Unlike the commencement of insolvency proceedings of natural persons, an application for insolvency proceedings of a legal person may be submitted to the court not only by the company itself, which is unable to settle its debts, but also by the company’s creditor and employee in cases specified by law.

In order to avoid a situation where insolvency proceedings are opened against the will of the company, the company must monitor its debts in a timely manner and, where appropriate, respond to warnings received from creditors about the intention to file for insolvency proceedings.

What should be taken into consideration when a company itself considers opening insolvency proceedings?

• insolvency proceedings may be opened if the debts have not been settled for more than two months and are already due, if, according to the liquidation financial statements, the debtor does not have sufficient assets to satisfy all justified creditors’ claims, or if the company fails to settle its legal protection process plan;
• the company must be able to cover the costs of opening insolvency proceedings in the amount of EUR 930;
• the company’s accounting must be in order, because the members of the board of the capital company are liable for losses if the accounting documents are not handed over to the administrator or it is not possible to get an idea of the company’s performed transactions and the condition of property;
• at the opening of insolvency proceedings, a representative (or representatives) of the debtor will be appointed, usually a member of the executive body, whose participation in the insolvency proceedings will be mandatory, so the relevant company member must be prepared to cooperate.

It is important to receive qualified legal assistance both before and during the commencement of the insolvency proceedings to ensure the successful conduct of the proceedings – timely evaluation of the transactions, proper communication and protection of the interests of the company and its officials in relation with the insolvency administrator. It should be borne in mind that there are a number of circumstances in which members of the board of a capital company or other officials of the company may be held liable for losses or delay of insolvency proceedings. Law office Lumos in Riga provides qualified legal assistance. The Law firm’s lawyers have extensive experience in dealing with a variety of complex situations. The managing partner of the Law firm is a certified insolvency administrator, and in practice the specialists of the office ensure the conduct of insolvency proceedings of various legal entities.