LITHUANIA - ENTERPRISE BANKRUPTCY LAW

17 June 1997 No. VIII-270

Vilnius

Source: http://www3.lrs.lt/pls/inter2/dokpaieska.showdoc_e?p_id=48540

CHAPTER ONE

GENERAL PROVISIONS

Article 1. Purpose of the Law

1. The Law shall regulate enterprise bankruptcy procedures.

2. The Law shall apply to all enterprises, public institutions, banks and credit unions (hereinafter - enterprises), registered in Lithuania in the manner set forth by the laws of the Republic of Lithuania. The peculiarities of bankruptcy procedures implemented in banks, credit unions, insurance companies, agricultural enterprises, brokerage firms, investment companies and other enterprises and institutions may be specified by other laws regulating the activities of said enterprises and institutions.

Article 2. Definitions

In this Law:

1. Bankruptcy means the state of an insolvent enterprise.

2. Bankruptcy procedures means judicial or extrajudicial enterprise bankruptcy process.

3. Bankruptcy case means a civil case heard in court over the disputes arising from legal relations connected with bankruptcy.

4. Enterprise under bankruptcy means an enterprise against which bankruptcy proceedings have been instituted or in respect of which extrajudicial bankruptcy procedure is applied.

5. Bankrupt enterprise means enterprise adjudged bankrupt by court order (in case of extrajudicial bankruptcy process - by the resolution of the meeting of creditors) and put into liquidation as bankrupt.

6. Management of assets of an enterprise under bankruptcy means the activities of the administrator relating to the organisation of the enterprise assets preservation, recovery of assets from the borrowers, assets realisation and distribution to the creditors, transfer of the remaining assets.

7. Creditors' claims secured by pledge means the right acquired by the creditor (holder of the collateral) under a contract of pledge or an executed mortgage note to demand, in the event of the enterprise's default to fulfil the liability secured by the pledge, that the property on which he holds a mortgage charge or a lien be realised in the manner prescribed under this Law and his claims be satisfied out of the proceeds.

8. Insolvency of the enterprise means the state of the enterprise when its liabilities amount to or exceed its assets.

9. Owner means the person who holds legal title to the enterprise which is not a legal entity or to a part thereof.

10. Composition with creditors means agreement between the creditors and the enterprise to continue the activities of the enterprise where the latter assumes certain obligations whereas the creditors agree to defer the satisfaction of financial claims or to reduce the amount thereof or to waive their claims.

11. Fraudulent bankruptcy means deliberate bringing of the enterprise to the state of being bankrupt if the creditor, shareholder or any other person suffers damage by reason thereof.

12. Rehabilitation of the enterprise means a series of measures (the changing of the type of economic activity, technical and economic measures, sale of assets, changes in production or work organisation, etc.) implemented in order to reinstate the enterprise to its former condition of solvency.

Article 3. Enterprise Creditors

Enterprise creditors (hereinafter - creditors) are legal or natural persons who have the right to demand from the enterprise fulfilment of liabilities and obligations, including, among others:

1) the state institutions charged with the responsibility for the collection of compulsory taxes, compulsory state social insurance contributions, and compulsory health insurance contributions in case of default in payment;

2) enterprise employees (their heirs) in case of arrears in the payment of wages and failure to pay the damages relating to labour relation;

3) the Ministry of Finance in case of outstanding foreign loans and loans obtained on behalf of the State or with the Government guarantee.

CHAPTER TWO

PETITION IN BANKRUPTCY

Article 4. Grounds for Filing a Petition in Bankruptcy

Persons specified in Article 5 of the Law may file with the court a bankruptcy petition if:

1) the enterprise is insolvent;

2) the enterprise is not in the position to pay wages and satisfy other work-related financial claims of the workers;

3) the enterprise is unable to pay for the goods received, work performed (services rendered), to repay credits and fulfil other financial obligations under contracts;

4) the enterprise is unable to effect compulsory payments prescribed under the laws of the Republic of Lithuania and/or pay the awarded sums;

5) the enterprise has concealed, wasted, transferred as a gift or destroyed its assets or performed other actions which give grounds to presume that the enterprise's liabilities will not be satisfied out of the remaining assets;

6) the enterprise notifies the creditors or the court (court bailiff) in writing of its inability or lack of intent to meet its liabilities, except in the case provided for under Article 16 (1) of this Law;

7) the execution of the court orders or/and the payment of the sums recoverable without suit would result in insolvency of the enterprise;

8) the court bailiff is not in the position to execute the orders of the court and other institutions.

Article 5. Petition Filed with Court for the Initiation of Bankruptcy Proceedings against the Enterprise

The right to file a bankruptcy petition in respect of the enterprise shall be vested in the following persons:

1) the creditor (creditors);

2) the owner (owners);

3) the head of the enterprise administration;

4) the founder of the state-owned or municipal enterprise;

5) the enterprise liquidator;

6) shareholders;

7) the State Labour Inspectorate at the Ministry of Social Security and Labour;

8) the Ministry of Agriculture and Forestry, the county governor, public organisations of agricultural producers (where the enterprise’s business is purchasing and processing of agricultural produce).

2. Petitions shall be filed in writing with the county court of the locality in which the central administration of the enterprise is situated in the manner set forth by the Code of Civil Procedure

3. Documents testifying to the validity of the petition shall be appended thereto.

Article 6. Petition in Bankruptcy Filed by the Creditor (Creditors)

1. In the event that the enterprise fails to fulfil the obligations specified in Article 4 (2), (3) or (4), the creditor (creditors) may file a petition in bankruptcy not earlier that after one month measured from the date prescribed by laws, other legal acts, also agreements between creditors and the enterprise, by which date the obligation had to be fulfilled, or upon the expiry of the same time period after creditor (creditors) presented his demand for the satisfaction of the enterprise's liabilities, provided that the time period has not been fixed as per agreements.

2. In case the conditions specified in paragraph 1 hereof are present, the creditor (creditors) must notify the enterprise manager in writing of his intention to file a petition in bankruptcy. The notification shall identify the unfulfilled obligations of the enterprise and shall contain a warning that in case of failure to fulfil the above obligations the creditor (creditors) will file a petition in bankruptcy. The creditors shall set an at least 15-day period for the fulfilment of obligations. A copy of the notification must be appended to the petition filed with the court.

3. The creditor (creditor) must present to the enterprise copies of the petition and of the appended annexes.

4. A petition filed with the court may be withdrawn prior to the institution of bankruptcy proceedings.

Article 7. Notification of the Enterprise’s Insolvency by the Head of Administration of the Enterprise which is a Legal Person and the Filing of a Petition in Bankruptcy

1.When the enterprise which is a legal person becomes insolvent, the head of its administration must within 10 days after the submission to the tax administrator of the financial account for the last accounting period present to the institution authorised by the Government information on the condition of the enterprise to be announced in the "Valstybės žinios" (Official Gazette), must notify the founder of the state-owned or municipal enterprise thereof in writing, must inform the board (if the board is formed in the enterprise). The board (in case of absence of the board - head of the administration) must no later than within 40 days convene the enterprise managerial body which has the right to adopt a decision on the reorganisation or liquidation of the enterprise.

2. Upon being authorised by the enterprise managerial body which has the right to adopt a decision on the enterprise reorganisation or liquidation (or having been given the permission of the state-owned or municipal enterprise founder), the head of the administration must within 5 days but not later than within two months after the submission to the tax administrator of the financial account for the last accounting period file a petition in bankruptcy. In case the managerial body of the enterprise turned insolvent, which has the right to adopt a decision on the liquidation or reorganisation of the enterprise, refuses such an authorisation, the head of the administration must within 5 days from the day of the meeting file a petition in bankruptcy.

3. A bankruptcy petition filed with the court shall state the reasons for the enterprise's voluntary petition in bankruptcy. The petition shall be accompanied by a list of the enterprise’s creditors and borrowers, stating the amounts of their respective debt and the maturity date, also the financial account for the preceding year and the last accounting period prior to the filing of the petition, data on the pledged assets and other obligations. The court may also be presented other documents which might be of consequence for the bankruptcy case.

Article 8. Petition in Bankruptcy Filed by the Enterprise Liquidator

If the insolvency of the enterprise is established at the time of its liquidation in the manner set forth under other laws regulating enterprise activities, the enterprise liquidator must no later than within one month after the establishment of the enterprise insolvency file a petition in bankruptcy.

Article 9. Petition in Bankruptcy Filed by the Shareholders

The shareholders shall have the right to file a petition in bankruptcy provided that:

1) the managerial body which has the right to adopt a decision on the reorganisation or liquidation of the enterprise (or the founder of the state-owned or municipal enterprise) has not adopted a resolution to authorise the head of the administration to file a petition in bankruptcy ;

2) the managerial body which has the right to decide on the reorganisation or liquidation of the enterprise is not convened within the time limits specified under Article 7 (1), or the issue of the enterprise bankruptcy is not on the agenda of the meeting;

3) the head of the administration fails to file a petition in bankruptcy within the time limits specified under Article 7 (2).

Article10. Petition in Bankruptcy Filed by the Enterprise Owner (Owners), State-owned or Municipal Enterprise Founder

The owner (owners) of theenterprise that is not a legal entity, the founder of the state-owned or municipal enterprise may file a petition in bankruptcy if the enterprise is insolvent and neither the creditors nor the head of administration apply to court in the manner prescribed by this Law.

Article 11. Petition in Bankruptcy Filed by the State Labour Inspectorate at the Ministry of Social Security and Labour

1. The State Labour Inspectorate at the Ministry of Social Security and Labour must file a petition in bankruptcy in respect of the enterprise in cases where the enterprise employee (employees) notify the Inspectorate of the enterprise's failure to pay wages for two months and/or the enterprise's insolvency is established upon its inspection.

2. The State Labour Inspectorate at the Ministry of Social Security and Labour shall file a petition in bankruptcy in respect of the enterprise within a month from the receipt of the employees' notification or the day of drawing up of the inspection report.

Article 12. Petition in Bankruptcy Filed by the Ministry of Agriculture and Forestry, the County Governor, Public Organisations of Agricultural Producers

1. The Ministry of Agriculture and Forestry or the county governor must file a petition in bankruptcy in respect of the enterprise processing agricultural produce in cases where the creditors or the head of the administration fail to apply to the court in the manner prescribed by this Law and where:

1) the enterprise is insolvent;

2) the agricultural produce supplier notifies of the enterprise's failure to pay for the delivered agricultural produce within the time limits prescribed by Article 6 (1) of this Law.

2.The Ministry of Agriculture and Forestry or the county administrator shall file a petition in bankruptcy in respect of the enterprise processing agricultural produce within two months from the day the enterprise is declared insolvent or within a month from the receipt of the agricultural produce supplier's notification.

3. Public organisations of agricultural producers may file a petition in bankruptcy in respect of the enterprise processing agricultural produce in cases where the agricultural produce supplier notifies of the enterprise's failure to pay for the delivered agricultural produce within the time limits prescribed by Article 6 (1) of this Law and neither the creditors nor the head of the administration apply to the court in the manner prescribed by this Law.

4. If a bankruptcy case is not or may not be commenced against an enterprise processing agricultural produce, the persons specified in paragraphs (2) and (3) hereof shall have the right to apply to the court under the Code of Civil Procedure for the recovery of outstanding amounts for the delivered agricultural produce.

CHAPTER THREE

HEARING OF ENTERPRISE BANKRUPTCY

Article 13. Preparation for Hearing of Bankruptcy

1. Upon the receipt of a petition in bankruptcy the court may:

1) instruct the owner (owners), board members, head of the administration, chief financier (accountant), the liquidator to submit to the court all documents required for the hearing of bankruptcy;

2) summon before the court, request that the owner (owners), former board members, the head of the administration, chief financier (accountant) and other responsible staff members submit written explanations relating to the petition in bankruptcy irrespective of the fact on what grounds the employment contracts concluded with them were terminated provided that they had been dismissed from work within 12 months prior to the day of filing of the bankruptcy petition. Appearance before the court of the above persons shall be obligatory and the guarantees established under the Code of Civil Procedure in respect of witnesses shall apply to them;

3) order an audit to be made at the enterprise;

4) order an expert examination to be carried out for the purpose of assessing the market value of the immovable and/or other property of the enterprise;

5) request that the head of the enterprise administration submit to the court data on the economic and financial position of the enterprise;

6) request data on the financial position of the enterprise and relevant explanations from the credit institution servicing the enterprise and the territorial state tax inspectorate;

7) apply measures to secure the claim in the manner prescribed by the Code of Civil Procedure;

8) clear up other circumstances which might be of consequence for the hearing of bankruptcy.

2. The court shall no later than within two months from the receipt of the bankruptcy petition pass a decision to institute bankruptcy proceedings or refuse initiation thereof.

3. Bankruptcy proceedings shall be instituted if the court has grounds to state that the enterprise is insolvent.

Article 14. Initiation of Bankruptcy Proceedings

1. Bankruptcy proceedings shall be instituted and heard in the manner prescribed by the Code of Civil Procedure, barring the exceptions provided for by this Law.

2. Bankruptcy proceedings shall be instituted by the county court of the locale where the central administration of the enterprise is situated.

3. The court shall refuse initiating bankruptcy proceedings if:

1) the enterprise's assets suffice for meeting its liabilities;

2) satisfaction of the creditors' claims is secured by pledge and may not be settled according to the general property disputes investigation procedure, except for the cases specified in Article 4 (7) of this Law;

3) the enterprise satisfies the creditors' financial claims prior to the court's decision to institute bankruptcy proceedings.

4. Upon passing a decision to institute bankruptcy proceedings, the court must:

1) appoint the administrator of the enterprise;

2) give a written notification of the instituted proceedings to: the enterprise, the enterprise creditors, enterprise debtors, all persons who have rented, borrowed, or are keeping in custody the assets of the enterprise, or using or holding the assets on any other grounds, also the Ministry of Finance if the enterprise is the receiver of a foreign loan with the State guarantee, the tax administrators, compulsory social insurance and compulsory health insurance administrators, credit institutions and insurance companies servicing the enterprise, the founder of the state-owned or municipal enterprise under bankruptcy or the institution representing the enterprise, also the Securities Commission if bankruptcy proceedings are instituted against a public company;

3) notify other courts in which a legal action has been taken against the enterprise for the satisfaction of proprietary claims, including claims arising from labour relations, of the institution of bankruptcy proceedings and take over the hearing of the above cases. Notify the bodies of investigation or courts if in criminal cases civil claims are entered by the creditors of the enterprise under bankruptcy and take over for scrutiny all documents relating to the above claims. Notify bodies of investigation or courts if the assets of the enterprise under bankruptcy are seized in criminal cases and take over all the documents relating to the seizure of assets;

4) fix the time period within which the creditors shall be entitled to file their financial claims.

5. Upon passing a decision to institute bankruptcy proceedings, the court may charge the enterprise administrator to perform the actions specified under paragraph 4(2) hereof;

6. After the court institutes bankruptcy proceedings:

1) the managerial bodies of the enterprise shall transfer to the administrator the enterprise assets according to the financial account drawn up based on the data as of the day of initiation of the enterprise bankruptcy proceedings, and all the documents;

2) the managerial bodies of the enterprise shall lose their powers whereas the enterprise administrator shall, upon a 7-day written notice, remove from office the enterprise board members and the head of the administration. Said persons shall not be entitled to severance pay or compensation, except for monetary compensation for the unused holidays. The owner of the enterprise that is not a legal entity, the founder of the state-owned or municipal enterprise, the enterprise managerial body which has the right to take a decision on the liquidation or reorganisation of the enterprise may adopt resolutions in the cases and according to the procedure specified in Articles 32, 35 and 38 of the Law;

3) discharge of any liabilities not met prior to the initiation of bankruptcy proceedings, including payment of interest, penalties and taxes, also recovery of debts from the enterprise through court or without suit shall be prohibited. Calculation of default interest for all liabilities of the enterprise, including for default in payments related to labour relations, shall be suspended;

4) the enterprise shall have the right to engage in business activity and receive income from business activity, also incur business-related expenses. Where taxable objects provided under tax laws are created by the enterprise's business activity the enterprise shall pay taxes under the laws of the Republic of Lithuania;

5) the court shall impose restrictions on the enterprise's business activity and disposal of its assets, which may be sold, leased, or pledged, also used as a warranty or guarantee for the discharge of other entities' liabilities or otherwise transferred (conveyed) only by leave of the court;[q1]

6) the enterprise shall acquire the status of the enterprise under bankruptcy.

7. Upon the termination of the enterprise bankruptcy proceedings all taxes and payable amounts, including default interest, shall be calculated as from the day of coming into force of the court order to terminate the proceedings.

8. A separate appeal may be filed against the decision of the court to institute bankruptcy proceedings. The filing of the appeal shall not stay the bankruptcy proceedings.

Article 15. The Enterprise Administrator

1. The enterprise administrator (hereinafter - the administrator) shall be a natural or legal person appointed by the court who shall have the right to provide bankruptcy administration services, shall be the enterprise manager, the executor of the court decisions and orders and/or resolutions of the creditors' meeting from the date of the court decision to institute bankruptcy proceedings until the coming into force of the court order following the bankruptcy hearing or until the coming into force of the decision to terminate bankruptcy proceedings.

2. The administrator shall be nominated to the court by the person who files a petition in bankruptcy. Persons listed in Article 5 of this Law shall also have the right to nominate their candidates to the administrator's post. The court shall also have the right to appoint to the office of administrator another persons meeting the requirements of this Article.

3. The creditors' meeting shall authorise the chairman of the meeting to conclude with the administrator a contract of agency on behalf of the enterprise.

4. The administrator shall:

1) submit the documents and data on the enterprise under bankruptcy to the registrar of the Register of Enterprises;

2) transmit to the institution authorised by the Government the data on the enterprise under bankruptcy and data for publication in the "Valstybės žinios" (Official Gazette);

3) manage, use and dispose< in the manner prescribed under this Law, of the assets of the enterprise under bankruptcy and also of the enterprise funds kept with the banks;

4) ensure the protection of the assets of the enterprise under bankruptcy;

5) open a separate bank account for the accumulation of funds during the implementation of the procedure in bankruptcy and for effecting settlements with creditors in the manner set forth under this Law;

6) direct the business activity of the enterprise and implement the enterprise rehabilitation project;

7) examine the transactions of the enterprise under bankruptcy concluded within an at least 12 months period before the initiation of bankruptcy proceedings and file with the court in which the bankruptcy hearing is conducted claims for the invalidation of said transactions and also for declaring invalid the fraudulent discharge of financial liabilities;

8) represent or authorise another persons to represent the enterprise under bankruptcy in court, at the creditors' meetings, and in transactions where the enterprise continues its business activity;

9) based on the documents available to the enterprise and claims filed by the creditors, compile the list of all known enterprise creditors and their claims and submit the list to the court for approval, also contest unreasoned claims of creditor at the creditors' meeting and in court;

10) appoint and dismiss employees under the Law on Employment Contract;

11) register lay-offs in the manner established under Article 24¹ of the Law on Employment Contract;

12) present to the court for approval the number of employees by their positions in the enterprise with whom employment contract may be terminated on the grounds specified under subparagraph 1 of Article 29(1) of the Law on Employment Contract;

13) decide on the subsequent fulfilment or repudiation, on the grounds specified under law or contracts, of the enterprise's prior contracts the term of implementation whereof has not yet expired;

14) protect the rights and interests of all creditors, also the rights and interests of the enterprise under bankruptcy and shall carry out and organise all the necessary work relating to bankruptcy proceedings;

15) provide information to the institution authorised by the Government, the Department of Statistics at the Government of the Republic of Lithuania (according to the forms of reporting prescribe by the Department), the court, the creditors, the owner (owners), the shareholders;

16) take part in the enterprise liquidation;

17) organise and supervise the accounting of income received in the process of management or use of the enterprise's assets or disposal thereof, also cost accounting;

18) satisfy the claims of creditors approved in the manner set forth by this Law;

19) convene the creditors' meetings;

20) notify, in the manner prescribed under laws and/or founding documents, the owner of the enterprise, the founder of the state-owned or municipal enterprise, the enterprise managerial body which has the right to decide on the enterprise reorganisation or liquidation where their decisions are required in the cases specified by Articles 32, 35 and 38 of this Law;

21) implement other decisions of the court and/or the creditors' meeting, the chairman of the meeting and the creditors' committee.

5. A creditor (a person connected with the creditor by labour relations or a member of the latter's managerial bodies) of the enterprise against which bankruptcy proceedings have been instituted, a person who under the laws of the Republic of Lithuania or other legal statutes has no right to be appointed head of the administration, the enterprise owner, a member of the Supervisory Board or the Board, or a person from the enterprise administration which has lost its powers due to the institution of bankruptcy proceedings, a shareholder holding by the right of ownership in excess of 10% of shares of the enterprise under bankruptcy may not be appointed administrator. The above shall also apply to persons employed at the enterprise under bankruptcy and dismissed from office within 12 months immediately preceding the initiation of bankruptcy proceedings.

6. The administrator must indemnify, in the manner prescribed by laws of the Republic of Lithuania, for the losses incurred through his fault.

7. A natural person may at the same time be appointed administrator of one enterprise only.

8. The decision concerning temporary substitution of the administrator during his absence by reason of holidays or temporary disability shall be adopted by the court on the motion of the creditors' meeting.

CHAPTER FOUR

EXTRAJUDICIAL BANKRUPTCY PROCEDURES

Article 16. Extrajudicial Implementation of Bankruptcy Procedures

1.Bankruptcy procedures may be implemented out of court provided that no proceedings are instituted in the court under which proprietary claims, including claims connected with labour relations, would have been filed against the enterprise.

2. Upon receiving the authorisation of the managerial body which has the right to adopt a resolution to reorganise or liquidate the enterprise, the permission of the state-owned or municipal enterprise founder, the enterprise owner (owners) or the head of the administration shall notify each creditor in writing of the insolvency of the enterprise sending alongside with the notification the enterprise's proposal to implement extrajudicial bankruptcy procedures, and indicating the date and place of the creditors' meeting. The creditors' meeting shall be convened no later than within 20 days after the day of sending of the notification regarding the proposal to apply bankruptcy procedures in respect of the enterprise.

3. The decision on the implementation of extrajudicial bankruptcy procedure may be adopted by the creditors’ meeting provided that the decision is approved by open voting by the creditors whose claims in terms of value account for at least 4/5 of the amount of the enterprise's current financial liabilities, including those which are not yet due, as of the day of adoption of the decision.

Article 17. Extrajudicial Bankruptcy Procedure

1. Extrajudicial bankruptcy procedures shall be carried out in the manner prescribed under this Law. The issues within the jurisdiction of the court shall be considered and decided by the creditors' meeting.

2. The duration of extrajudicial bankruptcy procedure as well as the dates of settlement with the creditors shall be approved by the creditors' meeting.

3. The administrator shall be approved by the creditors' meeting in pursuance of the provisions of Article 15 of this Law.

4. The procedure for implementing the resolutions of the creditors' meeting and for effecting settlements with creditors' shall be established in accordance with the procedure and in compliance with the terms and conditions of bankruptcy hearing.

5. Extrajudicial bankruptcy procedures shall bring about the consequences set forth in subparagraphs 1, 2, 3, 4, 5, 6 of Article 14 (6) and in Article 20 of this Law.

6. In the event of failure by the parties to agree on the application of bankruptcy procedure or inability of the creditors' meeting to adopt, in the manner prescribed by this Law, a resolution on the terms and conditions as well as the procedure for satisfying the creditors' claims, the administrator shall, on the creditor's (creditors') written request, file a petition in bankruptcy against the enterprise.

CHAPTER FIVE.

PROTECTION OF THE INTERESTS OF THE DEBTOR, CREDITORS, AND THIRD PARTIES IN THE EVENT OF INITIATION OF BANKRUPTCY PROCEEDINGS

Article 18. Disposal of the Assets of the Enterprise under Bankruptcy

1. From the day of institution of bankruptcy proceedings the enterprise owner (owners), the administration shall have no right to conclude any contracts related to the current economic activity, to dispose of the enterprise's assets, and no creditor shall have the right to take over the assets and funds of the enterprise under bankruptcy.

2. The right to use, manage and dispose of the assets and funds of the enterprise under bankruptcy shall be granted only to the administrator who shall act in accordance with the rights conferred on him by the court and under this Law.

3. Persons who have leased, borrowed, are keeping in custody or using or managing on any other grounds the assets of the enterprise under bankruptcy shall be prohibited from concluding any contracts in respect of the assets from the day of initiation of bankruptcy proceedings.

4. All contracts concluded in violation of provisions of paragraphs 1, 2, and 3 hereof shall be void as of the date of their conclusion.

5. Claims for the invalidation of contracts, also other claims of the administrator against the enterprise's borrowers shall be investigated in the court where the enterprise bankruptcy case is heard.

Article 19. Satisfaction of Claims Filed with Courts prior to the Institution of Bankruptcy Proceedings

1. All cases in which proprietary claims, including financial claims arising from labour relations, are filed against the enterprise shall be referred to the court which administers the enterprise bankruptcy proceedings.

2. The administrator or the person authorised by him shall represent the enterprise under bankruptcy in the proceedings for the collection of assets from other persons for the benefit of the enterprise. The enterprise owner or the head of the administration must notify the court and the administrator of the proceedings instituted prior to the commencement of the bankruptcy case within 15 days from the initiation of bankruptcy proceedings. The enterprise owner or the head of the administration must within the above period notify the court and the administrator of the criminal proceedings where associated action for damages is brought by the creditors and/or attachment has been levied on the assets of the enterprise.

Article 20. Payment Periods

All debts of the enterprise under bankruptcy shall be considered overdue as from the day of institution of bankruptcy proceedings. The provision shall become invalid upon the coming into force of the court order to terminate bankruptcy proceedings. When a decision is taken to apply the rehabilitation procedure in respect of the enterprise, the debt maturity dates shall be set in the rehabilitation project approved by the court.

Article 21. Fulfilment of Obligations of and to the Enterprise under Bankruptcy

1. The administrators may fulfil, in the manner and in cases specified under this Law, the contracts of the enterprise under bankruptcy concluded prior to the institution of bankruptcy proceedings or demand invalidation thereof in the manner prescribed by law.

2. The administrator must notify the interested persons of the discharge of (or failure to discharge) obligations of the enterprise under bankruptcy assumed prior to the institution of bankruptcy proceedings.

3. The administrator must apply to the court for the invalidation of the contract of pledge of assets provided that said contracts were concluded after the expiry of more than one month following the conclusion of the loan agreement.

4. Having ascertained that the enterprise was insolvent at the moment of pledge of enterprise assets, the court shall declare the contract of pledge invalid.

Article 22. Transfer of the Attached Property

1. The court bailiff shall deliver to the court where the bankruptcy hearing is held the documents relating to the attachment of the enterprise's property attached prior to the institution of bankruptcy proceedings in order to enforce the fulfilment of the court orders and decisions adopted other institutions, but not yet sold and shall notify the property trustee thereof. The claims of the creditor against the property shall be satisfied in the manner prescribed by this Law.

2. In case the property of the enterprise against which bankruptcy proceedings have been instituted is seized in criminal proceedings, all documents relating to the seizure of the property shall be transmitted to the court where bankruptcy hearing is held and the property trustee shall be notified thereof.

3. The issues relating to the attachment or seizure of property as specified in paragraphs 1 and 2 hereof shall be within the jurisdiction of the court in which bankruptcy proceedings have been instituted. All rights and duties related to the protection of the property shall be vested in the trustee appointed prior to the lifting of property attachment/seizure.

Article 23. Termination of the Employment Contract

Upon the institution of bankruptcy proceedings against the enterprise or upon commencement of extrajudicial bankruptcy procedures the administrator shall have the right to terminate employment contracts with the enterprise employees in pursuance of subparagraph 1, Article 29 (1) of the Law on Employment Contract. Termination of employment contract on the grounds specified under subparagraph 1, Article 29 (1) of the Law on Employment Contract shall be allowed only with the number of employees not exceeding the number of jobs approved by the court.

Article 24. Fraudulent Bankruptcy

If the court in which the enterprise bankruptcy hearing is conducted establishes a fraudulent bankruptcy, the administrator must review all contracts concluded by the enterprise under bankruptcy within an at least 3-year period and bring an action before the court, in which enterprise bankruptcy hearing is conducted, for the invalidation of the contracts which are contrary to the interests of the enterprise and/or which could have brought about the enterprise's insolvency.

Article 25. Rights of Creditors in a Bankruptcy Case

1. Upon the institution of bankruptcy proceedings the creditors shall have the right to:

1) put forward their financial claims within a time period fixed by the court, which may be not less than 15 days and not longer than two months from the date of institution of bankruptcy proceedings, and refer the claims to the administrator, also specify the guarantees for the fulfilment of liabilities provided by the enterprise;

2) attend bankruptcy hearings in the court, also the creditors' meetings and assert their claims;

3) receive from the administrator information on the course of bankruptcy proceedings.

2. The court shall have the right to accept, pending the end of bankruptcy proceedings, the creditors' claims filed after the date fixed under paragraph 1, subparagraph 1 hereof, provided the court recognises that failure to act within the set time period was due to valid reasons.

3. In the event that the creditor's civil claims are referred under the Code of Criminal Procedure to the court in which the bankruptcy case is heard, the claims shall be considered to have been filed within the time period prescribed under subparagraph 1, paragraph 1 hereof for referring claims. Said claims may be referred to the court in which the bankruptcy case is heard only pending the end of bankruptcy proceedings.

4. The institutions specified by subparagraphs 1 and 3 of Article 3 of this Law shall be represented in bankruptcy proceedings and creditors' meetings by the persons authorised by them.

Article 26. Calling the Creditors' Meeting

1. The first meeting of creditors shall be called not later than within 15 days after the expiry of the time period set for the filing of creditors' claims.

2. Upon the institution of bankruptcy proceedings the right to call the first meeting of creditors shall be vested in the court or, on its instruction, the administrator.

3. Subsequent meetings of creditors shall be called by the court, the administrator or the chairman of the creditors' meeting. The right to request calling a meeting of creditors shall be vested in the group of creditors the amount of whose claims accounts for at least 10 percent of the total amount of the creditors' claims approved by court in the manner prescribed by this Law.

4. Participants in the creditors' meetings must be given an at least 10-day written notice of the forthcoming meeting.

5. The administrator shall present to the creditors' meeting a certificate issued by the court specifying each creditor's financial claims.

6. The creditors' meetings may be attended by the owner of the enterprise under bankruptcy or his representative, the administrator, the representative of the founder of a state-owned or municipal enterprise, also the representative of shareholders whose holdings in a public or private company account for at least 10 percent of the company shares. Only creditors shall have the right to vote.

Article 27. The Rights of the Creditors' Meeting

The creditors' meeting shall have the right to:

1) elect the chairman of the creditors' meeting and recommend his candidature for the approval of the court;

2) decide on the formation of the creditors' committee, elect the committee, change its composition, delegate to the committee all or part of the rights vested in the creditors' meeting;

3) investigate the creditors' complaints relating to the actions of the administrator;

4) demand that the administrator report on his activities and approve said reports. In the event that the administrator's report is not approved by the creditors' meeting, it may be approved by court;

5) approve the estimate of administrative expenses, also revise the estimate;

6) submit proposals to the court to impose restrictions on the enterprise's economic activities as well as to restrict its freedom to dispose of the enterprise's property;

7) fix the salaries of the administrator and the chairman of the liquidation commission;

8) adopt a resolution on concluding the composition with creditors;

9) propose to the court to approve the enterprise rehabilitation plan and amendments to the plan;

10) adopt a resolution on the enterprise rehabilitation plan;

11) apply to the court for the replacement of the administrator, chairman of the creditors' meeting;

12) elect a person to preside over the creditors' meeting if the chairman of the creditors' meeting is not attending the meeting;

13) propose to the court that the liquidation procedure be applied in respect of the enterprise;

14) propose to the court the composition of the liquidation commission;

15) where extrajudicial bankruptcy procedures are applied in respect of the enterprise, adopt resolutions which in case of bankruptcy proceedings are within the court jurisdiction;

16) settle other issues assigned under this Law to the competence of the creditors' meeting.

Article 28. Procedure for Adopting Resolutions of the Creditors' Meeting

1. A resolution of the creditors' meeting shall be deemed adopted if voted in favour of by open voting by the creditors whose amount of claims approved by the court accounts for over one half of the amount of all the creditors’ approved claims, save the exceptions prescribed by this Law. A creditor shall have the right to notify the creditors' meeting in writing whether he is "for" or "against" each resolution. The opinion expressed in the notifications shall be included in the voting results of the creditors' meeting (repeat meeting including) and must be announced at the creditors' meeting.

2. If the number of votes at the meeting proves insufficient for adopting a resolution, the administrator shall within 15 days call a repeat meeting of creditors which shall have the right to adopt resolutions only according to the agenda of the preceding meeting.

3. A resolution shall be deemed adopted at the repeat meeting of creditors if voted in favour of by open ballot by creditors whose amount of claims approved by court accounts for over one half of the amount of the approved claims of creditors attending the meeting.

4. The resolutions of the creditors' meeting shall be binding on all creditors. Where bankruptcy proceedings are instituted in a court the chairman of the creditors' meeting must notify the court in writing of the adopted resolutions not later than within 5 days after the adoption of the resolution.

Article 29. The Creditors' Committee

1. The creditors' committee may be elected by the first or by the subsequent meeting of creditors. The chairman of the creditors' meeting shall also be the chairman of the creditors' committee. Among its members the creditors' committee must have at least one person authorised to represent financial claims arising from relations under labour law provided that he represents at least 1/3 of the amount of said claims. There must be at least 5 members on the creditors' committee.

2. The creditors' committee shall supervise the course of bankruptcy procedure, the administrator's activity, shall protect the creditors' interests in the period between the creditors' meetings.

3. The rights of the creditors' committee shall be specified by the creditors' meeting.

4. The resolutions of the creditors' committee shall be valid if the committee meeting is attended by over a half of the committee members. The creditors' committee shall adopt resolutions by simple majority vote and in case of a tie the chairman shall have the casting vote. The creditors' committee must inform all creditors, in the manner laid down by the creditors' meeting, of the adopted resolutions and, where bankruptcy is opened in court, notify the court thereof in writing not later than within 5 days after the adoption of the resolution.

Article 30. Approving the Creditors' Claims

1. The creditors' financial claims shall be approved by the court. The list of creditors and their claims may be changed by a court order.

2. The creditors shall have the right to the general or limited waiver of their claims. The creditor shall notify the court in writing of his waiver of claims. The court shall accept the waiver of claims by issuing an order, shall reduce the amount of creditors' claims accordingly and, in case of a creditor's general waiver, strike him off the list of creditors.

Article 31. Termination of Bankruptcy Proceedings

Bankruptcy proceedings shall be terminated when:

1) all creditors waive their claims and the court passes an order to accept the waivers;

2) the enterprise under bankruptcy regains its solvency and the administrator files documents with the court proving the restoration of the enterprise's solvency;

3) composition with creditors is concluded and approved by the court;

4) rehabilitation of the enterprise according to the rehabilitation plan approved by the court is completed.

SECTION SIX

REHABILITATION OF AN ENTERPRISE UNDER BANKRUPTCY

Article 32. Procedure for Making Enterprise Rehabilitation Order

1. Enterprise rehabilitation may be undertaken only provided that the plan for its rehabilitation is approved by the court. The enterprise may be rehabilitated by one or several natural or legal persons, also enterprises without the legal person status upon presenting enterprise rehabilitation guarantees.

2. The plan of enterprise rehabilitation may be proposed by the rehabilitation entity (entities), the creditors, the administrator, the owner (owners), the enterprise managerial body which has the right to decide on whether to rehabilitate or liquidate the enterprise, the founders of the state-owned or municipal enterprise, shareholders whose holdings account for at least 10% of shares.

3. Upon being presented with the plan of rehabilitation the administrator shall notify, in the manner prescribed by law, the enterprise owner, the managerial body which has the right to adopt a decision on the enterprise reorganisation or liquidation, the founder of state-owned or municipal enterprise, and shall call the meeting of creditors.

4. After the creditors' meeting adopts a decision to approve of the plan of the enterprise rehabilitation and the rehabilitation entity (entities) presents enterprise rehabilitation guarantees, the administrator shall file an application with the court requesting the approval of the plan of the enterprise rehabilitation.

5. The creditors' meeting shall approve of the plan of rehabilitation of the enterprise under bankruptcy if the meeting acknowledges that implementation of the presented plan will reinstate the enterprise to former condition of solvency. For the rehabilitation plan to be approved it is necessary that it be voted in favour of by the creditors whose claims amount to at least 2/3 of the total amount of approved claims.

6. During the rehabilitation of the enterprise under bankruptcy the creditors' claims shall be satisfied in the manner prescribed under Article 41 of this Law.

7. Upon approving the plan of the enterprise rehabilitation the court shall take a rehabilitation order.

8. Upon the coming into effect of the court order relating to the enterprise rehabilitation the enterprise administrator shall within 5 days communicate to the institution authorised by the Government data on the enterprise undergoing rehabilitation and also data to be published in the "Valstybės žinios," shall communicate a written notice thereof to credit institutions servicing the enterprise, the insurance institutions having links with the enterprise as well as tax, compulsory social insurance and compulsory health insurance administrators, the founder of state-owned or municipal enterprise or the institutions representing him, the Ministry of Finance if the enterprise received a foreign loan with the State's guarantee, also the Securities Commission if the enterprise undergoing rehabilitation is a public company, and shall present a copy of the rehabilitation order and a copy of the plan of rehabilitation to the registrar of the Register of Enterprises who registered the enterprise.

9. Changes in the plan of rehabilitation of the enterprise shall be approved, on the proposal of the creditors' meeting, by a court order. The administrator shall within 5 days from the coming into force of the court order submit to the Government data relative to the changes in the plan of the enterprise rehabilitation for publication in the "Valstybės žinios" and shall also communicate the data to persons specified in paragraph 8 hereof.

Article 33. The Plan of Rehabilitation of the Enterprise

The plan of rehabilitation of the enterprise must contain the following information:

1) the object of rehabilitation, its purpose and duration;

2) measures for restoring solvency of the enterprise (changing the type of business activity, technical and economic measures, sale of property, changes in the production and/or work organisation, other measures);

3) the number of the employees who may be made redundant by reason of changes in the production and/or work organisation;

4) the share of property intended for use in business activity and the share of property to be sold;

5) facilities and assets intended for sale;

6) the creditors' allowances granted to the enterprise under bankruptcy (deferred payment plan, debt reduction or release from debts, tax deferral, payment deferral or reduction);

7) sources and dates of settlement of the creditors' financial claims;

8) the entity rehabilitating the enterprise, the entity’s duties and rights;

9) the rights of the creditors' meeting, the committee of creditors, the chairman of the creditors' meeting;

10) the procedure of the administrator's reporting to the creditors' meeting;

11) the procedure of property distribution among the owners following the rehabilitation;

12) property and non-property rights of the rehabilitation entity (entities) following the enterprise rehabilitation, the procedure of acquisition of the above rights.

Article 34. Termination and Completion of Enterprise Rehabilitation

1. The court, acting on the proposal of the creditors' meeting, may terminate the enterprise rehabilitation in case of full or partial failure to implement the enterprise rehabilitation plan.

2. Upon the completion of the enterprise rehabilitation according to the plan approved by the court the administrator shall:

1) draw up and submit to the court a report on the enterprise rehabilitation, where he must give information on the sold and available assets and the owners thereof, property distribution among the owners, changes in the type of business activity, technical and economic measures, changes in the production and work organisation, other measures;

2) submit to the court for approval the amount of the enterprise's property, specify the property owners' rights, also the number of shares held by each shareholder. Other documents shall be accompanied by the list of creditors' whose claims have not been satisfied and their written confirmation of the implementation of the rehabilitation plan;

3) file with the registrar of the Register of Enterprises amendments to the documents subject to registration and thereafter transfer the property in the manner specified by the rehabilitation plan.

3. After the administrator presents an extract from Register of Enterprises and the deed of transfer of property, the court shall pass an order to terminate bankruptcy proceedings against the enterprise.

CHAPTER SEVEN

COMPOSITION WITH CREDITORS

Article 35. Concluding Composition with Creditors

1. The proposal to conclude a composition with creditors may be submitted by the creditors, the administrator, the enterprise owner, state-owned or municipal enterprise founder, the managerial body which has the right to decide to reorganise or liquidate the enterprise.

2. The composition with creditors shall be signed by all the creditors or their authorised representative and the administrator upon written consent of the enterprise owner (owners), the managerial body which has the right to take a decision on the enterprise liquidation or reorganisation, the state-owned or municipal enterprise founder.

3. Composition with creditors may be concluded at any stage of bankruptcy proceedings pending the adjudication of bankruptcy.

Article 36. The Contents of the Composition with Creditors and the Procedure of its Approval

1. The composition with creditors shall specify:

1) allowances made in respect of the enterprise, and also financial claims of the creditors;

2) liabilities of the enterprise;

3) ways and time limits of satisfaction of claims;

4) liability of the enterprise for failure to implement composition with creditors.

2. The composition with creditors shall be approved by the court.

3. The court shall refuse to approve the composition with creditors if actions provided for therein contradict the laws of the Republic of Lithuania or infringe the rights and interests protected under law.

4. The composition shall become effective upon the coming into force of the court ruling relating to the approval thereof.

5. Upon the approval of the composition the bankruptcy proceedings against the enterprise shall be terminated.

6. Where extrajudicial bankruptcy procedure is applied the composition shall be notarised.

7. The composition shall be grounds for changing the enterprise registration data upon the implementation of the composition.

8.After the coming into force of the court ruling approving the composition the administrator shall within 5 days communicate a written notice thereof to the credit institutions servicing the enterprise, tax, compulsory social insurance and compulsory health insurance administrators, founders of state-owned or municipal enterprise, the registrar of the Register of Enterprises who registered the enterprise, the Ministry of Finance provided that the enterprise has been extended a foreign loan with the State guarantee, also the Securities Commission if composition is concluded with a public company, and shall also transmit data regarding the enterprise and data for publication in the “Valstybės žinios” (Official gazette) to the institution authorised by the Government.

CHAPTER EIGHT

LIQUIDATION OF A BANKRUPT ENTERPRISE

Article 37. Adjudging the Enterprise Bankrupt

1. Upon hearing the bankruptcy case and having issued a bankruptcy order the court shall pass a decision to put the enterprise into liquidation as a result of bankruptcy and to fully or in part satisfy every creditor’s claims with the proceeds from the sale of property of the enterprise in liquidation. The creditors’ claims shall be satisfied in accordance with the procedure set forth in Articles 40 and 41 of this Law.

2. If no order is made regarding the application of other bankruptcy procedures and no extension is granted by the court within 6 months from the institution of bankruptcy proceedings, the court shall adjudge the enterprise bankrupt and pass a decision to put the enterprise into liquidation.

3. In its decision the court shall specify the confirmed amount of each creditor’s financial claims, the rights and duties of the liquidation commission and its chairman, the successor to the remaining property and rights of claim, other instructions and orders necessary for the implementation of the liquidation procedure, and shall authorise the liquidation commission to realise the assets of the bankrupt enterprise.

Article 38. Liquidation of a Bankrupt Enterprise

1. A bankrupt enterprise may be removed from the register not earlier than after 3 months following the coming into force of the adjudication order in respect of the enterprise.

2. Upon the coming into force of the court decision to liquidate the bankrupt enterprise, the court shall, on the proposal of the creditors’ meeting, approve the liquidation commission and appoint its chairman. The enterprise administrator may be appointed chairman of the liquidation commission. Requirements set for the enterprise administrator under this Law shall also be valid for the chairman of the liquidation commission. Appointed to the liquidation commission shall be the enterprise administrator, the creditors, including the representatives of the institutions specified in subparagraphs 1 and 3 of Article 3 of this Law, the owner or the owners’ representative, the representatives of the state-owned or municipal enterprise founder, the authorised representatives of the enterprise managerial body which has the right to decide on the reorganisation or liquidation of the enterprise.

3. The court shall approve the rules of procedure and establish the procedure of replacement of the liquidation commission and its chairman as well as the procedure for acting for the chairman of the liquidation commission.

4. The creditors’ meeting shall authorise the chairman of the creditors’ meeting to conclude with the chairman of the liquidation commission agency agreement on behalf of the enterprise.

5. The chairman of the liquidation commission must not later than within 5 days of the coming into force of the adjudication order in respect of the enterprise submit data regarding the bankrupt enterprise to the institution authorised by the Government as well as data for publishing in the “Valstybės žinios” (Official Gazette), also communicate data to the registrar of the Register of Enterprises, notify the owner (owners) of the bankrupt enterprise, state-owned or municipal enterprise founder, credit institutions which service the enterprise, also tax, compulsory social insurance and compulsory health insurance administrators, the Ministry of Finance if the enterprise has been extended a foreign loan with the State guarantee, the labour exchange as well as the Securities Commission if a public company is in liquidation, of the adopted decision.

6. Upon coming into force of the adjudication order the enterprise shall acquire the status of an enterprise in liquidation by reason of bankruptcy.

7. The liquidation commission shall:

1) make an inventory of the enterprise’s assets and take it over from the administrator, determine the order of priority of assets sale and instruct the chairman of the liquidation commission to arrange the sale of the assets in the manner laid down by this Law and to sell it;

2) following the procedure set forth in Article 41 of this Law establish the hierarchy of the creditors’ claims and instruct the chairman of the liquidation commission to satisfy the claims.

8. The chairman of the liquidation commission shall:

1) dispose of the enterprise’s assets and safeguard the protection thereof;

2) arrange the sale of the assets and sell them in the manner laid down by this Law;

3) dismiss the employees in accordance with the procedure established under the Law on Employment Contract;

4) return to the owner (owners) of the bankrupt enterprise, the founder of the state-owned or municipal enterprise or the enterprise managerial body vested with the right to decide on the reorganisation or liquidation of the enterprise the assets remaining after the settlement with the creditors;

5) file with the court the liquidation balance and the document certifying the return of the remaining assets;

6) communicate the data on the liquidated enterprise to the institution authorised by the Government.

9. Upon receipt of the documents specified in subparagraph 5 of paragraph 8 hereof, the court shall make on order to remove from the Register of Enterprises the enterprise liquidated by reason of bankruptcy.

10. The chairman of the liquidation commission shall present to the registrar of the Register of Enterprises, in the manner prescribed under the laws of the Republic of Lithuania and this Law, the court order to remove the enterprise from the Register and other documents. The registrar shall strike the enterprise off the Register.

11. The decisions and actions of the liquidation commission and its chairman may be appealed against, according to the appeals procedure in execution proceedings under the Code of Civil Procedure, to the court where the enterprise bankruptcy hearing was conducted.

CHAPTER NINE

THE PROCEDURE OF SALE OF ENTERPRISES’ ASSETS AND SATISFACTION OF CREDITORS’ CLAIMS IN THE COURSE OF BANKRUPTCY PROCEEDINGS

Article 39. Sale of Assets

1. The assets of the enterprise under bankruptcy and of the bankrupt enterprise, and the rights of claim according to the borrowers’ liabilities to the enterprise under bankruptcy or the bankrupt enterprise shall be assessed and sold at public auction in the manner laid down by the Government.

2. The use of the assets not sold at the auction shall be decided by the creditors whose claims were not satisfied by reason of shortage of funds

3. The shares and other securities of other public companies held by the enterprise under bankruptcy or the bankrupt enterprise shall be sold in accordance with the procedure laid down by legal statutes regulating trading in securities.

4. The pledged property shall be sold according to the procedure prescribed under this Law upon prior notification of the holder of the collateral.

Article 40. Compensation Payable to the Holder of the Collateral

The holder of the collateral shall be compensated from the proceeds obtained from the sale of the enterprise's pledged assets. The balance of the funds shall be allotted for the satisfaction of the creditors' claims in the manner prescribed by Article 41.

Article 41. Sequence of and Procedure for Fulfilling Creditors' Claims

1. Priority in fulfilling creditors' claims shall be given to employees' claims connected with labour relations, to claims for indemnity in case of mutilation or other bodily injuries, claims arising in the case of a professional disease or a fatal occupational accident, also payment claims of natural persons for the agricultural produce purchased for processing.

2. Second in sequence for the satisfaction of claims shall be tax claims and claims for other payments into the budget, also for compulsory state social insurance contributions and compulsory health insurance contributions, as well as claims relating to foreign loans guaranteed by the State or the Government;

3. Third in sequence for the satisfaction of claims shall be all other creditors' claims.

4. The claims of creditors (claimants) of each successive sequence shall be satisfied after full satisfaction of the claims of the creditors (claimants) of the preceding sequence. If assets are insufficient to satisfy all of the claims of one sequence in full, said claims shall be satisfied in proportion to the amount due to each creditor (claimant).

5. The Government shall set up a fund for the satisfaction of claims arising from labour relations as specified in paragraph 1 hereof of employees of enterprises under bankruptcy and bankrupt enterprises. A certain portion of proceeds derived from the privatisation of State-owned property may be used for the creation of the fund.

Article 42. Administrative Expenses

1. The estimate of administrative expenses shall be approved and revised by the creditors' meeting.

2. On the decision of the administrator or the liquidation commission and the creditor’s meeting, up to 8% of the funds recovered from the enterprise’s borrowers and of the proceeds from the sale of assets of the enterprise under bankruptcy may be allocated for covering the administrative expenses. The procedure of payment of the share of funds earmarked for administrative expenses shall be established by the meeting of creditors.

CHAPTER TEN

FINAL PROVISIONS

Article 43. Entry into Force of the Law

1. The Law shall enter into force as of 1 October 1997.

2. The Law of the Republic of Lithuania on Enterprise Bankruptcy (Valstybės žinios, 1992, No. 29-843; 1993, No. 52-999; 1994, No. 43-774, No. 101-2020; 1995, No. 106-2352, No. 107-2396; 1996, 43-1045, No. 116-2700) shall be effective and regulate bankruptcy procedures only in respect of the enterprise against which bankruptcy proceedings have been instituted or extrajudicial bankruptcy process has been commenced prior to the entry into force of this Law.

3. The procedure laid down by this Law shall also apply to the bankruptcy cases of those enterprises in respect of which extrajudicial bankruptcy procedure has been initiated prior to the entry into force of this Law, however, after the effective date, on the decision of the creditors’ meeting, the cases shall be referred to the court for processing.

4. The Government or the institution authorised by it shall establish:

1) the procedure for submitting and announcing data relative to the enterprise insolvency, economic-financial position of the enterprise under bankruptcy or bankrupt enterprise, and bankruptcy proceedings;

2) the procedure of representation in bankruptcy proceedings by persons authorised by public authorities;

3) the procedure of auctioning off the assets of the enterprise under bankruptcy or bankrupt enterprise drafted in compliance with appropriate provisions of this Law and the Code of Civil Procedure;

4) the procedure for granting natural and legal persons the right to provide bankruptcy administration services.

I promulgate this Law passed by the Seimas of the Republic of Lithuania.

PRESIDENT OF THE REPUBLIC ALGIRDAS BRAZAUSKAS

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