LIETUVOS RESPUBLIKOS

LIETUVOS RESPUBLIKOS REPUBLIC OF LITHUANIA ENTERPRISE BANKRUPTCY law 20 March 2001 – No IX-216 (As last amended on 4 November 2010 – No XI-1087) Vilnius CHAPTER ONE GENERAL PROVISIONS Article 1. Purpose of the Law 1. This Law shall regulate enterprise bankruptcy process. 2. The Law shall apply to all legal persons registered in the manner prescribed by the legal acts of the Republic of Lithuania (hereinafter referred to as “enterprises”), except for budgetary institutions, political parties, trade unions and religious communities and associations. The specific features of bankruptcy process may be established in special laws regulating the activities of legal persons. 3. The provisions of other laws regulating the activities of enterprises, the creditor’s right to satisfaction of claims, the creditor’s right to take measures to recover debts, taxes and other compulsory payments and the administration thereof in the course of bankruptcy process shall be applied in enterprises to the extent they do not contradict the provisions of this Law. 4. This Law shall apply to the extent it does not contradict the Law on Financial Collateral Arrangements and the Law on Settlement Finality in Payment and Securities Settlement Systems. 5. The purpose of this Law shall be to ensure the implementation of the legal acts of the European Union specified in the Annex to this Law. Article 2. Definitions 1. “Bankruptcy” means the state of an insolvent enterprise where bankruptcy proceedings have been initiated against the enterprise in court or the creditors are performing extrajudicial bankruptcy procedures in the enterprise. 2. “Bankruptcy process” means the totality of judicial or extrajudicial enterprise bankruptcy procedures. 3. “Bankruptcy proceedings” means a civil case heard in court over disputes arising from legal relations relating to bankruptcy. 4. “Enterprise in bankruptcy” means an enterprise against which bankruptcy proceedings have been initiated or in respect of which extrajudicial bankruptcy procedures are applied. 5. “Bankrupt enterprise” means an enterprise declared bankrupt by the court or, in case of extrajudicial bankruptcy procedures, by the meeting of creditors, and thus put into liquidation. 6. “Management of assets of an enterprise in bankruptcy or a bankrupt enterprise” means the following activities of the administrator: organisation of retention of the assets of an enterprise in bankruptcy or a bankrupt enterprise, recovery of assets from the debtors, sale of assets, satisfaction of the creditors’ claims, transfer of the remaining assets. 7. “Creditor's claims secured by pledge and/or mortgage” means the right acquired by the creditor (holder of the pledge, mortgage creditor) under a pledge agreement or a registered mortgage bond or pledge note, in the event of the enterprise’s default to fulfil the obligation secured by pledge and/or mortgage, to request in the manner prescribed by this Law that the pledged assets be sold and his claims be met from the proceeds and, in the event of failure to sell the pledged assets, that the assets be transferred  into his ownership. 8. “Insolvency of an enterprise” means the state of an enterprise when it fails to discharge its obligations (pay debts, carry out works paid for in advance, etc.) and the overdue liabilities of the enterprise (debts, unperformed works, etc.) are in excess of half of the value of the assets entered in the enterprise’s balance. 9. “Owner (owners)” means the participant (participants) of an enterprise: a shareholder or a group of shareholders whose shares carry at least 1/10 of all votes, the owner, stakeholder (stakeholders), member (members) of an individual enterprise and an institution exercising the rights and duties of the owner of a state or municipal enterprise. 10. Repealed as of 1 July 2008. 11. “Composition with the creditors” means an 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, reduce or waive their claims. 12. “Fraudulent bankruptcy” means deliberate bringing of the enterprise to bankruptcy. 13. “Simplified bankruptcy procedures” means judicial enterprise bankruptcy procedures carried out where the enterprise has no assets or where its assets are insufficient to cover the legal and administrative expenses. Article 3. Creditors of an Enterprise Creditors of an enterprise (hereinafter - creditors) shall mean natural and legal persons entitled to request from the enterprise the discharge of its obligations and liabilities, including: 1) in the event of non-payment of taxes, state social insurance and compulsory health insurance contributions – state institutions which have an obligation to collect them; 2) in the event of non-payment of remuneration and compensation for damage arising from employment relations – employees of the enterprise (successors thereof); 3) in the event of transfer to the State of the obligation to compensate for damage due to accidents at work or contraction of an occupational disease in the cases specified in the Provisional Law on Damage Compensation in Accident at Work or Occupational Disease Cases – an institution authorised by the Government; 4) in the event of non-repayment of loans granted from the funds borrowed on behalf of the State and loans granted with the State guarantee – the Ministry of Finance; 5) natural and legal persons upon the sale of agricultural products; 6) in the event of non-repayment of assistance granted from the EU funds – state institutions administering the EU funds; 7) other creditors. chapter TWO petition for initiation of bankruptcy proceedings Article 4. Grounds for Filing with the Court of a Petition for Initiation of Enterprise Bankruptcy Proceedings Persons specified in Article 5 of this Law may file with the court a petition for the initiation of bankruptcy proceedings if at least one of the following conditions is present: 1) the enterprise fails to pay the remuneration and other employment-related amounts in due time; 2) the enterprise fails, in due time, to pay for the goods received and works (services) carried out, defaults on the repayment of credits and fails to discharge other property obligations assumed under transactions; 3) the enterprise fails to pay, in due time, taxes and other compulsory contributions prescribed by law and/or the awarded amounts; 4) the enterprise has publicly announced or notified the creditor (creditors) in any other manner of its inability or lack of intent to discharge its obligations; 5) the enterprise has no assets or income from which debts could be recovered and therefore the bailiff has returned the writs of execution to the creditor. Article 5. Petition Filed with the Court for Initiation of Enterprise Bankruptcy Proceedings 1. The following persons shall have the right to file a petition with the court for the initiation of enterprise bankruptcy proceedings: 1) the creditor (creditors); 2) the owner (owners); 3) the head of the enterprise administration. 2. In the presence of the condition laid down in paragraph 1 of Article 7 of this Law, a petition for the initiation of bankruptcy proceedings must be filed with the court by the liquidator of the enterprise in liquidation. 3. Petitions shall be filed in writing with the regional court of the locality in which the enterprise’s registered office is located in the manner specified in the Code of Civil Procedure. 4. Documents substantiating the validity of a petition shall be attached thereto. Article 6. Petition for Initiation of Bankruptcy Proceedings Filed with the Court by the Creditor (Creditors) 1. In the presence of at least one of the conditions specified in subparagraphs 1, 2 and 3 of Article 4 of this Law, the creditor (creditors) may file with the court a petition for the initiation of bankruptcy proceedings upon the expiry of the time limit specified in paragraph 2 of this Article. The petition must be accompanied by evidence attesting to the fulfilment of the requirements set in paragraphs 2 and 4 of this Article in the manner prescribed by the Code of Civil Procedure and a copy of the notification referred to in paragraph 2 of this Article. 2. The creditor (creditors) must notify the enterprise in writing of his (their) intention to file with the court a petition for the initiation of bankruptcy proceedings. The notification shall identify the undischarged liabilities of the enterprise and shall contain a warning that in case of failure to discharge the aforementioned liabilities within the time limit specified in the notification, the creditor (creditors) will file with the court a petition for the initiation of the enterprise bankruptcy proceedings. The creditor (creditors) shall set a period of at least 30 days for the discharge of liabilities. 3. In the presence of the condition specified in subparagraph 5 of Article 4 of this Law and the creditor (creditors) has (have) filed with the court a petition for the initiation of bankruptcy proceedings not later than within one month from the date of return of the writs of execution, the conditions specified in paragraph 2 of this Article shall not be applicable when filing the petition with the court. 4. The creditor (creditor) must present to the enterprise copies of the petition filed with the court and of the annexes accompanying the petition. 5. A petition filed with the court may be withdrawn before the court passes a ruling to initiate bankruptcy proceedings. Article 7. Petition for Initiation of Bankruptcy Proceedings Filed with the Court by the Liquidator of the Enterprise 1. Should it transpire during the liquidation of the enterprise pursuant to the procedure prescribed by other laws regulating the activities of enterprises that the enterprise will be unable to discharge all of its liabilities, the liquidator of the enterprise must forthwith suspend all payments and not later than within 15 days from the day of establishment of the aforementioned condition file with the court a petition for the initiation of the enterprise bankruptcy proceedings. The petition to the court shall be accompanied by the lists of creditors and debtors of the enterprise, including their addresses, amounts of liabilities and debts and the time limits for the settlement thereof, as well as the financial statements (a balance sheet and  profit (loss) account) for the period from the day of adoption of the decision to put the enterprise into liquidation to the day of filing of the petition as well as evidence attesting to the fulfilment of the requirements set in paragraph 3 of this Article in the manner prescribed by the Code of Civil Procedure. 2. Expenses relating to the administration of enterprise bankruptcy shall be covered in the manner prescribed by this Law. 3. The liquidator must provide the owner (owners) of the enterprise with copies of the petition filed with the court and of the annexes accompanying the petition. Article 8. Petition for Initiation of Bankruptcy Proceedings Filed with the Court by the Head or Owner (Owners) of the Enterprise 1. If the enterprise is unable to and/or will be unable to settle with the creditor (creditors) and the latter has (have) not filed a petition with the court for the initiation of bankruptcy proceedings or if the condition referred to in subparagraph 4 of Article 4 of this Law is present, the head or the owner (owners) of the enterprise must file a petition with the court for the initiation of bankruptcy proceedings. 2. The reasons for filing by the enterprise of a petition for the initiation of bankruptcy proceedings shall be indicated in the petition. The petition to the court shall be accompanied by the lists of creditors and debtors of the enterprise, indicating their addresses, amounts of liabilities and debts and the time limits for the settlement thereof, a set of financial statements for the previous financial year and the period of the reporting financial year prior to the date of filing of the petition and information relating to the proceedings initiated in courts and recoveries without suit, the pledged assets and other obligations, as well as evidence attesting to the fulfilment of the requirements set in paragraph 3 of this Article in the manner prescribed by the Code of Civil Procedure. Other documents of relevance to the bankruptcy proceedings may also be presented to the court. 3. The head of the enterprise must provide the owner with copies of the petition filed with the court and of the annexes accompanying the petition. Where the petition is filed with the court by the owner (owners), he (they) must provide the enterprise with the documents specified in this paragraph. 4. The head of the enterprise or any other person (persons) having the right to adopt a respective decision in the enterprise must compensate for damage incurred by the creditors due to the enterprise missing the deadline for filing with the court of a petition for the initiation of bankruptcy proceedings. chapter THREE hearing of BANKRUPTCY proceedings in court Article 9. Preparation for Hearing of Bankruptcy Proceedings in Court 1. After the documents specified in paragraph 4 of Article 6 and paragraph 3 of Article 8 of this Law have been delivered to the enterprise, the head of the enterprise shall, not later than within five days from the receipt thereof, furnish to the court the lists of creditors and debtors of the enterprise, indicating their addresses, amounts of liabilities and debts, the time limits for the settlement thereof, a set of financial statements for the previous financial year and the period of the reporting financial year prior to the day of filing with the court of the petition by the creditors, information relating to the proceedings initiated in courts and recoveries without suit, the pledged assets and other obligations. Where the head of the enterprise fails, within the specified time limit, to furnish to the court the aforementioned documents without a valid excuse, the court or the judge may impose on the head of the enterprise a fine in the amount of up to LTL 10 000. 2. Upon receiving a petition for the initiation of bankruptcy proceedings, the court may: 1) obligate the persons who were and are entitled to act on behalf of the enterprise, the owner (owners), chief accountant (accountant), the head of a structural division in charge of keeping of the accounts of the enterprise to furnish to the court the documents required for the hearing of the bankruptcy proceedings and to appraise the assets of the enterprise in the manner prescribed by legal acts; 2) summon before the court the persons who were and are entitled to act on behalf of the enterprise, the owner (owners), the head of the company which provided accounting services to the enterprise prior to the initiation of bankruptcy proceedings, the head of a structural division in charge of keeping of the accounts of the enterprise, the chief accountant (accountant) and other executive officers, irrespective of the  grounds on which the employment or civil contracts with them were terminated, provided that they had been dismissed from work or the civil contracts with them had been terminated within 12 months prior to the date of filing with the court of a petition for the initiation of bankruptcy proceedings, and request that they provide written explanations relating to the initiation of bankruptcy proceedings. Appearance before the court of the aforementioned persons shall be obligatory and the guarantees established under the Code of Civil Procedure in respect of witnesses shall apply to them; 3) summon before the court the creditors of the enterprise; 4) request that the head or the owner (owners) of the enterprise furnish to the court the data on the economic and financial position of the enterprise; 5) on its own initiative or the initiative of the person concerned, apply interim protective measures according to the procedure laid down in the Code of Civil Procedure effective until the entry into force of the ruling to initiate bankruptcy  proceedings or to refuse to initiate bankruptcy  proceedings; 6) specify other circumstances which are of relevance to the hearing of the case. 3. Upon receipt by the court of a petition for the initiation of bankruptcy proceedings, where decisions have been made by courts and other institutions with regard to the enterprise and writs of execution have been issued based thereon, the assets (funds) of the enterprise under the writs of execution may be seized, however the handling and/or recovery of such assets shall be suspended. If the court refuses to initiate the enterprise bankruptcy proceedings, the recovery and handling of assets shall be resumed, and the interim protective measures applied shall be cancelled.  4. The court or the judge shall, not later than within one month from the day of receipt of a petition, adopt a ruling on the initiation of or refusal to initiate bankruptcy proceedings. For valid reasons the court shall be entitled to extend the time limit for the preparation for hearing of the bankruptcy proceedings in court, but for not longer than one month. Where, in preparation for the hearing of the case, the court decides to convene a preliminary sitting, such a sitting may only be held once. When instructing to convene a preliminary sitting, the court must comply with the time limits for adoption of the ruling to initiate bankruptcy proceedings or to refuse to initiate the proceedings specified in this paragraph. Where a petition for the initiation of restructuring proceedings is received during the examination of the petition for the initiation of bankruptcy proceedings and the court ruling to initiate bankruptcy proceedings has not yet been adopted, the examination of the petition for the initiation of bankruptcy proceedings shall be postponed pending the court ruling to initiate restructuring proceedings or to refuse to initiate restructuring proceedings. 5. Bankruptcy proceedings shall be initiated if the court has established the presence of at least one of the following conditions: 1) the enterprise is insolvent or the enterprise is late with payment of remuneration to the employee (employees); 2) the enterprise has publicly announced or notified the creditor (creditors) in any other manner of its inability to settle with the creditor (creditors) and/or lack of intent to discharge its obligations. Article 10. Initiating Bankruptcy Proceedings in Court 1. Bankruptcy proceedings shall be initiated and heard in contentious proceedings as prescribed by the Code of Civil Procedure except for the cases specified by this Law.  2. Bankruptcy proceedings shall be initiated by the regional court of the locality wherein the registered office of the enterprise is situated. 3. The court shall refuse to initiate bankruptcy proceedings where: 1) prior to adoption by the court of the ruling to initiate bankruptcy proceedings, the enterprise satisfies the claims of the creditor (creditors) who filed with the court a petition for the initiation of bankruptcy proceedings;  2) restructuring proceedings have been initiated against the enterprise; 3) during the examination of the petition for the initiation of bankruptcy proceedings the court makes a sufficiently justified assumption that the enterprise has no assets or that its assets are insufficient to cover the legal and administrative expenses, except for the cases provided for in paragraphs 10 and 12 of this Article. 4. Upon adopting a ruling to initiate bankruptcy proceedings, the court or the judge must: 1) appoint the administrator of the enterprise; 2) seize the immovable property and other tangible fixed assets of the enterprise effective until the entry into force of the ruling to initiate bankruptcy proceedings; 3) not later than on the next working day issue a written notification of the initiated bankruptcy proceedings to the Register of Legal Entities, to the institution authorised by the Government specified in paragraph 10 of Article 11 of this Law, the enterprise (where the ruling has been adopted in written proceedings – also to the creditors and administrator), the Bank of Lithuania, if bankruptcy proceedings have been initiated against an enterprise which is included in the list of system participants published by the Bank of Lithuania in accordance with the Law on Settlement Finality in Payment and Securities Settlement Systems, the Insurance Supervisory Commission of the Republic of Lithuania, if  bankruptcy proceedings have been initiated against an insurance and reinsurance company,  the Securities Commission of the Republic of Lithuania, if bankruptcy proceedings have been initiated against a financial brokerage firm, a management company, an investment company or a public limited liability company considered to be an issuer of securities under the Law on Securities not later than on the next working day following the entry into force of the ruling to initiate bankruptcy proceedings to the Register of Legal Entities and within ten days from the entry into force of the ruling to initiate bankruptcy proceedings to: the creditors, all persons who have leased, borrowed or are keeping the assets of the enterprise in custody or using or managing them on any other grounds, also the Ministry of Finance, if the enterprise is the recipient of a loan borrowed on behalf of the State or guaranteed by the State, the tax administrators, the state social insurance and compulsory health insurance administrators, credit institutions, financial brokerage firms and insurance companies providing services to the enterprise and the institution exercising the rights and duties of the owner of the state or municipal enterprise in bankruptcy; 4) notify other courts, in which property claims have been entered against the enterprise, including claims relating to employment relations, about the initiation of bankruptcy  proceedings and take over examination of these cases. Notify pre-trial investigation institutions, the prosecutor’s office or courts if civil claims have been brought in criminal proceedings by the creditors of the enterprise in bankruptcy and take over for examination all the documents relating to these civil claims. Notify pre-trial investigation institutions, the prosecutor’s office or courts if the assets of the enterprise in bankruptcy have been seized in criminal proceedings and take over the documents relating to the seizure of the assets. Notify the bailiff’s offices which have been presented the writs of execution regarding the recovery from this enterprise or in relation to the seizure of its assets; 5) set a time limit of at least 30 days but not exceeding 45 days from the entry into force of the court ruling to initiate bankruptcy proceedings within which the creditors have the right to file their claims which arose prior to the date of initiation of bankruptcy proceedings; 6) set a time limit not exceeding 15 days from the entry into force of the court ruling to initiate bankruptcy proceedings within which the management bodies of the enterprise must transfer to the administrator the assets of the enterprise according to the balance sheet drawn up on the basis of the data available on the day of entry into force of the ruling to initiate bankruptcy proceedings and all the documents; 7) approve the amount of funds on the basis of an estimate submitted by the administrator which the latter is entitled to use to cover the administrative expenses of the enterprise in bankruptcy pending the approval of the estimate of administrative expenses by the meeting of creditors. The administrator must submit the estimate specified in this subparagraph not later than within 20 working days from the entry into force of the ruling to initiate bankruptcy proceedings. 5. In the cases where the creditor’s civil claims are referred, in accordance with the procedure established by the Code of Criminal Procedure, to the court hearing the bankruptcy case, the time limits for the referral of claims set in subparagraph 5 of paragraph 4 of this Article shall be deemed to have been observed. The aforementioned actions by the creditors may be referred by the court ruling to the court hearing the bankruptcy case in the course of the entire bankruptcy process until the court adopts a ruling to terminate the bankruptcy case or a decision on the termination of the enterprise. 6. The court or the judge may assign the administrator of the enterprise to perform the actions specified in subparagraph 3 of paragraph 4 of this Article. 7. After the court ruling to initiate bankruptcy proceedings becomes effective: 1) the management bodies of the enterprise must transfer to the administrator the assets of the enterprise according to the balance sheet drawn up on the basis of the data available on the day of entry into force of the ruling to initiate bankruptcy proceedings and all the documents within the time limits set by the court. In the cases where the enterprise is an entity of unlimited civil liability, its owner (owners) must, within the same time limits, submit to the administrator the list of all the assets held by him (them), including the assets which are the object of joint ownership. Where a person committed by the court to transfer to the administrator all the documents within the time limits set by it fails to transfer the said documents or transfers not all the documents, the court or the judge may impose on him a fine in the amount of up to LTL 10 000; 2) the management bodies of the enterprise shall lose their powers, while the administrator of the enterprise shall, upon a 15-day written advance notice, terminate employment or civil contracts with the board members and the head of the enterprise. These persons shall not be paid a severance pay and compensations, with the exception of a pecuniary compensation for unused leave. The above persons and the chief accountant (accountant), the head of a structural division in charge of keeping of the accounts of the enterprise, the head of the company which provided accounting services to the enterprise prior to the initiation of bankruptcy proceedings must, at the request of the court in the course of the entire bankruptcy process, furnish all the information necessary for the bankruptcy process; 3) the discharge of all financial obligations not discharged prior to the initiation of bankruptcy proceedings, including the payment of interest, penalties, taxes and other compulsory contributions and the recovery of debts from the enterprise through court or without suit shall be prohibited. Calculation of penalties and interest on all obligations of the enterprise, including on a default in payments relating to employment relations, shall be terminated. Judgment mortgage may not be imposed. The validity of the collective agreement of the enterprise shall be restricted as prescribed by the creditors’ meeting; 4) if within 30 days from the entry into force of the ruling to initiate bankruptcy proceedings the administrator notifies the persons concerned that he will not execute the contracts which have been entered into by the enterprise and whose period of execution has not yet expired, the aforementioned contracts (including lease and loan for use contracts), except for employment contracts and contracts from which the rights of claim of the enterprise in bankruptcy arise, shall be deemed to have expired, and the claims arising by reason thereof shall be satisfied in the manner specified in Article 35 of this Law; 5) the enterprise  shall be entitled to engage in economic and commercial activities, provided it reduces the losses of creditors incurred by reason of bankruptcy, and to use the income received from these activities to cover the expenses related to these activities. Where taxable objects provided for by tax laws and laws on other compulsory contributions are created as a result of the economic and commercial activities of the enterprise, the enterprise shall pay taxes and other compulsory contributions in compliance with laws. Where claims relating to undischarged obligations and liabilities emerge as a result of the economic and commercial activities, they shall be satisfied in accordance with the procedure specified in Article 35 of this Law; 6) upon request of the creditors, the court may impose restrictions on the economic and commercial activities of the enterprise and disposal of its assets, which may not be sold, leased or pledged, used as a collateral or a guarantee for the discharge of the obligations of other entities, or otherwise transferred (conveyed) without the leave of the court; 7) the enterprise shall acquire the status of an enterprise in bankruptcy; 8) the court or the judge must, not later than on the next working day, notify in writing the Register of Legal Entities of the effective ruling to initiate bankruptcy proceedings as well as of the data relating to the appointed administrator (the name, surname in case of a natural person, and the name in case of a legal person), the personal number (company code in case of a legal person) and the place of residence (registered office). The court or the judge may assign the performance of the aforementioned tasks to the administrator; 9) the court or the judge shall, where possible, deliver a copy of the effective ruling to initiate the enterprise bankruptcy proceedings to the administrator on the day of entry into force of the ruling together with copies of the lists of creditors and debtors of the enterprise, indicating their addresses, amounts of liabilities and debts, the time limits for the settlement thereof, a set of financial statements for the previous financial year and the period of the reporting financial year prior to the day of filing with the court of a petition, information relating to the proceedings initiated in courts against the enterprise and recoveries without suit, the pledged assets and other liabilities, or shall send the aforementioned documents to the administrator on the same day by registered mail or courier. The administrator must, not later than on the next working day after the receipt of the aforementioned documents, arrive at the registered office of the enterprise in bankruptcy indicated in the court ruling to initiate the enterprise bankruptcy proceedings and arrange the takeover and protection of the enterprise’s assets and documents. Where, upon presenting a copy of the effective court ruling to initiate the enterprise bankruptcy proceedings and a document confirming his identity, the administrator is refused entrance to the registered office of the enterprise and/or other premises (territories) belonging to the enterprise by the right of ownership and/or other right, the administrator shall call a police officer and open the aforementioned premises (territories) in his presence. The police officer called by the administrator is under the obligation to arrive. The court or the judge may impose on a person preventing the administrator from performing the actions specified in this subparagraph a fine in the amount of up to LTL 10 000. 8. A separate appeal against the ruling to initiate bankruptcy proceedings or to appoint, temporarily substitute or dismiss the administrator must be heard by the Court of Appeal of Lithuania not later than within two weeks from the date of its lodging. Statements in response to separate appeals may be filed within seven working days from the date of dispatch of a copy of the separate appeal to the parties involved in the proceedings.  Having dismissed the ruling whereby initiation of bankruptcy proceedings is refused, the Court of Appeal of Lithuania may not adopt a ruling to initiate bankruptcy proceedings. The ruling of the Court of Appeal of Lithuania shall be final and not subject to appeal under cassation review. 9. The court shall have the right to accept creditors’ claims which have been submitted in breach of the time limits specified in subparagraph 5 of paragraph 4 of this Article, provided that it recognises the reasons for missing the time limits as important. Creditors’ petitions for the recognition of claims which arose prior to the initiation of bankruptcy proceedings submitted after the time limit specified in subparagraph 5 of paragraph 4 of this Article shall be accepted only until the day of adoption by the court of a ruling to terminate bankruptcy proceedings or liquidate the enterprise by reason of bankruptcy. 10. When the court makes a sufficiently justified assumption that the enterprise has no assets or that its assets are insufficient to cover the legal and administrative expenses, it must recommend to the person who has lodged with the court a petition for the initiation of the enterprise bankruptcy proceedings to pay into the court’s deposit account an amount fixed by the court within five working days from making the recommendation. The amount may not exceed LTL 10 000. If the aforementioned person pays the amount fixed by the court within the time period set by the court, bankruptcy proceedings may be initiated and the case may be heard following the simplified bankruptcy procedures. The amount paid into the deposit account of the court shall be used upon the instruction of the judge hearing the bankruptcy proceedings to cover the legal and administrative expenses. 11. Having paid in the amount provided for under paragraph 10 of this Article, the creditor shall be entitled to apply to court for the award of the paid amount from the head or the owner (owners) of the enterprise for failing to file with the court a petition for the initiation of the enterprise bankruptcy proceedings after the enterprise became insolvent. The head or the owner (owners) of the enterprise shall be liable to the creditor jointly and severally. 12. If the creditor files a petition in relation to undischarged claims 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, and the court makes a sufficiently justified assumption that the enterprise has no assets or that its assets are insufficient to cover the legal and administrative expenses, the bankruptcy proceedings shall be initiated and the case shall be heard following the simplified bankruptcy procedures. The court shall determine the amount of legal and administrative expenses which may not exceed the amount specified in paragraph 10 of this Article. The administrator shall apply to court in relation to recovery of this amount from the persons specified in paragraph 11 of this Article. 13. The ruling to initiate bankruptcy proceedings or refuse to initiate bankruptcy proceedings adopted in written proceedings shall come into force within ten days of its adoption, unless an appeal has been filed. 14. The court may restrict a person’s right to hold the position of the head of a public and/or private legal person for a period from three to five years if, being required by law, the person: has not filed a petition for the initiation of bankruptcy proceedings, has not transferred the assets and/or documents upon the entry into force of the ruling to initiate bankruptcy  proceedings, has avoided to furnish all the information necessary for the bankruptcy process or has otherwise hindered the procedures. Article 11.  Administrator of the Enterprise 1. The administrator of the enterprise (hereinafter referred to the “administrator”) shall be a natural or legal person appointed by the court and having the right to provide bankruptcy administration services who has acquired such a right pursuant to this Law and other legal acts relating to the implementation thereof. The head of a legal person having the right to provide bankruptcy administration services must have the right to provide bankruptcy administration services. The administrator who has forfeited the right to provide bankruptcy administration services may not perform enterprise bankruptcy procedures as of the specified date of forfeiture of the right. 2. When filing with the court a petition for the initiation of enterprise bankruptcy proceedings, a person shall nominate a candidate for the position of the administrator. In the event that a petition for the initiation of enterprise bankruptcy proceedings is filed with the court by the employees of the enterprise and they do not nominate a candidate for the position of the administrator, a candidate for the position of the administrator must be nominated in accordance with the procedure established by the Government by the institution authorised by the Government specified in paragraph 10 of this Article. Persons specified in Article 5 of this Law shall also have the right to nominate their candidates for the position of the administrator. The court may reject, on a reasoned basis, the nominated candidate (candidates) for the position of the administrator (administrators) and request that another candidate for the position of the administrator be nominated where the nominated candidate for the position of the administrator does not meet the requirements of this Law. The court must coordinate the candidate appointed for the position of the administrator with the institution authorised by the Government referred to in paragraph 10 of this Article. In the event of death of a natural person who is the administrator, another candidate appointed for the position of the administrator shall be nominated to the court not later than within three working days from learning about the death of the administrator by the institution authorised by the Government referred to in paragraph 10 of this Article, whose representatives and the chairman of the meeting of creditors, where elected, shall be present when the newly appointed administrator takes over the assets and documents of the enterprise. In that case, the court shall adopt a ruling on the appointment of the administrator not later than within three working days from receipt of the proposal from the institution authorised by the Government and the court ruling shall enter into force on the day of its adoption. 3. The administrator shall: 1) submit changes in the information and documents relating to the enterprise in bankruptcy to the Register of Legal Entities in the manner prescribed by legal acts; 2) forward the information relating to the enterprise bankruptcy process to the  institution authorised by the Government specified in paragraph 10 of this Article; 3) manage and use the assets of the enterprise in bankruptcy and dispose thereof as well as of its funds held in banks in the manner prescribed by this Law; 4) ensure the protection of the assets of the enterprise in bankruptcy; 5) open a separate bank account for the accumulation of funds in the course of bankruptcy process and for the settlement with creditors in the manner set forth in this Law. The basis for the opening of such a bank account shall be the court ruling to initiate bankruptcy proceedings or a decision adopted by the meeting of creditors to initiate extrajudicial bankruptcy procedures; 6) direct the economic and commercial activities of the enterprise in bankruptcy; 7) enter into fixed term contracts for the lease of the enterprise’s assets, in which the day of expiry of the lease contract must be the day of sale, transfer or return of these assets; 8) examine the transactions entered into by the enterprise in bankruptcy within a period of at least 36 months before the initiation of bankruptcy proceedings and bring actions in the court hearing the enterprise bankruptcy case for the invalidation of the transactions which are contrary to the objectives of the enterprise’s activities and/or which could have led to its inability to settle with the creditors. In this case, it shall be considered that the administrator has learnt about the transactions from the day of receipt of the documents on the conclusion of these transactions; 9) represent or authorise another person to represent the enterprise in bankruptcy  in court, at the creditors’ meeting and when entering into transactions where the enterprise in bankruptcy continues its economic and commercial activities; 10) compile a list of creditors of the enterprise and their claims on the basis of claims filed by the creditors which have been revised based on the accounting documents of the enterprise and, not later than within one month before the expiry of the time limit set by the court for lodging of creditors’ claims, submit the list to the court for approval, also contest unfounded claims of creditors at the meeting of creditors and in court. At the request of the administrator, the court may extend the time limit specified in this subparagraph; 11) hire and dismiss employees in accordance with the procedure laid down in the Labour Code and this Law; 12) submit documents to the Guarantee Fund for the allocation of funds for the satisfaction of claims of the employees arising from employment relations; 13) during the period before the first meeting of creditors, decide on further execution of transactions entered into by the enterprise the period of execution whereof has not yet expired,  and on entering into new transactions necessary for the enterprise to continue its economic and commercial activities, provided that the enterprise continues its economic and commercial activities, and, not later than within 30 days from the entry into force of the court ruling to initiate bankruptcy  proceedings, inform the parties concerned of his intent or refusal to execute the transactions entered into by the enterprise the period of execution whereof has not yet expired; 14) protect the rights and interests of all creditors, also the rights and interests of the enterprise in bankruptcy  and organise and carry out the necessary work relating to bankruptcy process; 15) furnish information to the institution authorised by the Government referred to in paragraph 10 of this Article and to the Department of Statistics of Lithuania (according to the forms of reports prescribed by the Department), the court, also, in accordance with the procedure established by the meeting of creditors, to the creditors and the owner (owners); 16) organise and control the accounting of income received in the process of management, use and disposal of the assets of the enterprise in bankruptcy, also the accounting of costs and, in the course of enterprise bankruptcy process and in the manner prescribed by legal acts, draw up and submit annual financial reports (the balance sheet and profit (loss) account).  In cases where the enterprise has not filed tax returns and other documents, the administrator must provide the appropriate institutions with a possibility to carry out document verifications and audits for the purpose of determining data to be provided in the tax returns or other documents which have not been filed; 17) convene the meetings of creditors; 18) notify the owner (owners) of the enterprise where their decisions are required in order to conclude a composition with the creditors; 19) be entitled to obtain from the State Tax Inspectorate, the administration agencies of the State Social Insurance Fund, the Department of Statistics of Lithuania,  the state enterprise Centre of Registers as well as other natural and legal persons, including banks and other credit institutions, financial and insurance companies, in the manner prescribed by legal acts, all the necessary information about the previous and current activities of the enterprise in bankruptcy or the bankrupt enterprise under his administration, its former and current employees, previously and currently held assets, etc., also obtain from the persons specified in this subparagraph copies of the enterprise’s documents, submitted reports, information, verification reports, etc. In cases where the enterprise is an entity of unlimited civil liability, he shall be entitled to receive, free of charge, from the institutions registering assets (securities) according to the procedure established by laws information relating to the assets (securities) registered in the name of the owner (owners) of the enterprise and from the banks, other credit institutions and insurance companies – information relating to the funds held or to be received by them; 20) execute other decisions of the court and/or meeting of creditors and the committee; 21) submit documents relating to the discharge of the obligation of compensation for damage resulting from accidents at work or contraction of an occupational disease and particulars of the recipients of the compensation for damage to the territorial branches of the State Social Insurance Fund according to their place of residence where, in the cases provided for by law, the compensation for damage is assigned to the State; 22) present to the Ministry of Agriculture documents relating to the allocation of funds for the settlement of claims of natural and legal persons for the agricultural produce purchased for processing; 23) take measures to recover debts from the debtors of the enterprise; 24) file with the court (courts) an application for his dismissal from the position of the administrator of all the enterprises under his administration not later than one the next working day following the day on which he becomes aware of the forfeiture of the right to provide bankruptcy administration services. He shall present a copy of the application for his dismissal to the chairmen of the meeting of creditors of all the enterprises under his administration on the same day. 4. A creditor of the enterprise against which bankruptcy proceedings have been initiated (a person in employment relations with the creditor or, where the creditor is a legal person, a member of its management bodies), a person who, under laws or other legal acts, has no right to be the head of the enterprise, the owner of the enterprise or a parent enterprise or a subsidiary, a member of its management bodies, his deputies (directors), the chief accountant (accountant), the head of  a structural division in charge of keeping of the enterprise’s accounts, a shareholder holding or having held by the right of ownership within the last 36 months prior to the initiation of bankruptcy proceedings more than 10 per cent of the shares of the enterprise in bankruptcy and bankrupt enterprise or its parent enterprise or a subsidiary may not be appointed administrator. These restrictions shall also apply to the persons referred to in this paragraph who were employed in the enterprise in bankruptcy and bankrupt enterprise and were dismissed from office within the last 36 months prior to the initiation of bankruptcy proceedings. The administrator may not have legal interest in the outcome of the proceedings. The restrictions specified in this paragraph placed on the administrator shall also apply in respect of the head of a legal person entitled to provide bankruptcy administration services, his deputies (directors), the chief accountant (accountant), the head of a structural division in charge of keeping of the enterprise’s accounts, members of the management bodies of a legal person and participants of a legal person. 5. The meeting of creditors shall authorise the chairman of the meeting of creditors to conclude a contract of agency with the administrator on behalf of the enterprise. 6. The administrator must, in accordance with the procedure established by laws, compensate for the damage caused through his fault. 7. The ruling concerning temporary substitution of the administrator in the event of his temporary incapacity for work or in other cases when he is temporarily unable to perform his duties shall be adopted by the court at the initiative of the administrator upon the approval of the chairman of the meeting of creditors. If the administrator is unable to apply to court due to an illness, the ruling concerning his temporary substitution in case of his temporary incapacity for work shall be adopted by the court on the recommendation of the chairman of the meeting of creditors. 8. The court may dismiss the administrator from office in the following cases: 1) where the administrator files with the court an application for his resignation or dismissal; 2) where the meeting of creditors (committee) of the enterprise in bankruptcy or bankrupt enterprise applies for dismissal of the administrator; 3) where the court becomes aware of the forfeiture of the administrator’s right to provide bankruptcy administration services and the administrator and/or the creditors have not applied to court for his dismissal. In this case, the court shall, not later than within 15 days from becoming aware, dismiss this administrator from all the enterprises under his administration and appoint another administrator (administrators) in accordance with the procedure laid down by this Law. 9. Upon dismissing the administrator and appointing another administrator, the court shall establish the time limit during which the former administrator must transfer the assets of the enterprise according to the balance sheet drawn up on the basis of the data available on the day of dismissal from office as well as all the documents to the newly appointed administrator. Where the dismissed administrator, without a valid excuse, fails to transfer the assets and documents of the enterprise within the specified time limit or transfers not all the assets and/or documents, the court or the judge may impose on the dismissed/removed administrator (where the administrator is a legal person, its head) a fine in the amount of up to LTL 10 000. 10. The activities of the administrator shall be controlled and information about the enterprise bankruptcy process shall be submitted for publishing to the supplement Informaciniai pranešimai to the official gazette Valstybės žinios by the institution authorised by the Government of the Republic of Lithuania. 11. The administrator (a natural person) must continuously improve his qualification (the administrator (a legal person) must ensure the continuous improvement of qualification of his employees who are entitled to provide bankruptcy administration services), and must comply with legal acts and requirements laid down in the Code of Conduct for Bankruptcy Administrators. 12. The professional civil liability of an administrator for the damage caused to natural or legal persons in the course of carrying out of bankruptcy procedures in respect of enterprises in bankruptcy and bankrupt enterprises shall be covered by compulsory insurance. 13. The object of compulsory insurance of an administrator against professional civil liability shall be the civil liability of the administrator for the damage caused by unlawful actions of the administrator and/or his employees in the course of carrying out of bankruptcy procedures in respect of enterprises in bankruptcy and bankrupt enterprises during the period of validity of the insurance contract. 14. An insured event shall mean unlawful actions (act or omission) committed by the administrator and/or his employees in the course of carrying out of bankruptcy procedures in respect of enterprises in bankruptcy and bankrupt enterprises during the period of validity of the insurance contract constituting grounds for incurring civil liability by the insured person and lodgement of a claim for compensation in compliance with the conditions laid down in the rules for compulsory insurance of the administrator against professional civil liability. 15. An administrator shall be covered by compulsory insurance against professional civil liability by entering into a contract of compulsory insurance of the administrator against professional civil liability. The policyholder of compulsory insurance of an administrator against professional civil liability shall be the administrator. The minimum sum insured in respect of compulsory insurance of an administrator against professional civil liability shall be LTL 200 000 for one insured event and LTL 500 000 for all insured events during one year. Upon payment of an insurance benefit in the case of an insured event and reduction of the minimum sum insured specified in this Article, the administrator must, within one month, take out insurance against civil liability in order to restore the compulsory minimum sum insured. 16. An administrator may also take out additional insurance of the administrator against professional civil liability for the damage caused to natural or legal persons in the course of carrying out of bankruptcy procedures in respect of enterprises in bankruptcy and bankrupt enterprises. 17. The insurer holding an insurance licence issued by the Insurance Supervisory Commission of the Republic of Lithuania which entitles to engage in compulsory insurance of administrators against professional civil liability must conclude a contract of compulsory insurance of administrators against professional civil liability with the administrator who has submitted an application and all the documents necessary for concluding such a contract. The rules for compulsory insurance of administrators against professional civil liability shall be approved by the Government or an institution authorised by it. 18. Seeking to administer an enterprise in bankruptcy or a bankrupt enterprise, the administrator must present a copy of the Certificate of Compulsory Insurance of an Administrator against Professional Civil Liability to the court, the meeting of creditors, in case of extrajudicial bankruptcy procedures, and to the institution authorised by the Government specified in paragraph 10 of Article 11 f this Law. 19. Damage caused by the unlawful actions of the administrator and/or his employees in the course of carrying out of bankruptcy procedures in respect of enterprises in bankruptcy and bankrupt enterprises during the period of validity of the insurance contract which exceeds LTL 1 000 shall be compensated by the insurer by paying out an insurance benefit not exceeding the sum insured. Where the insurance benefit is not sufficient to compensate for the damage in full, the difference between the insurance benefit and the actual amount of damage shall be covered by the administrator who has caused the damage. CHAPTER FOUR EXTRAJUDICIAL BANKRUPTCY PROCEDURES Article 12. Preparation for Extrajudicial Bankruptcy Procedures 1. Extrajudicial bankruptcy procedures may be applied provided that no action has been brought in court in which property claims, including claims relating to employment relations, have been entered against the enterprise, also if no recovery is made from the enterprise under the writs of execution issued by courts or other institutions. 2. If the enterprise is unable and will not be able to settle with the creditor (creditors), the head or the owner (owners) of the enterprise, intending to seek the creditors’ consent to carry out extrajudicial bankruptcy procedures, must notify every creditor in writing of the proposal to carry out extrajudicial bankruptcy procedures, specifying the date and venue of the meeting of creditors. 3. The meeting of creditors shall be convened not later than within 20 days from the dispatch of the proposal specified in paragraph 2 of this Article to the creditors. 4. The decision to carry out extrajudicial bankruptcy procedures may be adopted by the meeting of creditors if the decision is voted in favour of in open voting by the creditors whose claims, in terms of value, account for at least 4/5 of the amount of all the liabilities of the enterprise on the day of adoption of the decision, including those which have not yet matured. 5. If the meeting of creditors does not adopt the decision to carry out extrajudicial bankruptcy procedures, the persons listed in paragraph 1 of Article 5 of this Law may file with the court a petition for the initiation of bankruptcy proceedings. In this case, the time limits for filing of the petition set in paragraph 1 of Article 6 and the provisions of paragraph 2 of this Article shall not apply, provided that the petition is filed with the court not later than within 30 days after the meeting of creditors. Article 13. Extrajudicial Bankruptcy Procedures 1. Extrajudicial bankruptcy procedures shall be carried out in compliance with this Law. The issues assigned to the competence of the court shall be considered and decided upon by the meeting of creditors. 2. The administrator shall be appointed by the meeting of creditors in accordance with the provisions of Article 11 of this Law. 3. The procedure for executing the decisions of the meeting of creditors and satisfaction of the creditors’ claims shall be established in accordance with the procedure and terms of hearing of bankruptcy cases by the court prescribed by this Law. 4. The administrator shall, within three working days from the meeting of creditors at which the creditors adopted a decision to carry out extrajudicial bankruptcy procedures, notify the employees of the enterprise in writing of the intended termination of the employment contracts and terminate the employment contracts with them after 15 days of such notification. The administrator shall, not later than within three working days from the meeting of creditors referred to in this paragraph, notify the territorial labour exchange office, the municipal institution and representatives of the employees of the enterprise of the intended dismissal of employees.  A dismissed employee shall be paid severance pay in the amount specified in paragraph 2 of Article 19 of this Law and settlement with him shall be effected in accordance with the procedure laid down in Article 35 of this Law. 5. In case of extrajudicial bankruptcy procedures, the consequences specified in paragraph 7 of Article 10, Article 16 and paragraphs 2 and 3 of Article 27 of this Law shall arise. CHAPTER FOUR(1) SIMPLIFIED BANKRUPTCY PROCEdureS Article 13(1). Simplified Bankruptcy Procedures 1. In the cases provided for in paragraphs 10 and 12 of Article 10 of this Law and/or when the administrator establishes during the examination of the enterprise bankruptcy case that the enterprise has no assets or that its assets are insufficient to cover the legal and administrative expenses, the court may adopt a ruling to apply the simplified bankruptcy procedures in respect of the enterprise. Such procedures may not last longer than one year from the day of entry into force of the ruling to apply the simplified bankruptcy procedures. Bankruptcy procedure of liquidation must be applied during the simplified bankruptcy procedures. The issues relating to the sale of assets, assigned under this Law to the competence of the meeting of creditors, shall be resolved by the court. 2. Having adopted a ruling to apply the simplified bankruptcy procedures in respect of the enterprise, the court must: 1) forthwith submit the information relating to the court ruling to apply the simplified bankruptcy procedures in respect of the enterprise to the Register of Legal Entities, the enterprise, creditors and the institution authorised by the Government specified in paragraph 10 of Article 11 of this Law; 2) appoint the administrator if he has not been appointed; 3) approve the estimate of administrative expenses to be submitted by the administrator not later than within five working days from the entry into force of the court ruling to appl …