructuring plan. According to the law, the restructuring plan shall specify a short description of the current situation of the enterprise; reasons behind the financial difficulties of the enterprise; a list of creditors; a preliminary business plan of the enterprise, etc.
The restructuring law also provides definitions for the conditions of enterprise restructuring, the process of initiating restructuring proceedings and the role of the court in the restructuring proceedings (appointment of an external administrator). The law also regulates the procedures to be put in place to satisfy creditors' claims and provides some guidelines on how the business should be managed during such a process. The law primarily regulates economic obligations of creditors and the company.
It is important to emphasise that restructuring under the restructuring law is understood as formal procedures with involvement of the court, formal approval of the restructuring plan and participation of a restructuring external administrator.
According to the Authority of Audit, Accounting, Property Valuation and Insolvency Management, from 1 January 2001 to 31 December 2016, there were 424 restructuring procedures initiated in Lithuania of which 101 were in progress, 277 were discontinued and 40 were successfully completed. In 2016, a total of 2,684 bankruptcy procedures and 31 restructuring procedures were initiated in Lithuania; 19 restructuring procedures were successful.
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Involved actors other than national government