5.The administrator shall, not later than within five working days from the entry into force of the court decision regarding the termination of the enterprise or from the date of adoption by the meeting of creditors of the decision on the termination of the enterprise, submit an application to the Register of Legal Entities for the removal from the register of the enterprise liquidated by reason of bankruptcy. The administrator must attach to the application the court decision regarding the termination of the enterprise or the decision of the meeting of creditors on the termination of the enterprise, the originals of the registration certificate of the enterprise and its documents of incorporation and the certificate that the documents have been transferred to the archive for further safekeeping and shall indicate the addresses of the banks and other credit institutions which provide services to the enterprise.
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6.The Register of Legal Entities shall remove the enterprise from the register within five working days from the receipt of the court decision regarding the termination of the enterprise and shall notify thereof the administrators of taxes and state social insurance and compulsory health insurance as well as banks and other credit institutions which have provided services to the enterprise and the institution authorised by the Government specified in paragraph 10 of Article 11 of this Law.
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CHAPTER EIGHT PROCEDURE for the SALE OF ASSETS of ENTERPRISEs AND SATISFACTION OF CREDITORS’ CLAIMS IN THE COURSE OF bankruptcy process
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Article 33Procedure for the Sale and Transfer of Assets
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1.The assets of an enterprise in bankruptcy or a bankrupt enterprise, where the enterprise is an entity of unlimited civil liability and does not have any assets or its assets are insufficient for covering the administrative and legal expenses and for satisfaction of the creditors’ claims, the assets held by its owner (owners), including the assets held by joint ownership, in respect of which recovery may be executed in accordance with the procedure set forth by legal acts, shall be sold:
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1)animals, products and other easily perishable products or assets which are likely to quickly lose their commercial value shall be sold at a price set (in case of pledged assets – upon coordination with the pledgee) by the administrator, taking into account the actual transaction prices of analogous objects (goods) on the market;
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2)immovable property and pledged assets, except for the cases referred to in subparagraph 1 of paragraph 1 and paragraphs 4 and 5 of this Article, shall be sold at auction in accordance with the procedure established by the Government;
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3)the procedure for the sale of other assets as well as immovable property unsold at two auctions shall be established by the meeting of creditors. Upon a decision of the meeting of creditors, these assets may be sold in the manner specified in subparagraph 2 of this paragraph.
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2.Unsold assets may be transferred to the creditors. The statement of transfer of the assets shall be approved by the administrator.
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3.The sale and purchase agreement or the statement of transfer of assets shall be held equivalent to the contract attested by a notary and shall be considered as documents confirming the right of ownership.
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4.Where the sale of the pledged assets has been announced prior to the date of initiation of bankruptcy proceedings, the bailiff shall complete the sale of the assets in accordance with the procedure laid down in the Code of Civil Procedure and, upon the sale of the assets at auction, transfer the proceeds to the account of the enterprise in bankruptcy.
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5.The securities (shares, bonds and other securities) held by the enterprise in bankruptcy or the bankrupt enterprise must be sold in accordance with the procedure laid down by legal acts regulating trading in securities. The shares of private limited liability companies shall be sold in accordance with the procedure established by the meeting of creditors. The shareholders of the private limited liability company whose shares are offered for sale shall have the right of pre-emption. The shares shall be sold to the highest bidder.
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6.Pledged assets shall be sold at auction according to the procedure established by the Government, upon notifying the pledgee and the mortgage creditor. The pledgee or the mortgage creditor may, not later than within 20 days from the auction, apply to the meeting of creditors with a proposal to take over the unsold pledged assets for the initial sale price fixed at the auction, where the auction has failed due to the fact that the buyer has not paid the total amount within the set time limit, for the buying price of the assets at the auction which was announced failed. Where the price of the assets taken over is higher than the claims of the pledgee and/or the mortgage creditor confirmed by the court, the resulting difference must be paid to the account of the enterprise in bankruptcy not later than within 10 days from the transfer of these assets. In the event of failure to sell the pledged assets at two auctions and to transfer the assets to the pledgee or the mortgage creditor, the procedure for the appraisal and sale thereof shall be established by the meeting of creditors. Where the buyer pays the full price for the acquired pledged assets, the amount due to the pledgee or the mortgage creditor, upon deduction of the amount approved by the meeting of creditors for covering the administrative expenses, not later than within 10 days from the date of receiving the price, must be credited to the account specified by the pledgee or the mortgage creditor.
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In all cases where the administrator transfers the unsold pledged assets to the pledgee or the mortgage creditor, the said persons shall, not later than within 10 days from the transfer of the assets, cover the expenses of asset administration incurred by the administrator, specified in the estimate of administrative expenses approved by the meeting of creditors. Upon receiving the sale and purchase agreement of the pledged assets or the statement of transfer thereof, the mortgage judge shall, within three working days from the receipt of these documents, adopt a ruling to terminate the mortgage or pledge.
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Version of paragraph 6 as of 1 July 2012:
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6.Pledged assets shall be sold at auction according to the procedure established by the Government, upon notifying the pledgee and the mortgage creditor. The pledgee or the mortgage creditor may, not later than within 20 days from the auction, apply to the meeting of creditors with a proposal to take over the unsold pledged assets for the initial sale price fixed at the auction, where the auction has failed due to the fact that the buyer has not paid the total amount within the set time limit, for the buying price of the assets at the auction which was announced failed. Where the price of the assets taken over is higher than the claims of the pledgee and/or the mortgage creditor confirmed by the court, the resulting difference must be paid to the account of the enterprise in bankruptcy not later than within 10 days from the transfer of these assets. In the event of failure to sell the pledged assets at two auctions and to transfer the assets to the pledgee or the mortgage creditor, the procedure for the appraisal and sale thereof shall be established by the meeting of creditors. Where the buyer pays the full price for the acquired pledged assets, the amount due to the pledgee or the mortgage creditor, upon deduction of the amount approved by the meeting of creditors for covering the administrative expenses, not later than within 10 days from the date of receiving the price, must be credited to the account specified by the pledgee or the mortgage creditor.
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In all cases where the administrator transfers the unsold pledged assets to the pledgee or the mortgage creditor, the said persons shall, not later than within 10 days from the transfer of the assets, cover the expenses of asset administration incurred by the administrator, specified in the estimate of administrative expenses approved by the meeting of creditors. Mortgage (pledge) shall terminate after the sale of the pledged assets. The administrator shall, in accordance with the procedure established by law, forward information about the termination of mortgage (pledge) to the notary or the court (in case of judicial mortgage).
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7.If not all the assets of the bankrupt enterprise have been sold or transferred to the creditors and not all claims of the creditors have been satisfied within 24 months from the entry into force of the court ruling to declare the enterprise bankrupt, these assets must be written off as not having market value, upon the decision of the creditors whose claims have not been satisfied due to insufficiency of funds. The assets of the bankrupt enterprise which have been written off (except for immovable property) must, not later than within 30 days from the date of their writing off, be used or destroyed in the manner established by the meeting of creditors. The administrator must, under the statement of transfer, gratuitously transfer the immovable property which has been written off, not later than within 30 days from the date of its writing off, to the municipality in the territory whereof the immovable property is located. The municipality must take over such property within the specified time limit. At the request of the meeting of creditors, the court may extend the 24-month time limit referred to in this paragraph.
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8.Radioactive substances, equipment containing radioactive substances and generators of ionising radiation may be sold or transferred only in accordance with the procedure established by the Law on Radiation Protection and other legal acts regulating radiation protection of the population and the environment.
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Article 34Satisfaction of the Creditor’s Claims Secured by Pledge and/or Mortgage
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The creditor’s claims secured by pledge and/or mortgage shall be satisfied first of all from the proceeds obtained from the sale of the pledged assets of the enterprise or by transferring the pledged assets. Where the pledged assets are sold at a price higher than the amount of claims secured by the pledge and/or mortgage, the remaining balance of the funds shall be allocated for the satisfaction of claims of other creditors in accordance with the procedure set forth in Article 35 of this Law.
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Article 35Sequence of and Procedure for Satisfaction of the Creditors’ Claims
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1.The creditors’ claims shall be satisfied in two stages. During the first stage, the creditors’ claims shall be satisfied in the sequence established in this Article, not including the computed interest and default interest, while during the second stage, the remaining part of the creditors’ claims (interest and default interest) shall be satisfied in the same sequence.
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2.First in line for satisfaction shall be claims of the employees relating to employment relations; claims for the compensation for damage due to mutilation or other bodily injury, contraction of an occupational disease or death as a result of an accident at work; claims of natural and legal persons for payment for agricultural produce purchased for processing.
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3.Second in line for satisfaction shall be claims for payment of taxes and other payments into the budget as well as compulsory state social insurance contributions and compulsory health insurance contributions; claims relating to loans granted from the funds borrowed on behalf of the State and loans granted with the guarantee of the State or guarantee institutions the discharge of whose liabilities is guaranteed by the State, relating to assistance granted from the EU funds.
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4.Third in line for satisfaction shall be all the remaining creditors’ claims.
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5.The computed income tax payable on the remuneration of individuals shall not be attributed to the creditors’ claims standing first in line for satisfaction. This claim must stand second in line for satisfaction. Where claims of employees relating to employment relations referred to in paragraph 2 of this Article, claims for the compensation for damage due to mutilation or other bodily injury, contraction of an occupational disease or death as a result of an accident at work have been satisfied from the funds of the Guarantee Fund or where a decision is adopted to pay the compensation for damage for the enterprise from the state budget, while the claims of natural and legal persons for payment for agricultural produce purchased for processing have been satisfied from the funds allocated by the Ministry of Agriculture, the recourse claims of the Guarantee Fund, the territorial department of the State Social Insurance Fund Board and the Ministry of Agriculture arising by reason of that must stand second in line for satisfaction.
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6.During each stage, the creditors’ claims of each successive sequence shall be satisfied following full satisfaction of the creditors’ claims of the respective stage of the preceding sequence. If funds are insufficient to satisfy in full all the claims of one stage of one sequence, such claims shall be satisfied in proportion to the amount due to each creditor. Where the principle of proportionality, referred to in this paragraph, has not been complied with in the course of satisfying the creditors’ claims standing first in line for satisfaction from the funds of the Guarantee Fund or the Ministry of Agriculture in accordance with the procedure established by legal acts, the resulting discrepancies in proportionality must be adjusted when satisfying the remaining unsatisfied claims of these creditors from the funds of the enterprise.
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7.Claims relating to employment relations of the employees of an enterprise in bankruptcy or a bankrupt enterprise, referred to in paragraph 2 of this Article, may be satisfied from the funds of the Guarantee Fund, whereas claims of natural and legal persons for payment for agricultural produce purchased for processing may be satisfied according to the procedure laid down by the Government. The confirmed claims of an employee or a natural and legal person shall be reduced by the amount of the sum paid from the above Funds.
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8.In case of the set-off between the enterprise and the creditor, the creditor’s claims shall be reduced by the amount offset, including the computed interest and default interest. Where the offset amount is not sufficient to satisfy all the creditors’ claims, the part of the claim without the interest and default interest shall be satisfied first of all, the remaining part of the claims shall be satisfied in accordance with the procedure set forth in this Article, having regard to the satisfaction of claims in two stages as established in paragraph 1 of this Article.
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Article 36Administrative Expenses
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1.Expenses relating to administration of the enterprise bankruptcy shall be paid first of all from all types of funds of an enterprise in bankruptcy and a bankrupt enterprise (proceeds from the sale of assets of the enterprise, including pledged assets, debts repaid to the enterprise, earnings from economic activities, rent of property and other funds received in the course of bankruptcy process). Where the enterprise has no funds or they are insufficient to cover the expenses relating to bankruptcy administration, the expenses shall be paid in accordance with the procedure established by the Government.
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2.The estimate of administrative expenses shall be approved and amended by the meeting of creditors, which shall also establish the procedure for disposal of the administrative expenses.
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3.Bankruptcy administration expenses shall comprise remuneration for the administrator, remuneration for an assistant administrator (administrators), amounts paid in connection with employment relations to employees of the enterprise whose participation in the bankruptcy process is necessary, except for those participating in the economic and commercial activities, auditing expenses, expenses related to property appraisal and sale, management of waste and contaminated soil and earth as well as other expenses approved by the meeting of creditors. Expenses related to economic and commercial activities may not be assigned to the bankruptcy administration expenses.
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4.The first meeting of creditors must fix the amount of remuneration to be paid to the administrator for the administration of the enterprise during the bankruptcy process, including the period from the entry into force of the court ruling to initiate enterprise bankruptcy proceedings until the date of conclusion of a contract of agency with him or the date of the first meeting of creditors.
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5.The amount of remuneration payable to the administrator (having regard to whether or not the enterprise in bankruptcy and/or the bankrupt enterprise continues (carries on) its activities, the type and amount of the assets of the enterprise being sold, also the complexity and number of proceedings initiated and civil claims brought against the enterprise) and the procedure for payment of remuneration (the remuneration may be paid in a lump sum upon completion of the bankruptcy process or by instalments in the course of the bankruptcy process) shall be established in the contract of agency. chapter NINE FINAL PROVISIONS
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Article 37Entry into Force and Application of the Law
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1.This Law shall enter into force as of 1 July 2001.
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2.The Law of the Republic of Lithuania on Enterprise Bankruptcy (Valstybes žinios, 1997, No 64-1500; 1998, No 109-2996, No 114-3189; 2000, No 32-889) shall apply and regulate bankruptcy procedures only in respect of the enterprises against which bankruptcy proceedings have been initiated or extrajudicial bankruptcy process has been initiated prior to the entry into force of this Law.
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3.The procedure set forth in this Law shall also apply to the investigation of bankruptcy cases of the enterprises which, prior to the entry into force of this Law, were subject to extrajudicial bankruptcy procedures, but which were referred to court for hearing by the decision of the meeting of creditors after 1 July 2001.
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4.The administrative expenses of enterprises in respect of which bankruptcy proceedings were initiated prior to 1 July 2001 may be revised pursuant to the provisions of Article 36 of this Law.
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5.The provisions of paragraph 4 of Article 33 of this Law shall apply in respect of enterprises which acquired the status of the enterprise in liquidation by reason of bankruptcy prior to 1 July 2001. The 24-month period fixed for the liquidation procedure in paragraph 4 of Article 33 shall start as of 1 July 2001. The provisions of paragraph 6 of Article 32 of this Law shall apply when removing the aforementioned enterprises from the register.
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6.The Government or an institution authorised by it shall establish:
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1)the procedure for submitting and publishing information relating to the enterprise bankruptcy procedures;
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2)the procedure for representation in the course of bankruptcy procedures by persons authorised by public authorities;
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3)the procedure for selling the assets of the enterprise in bankruptcy or bankrupt enterprise by auction;
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4)the procedure for issuing bankruptcy administrator and assistant bankruptcy administrator certificates and drawing up the list of persons providing enterprise bankruptcy administration services, the procedure for supervision of activities of bankruptcy administrators.
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7.The provisions of paragraphs 4 and 7 of Article 10, paragraph 2 of Article 13(1), paragraph 8 of Article 29, and paragraphs 2, 5 and 6 of Article 32 of this Law relating to the Register of Legal Entities shall apply from the commencement of operation of the Register of Legal Entities.
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8.Prior to the commencement of operation of the Register of Legal Entities:
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1)changes in the data and amendments to the documents prescribed by legal acts shall be submitted to the manager of the Register of Enterprises;
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2)the administrator shall submit an application specified in paragraph 5 of Article 32 to the manager of the Register of Enterprises;
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3)the actions referred to in paragraph 6 of Article 32 shall be performed by the manager of the Register of Enterprises.
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Annex to Republic of Lithuania Enterprise Bankruptcy Law LEGAL ACTS OF THE EUROPEAN UNION IMPLEMENTED BY THIS LAW 1. Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings (OJ 2004 special edition, Chapter 19, Volume 1, p. 191) with the latest amendments adopted by Council Regulation (EC) No 694/2006 of 27 April 2006 (OJ 2006 L 121, p. 1) amending the lists of insolvency proceedings, winding-up proceedings and liquidators in Annexes A, B and C to Regulation (EC) No 1346/2000 on insolvency proceedings (OJ 2006 L 121, p.1). _______________