Seimas to consider Ministry of Finance proposals to strengthen the insolvency framework
The Seimas, after the submission, started to consider the draft amendments to the Laws on Insolvency of Legal Persons, Bankruptcy of Natural Persons and the accompanying amendments to the Laws prepared by the Ministry of Finance, which will strengthen the standards of impartiality and transparency, and the insolvency processes themselves will become clearer and more focused on effective problem-solving.
“With this package of draft laws, we have a very clear objective – to strengthen the efficiency of the insolvency framework. We strive that in cases of financial difficulties, the decision-making would be more efficient and clearer, and insolvency administrators would act according to the highest standards of impartiality and professionalism. The same principles of transparency must apply to everyone, regardless of whether the functions of the public administration are carried out by public authorities or by equivalent entities”, Minister of Finance K. Vaitiekūnas says.
Once adopted by the Seimas, the proposed amendments to the laws would enter into force on 1 January 2027, while the provisions on the digitalisation of creditors’ meetings would apply from 1 May 2028.
Regulation of insolvency of legal persons
According to the Minister of Finance, one of the most important amendments to the Law on Insolvency of Legal Persons is a significant expansion of the scope of restrictions on the appointment of insolvency administrators and impartiality requirements. Currently, restrictions on the insolvency administrator are relatively narrow, but practice shows that the risk of conflicts of interest often arises through close kinship, family or business ties rather than directly, and it is therefore necessary to apply these restrictions to a wider range of persons.
It is proposed to identify transactions that the insolvency administrator could only enter into after obtaining the approval of creditors, for example, when purchasing services from other insolvency administrators or legal persons linked to them. If the insolvency administrator intends to enter into transactions with legal persons with which it itself or its participants, the manager, members of bodies, persons handling accounts or employees and their relatives are related, as well as with other insolvency administrators, this would require the approval of creditors.
It is proposed to introduce a restriction under which an insolvency administrator who is a natural person could not work for more than one legal person in order to reduce the risk of potential bias and conflicts of interest, to prevent the possibility of manipulation in the selection and to ensure equal competitive conditions between of the insolvency administrators natural and legal persons.
“With the aim of ensuring more effective control over the activities of insolvency administrators, in parallel, we propose to extend the range of sanctions imposed on the supervisory authority and the Chamber of Insolvency Administrators by including also financial penalties. This measure would allow for a more expeditious and proportionate response to the breaches identified and would strengthen compliance with professional standards across the insolvency enforcement framework”, K. Vaitiekūnas stresses.
The supervisory authority would also have the power to impose financial sanctions on the Chamber of Insolvency Administrators itself in the event of improper performance of the functions assigned to it by law such as examination, upgrading and ethics supervision.
It is proposed to introduce environmental safeguards in cases where there is untreated waste or contaminated soil in the company’s asset structure. “In such situations, the out-of-court bankruptcy proceedings would not be possible, the court would be obliged to inform the environmental protection authority of each case, and the court would also approve the amount of the costs of waste treatment. These solutions would help ensure that environmental risks are managed at an early stage”, K. Vaitiekūnas emphasises.
It is also envisaged by using the capabilities of the Insolvency Portal to consolidate the electronic voting at the creditors' meetings. As all information on insolvency proceedings is already available on this portal and is used by creditors, it is envisaged to transfer the creditor's vote to the electronic space at the creditors’ meetings. This would allow the creditors' meetings to be organised in a simpler and more transparent way, to register votes automatically, to eliminate the risk of data alteration and to abandon paper documents.
Improvement of bankruptcy processes of natural persons
“Currently, one of the biggest administrative obstacles for residents wishing to initiate the bankruptcy process of a natural person is the requirement to have a debt amount of at least 25 MMW. The amendments to the law aim to waive this barrier so that persons in financial difficulties could start the bankruptcy process earlier and restore their financial stability faster”, K. Vaitiekūnas says.
Prevention of corruption
The amendments to the Law on the Prevention of Corruption propose to extend the scope of the assessment of corruption risks. It is envisaged to make it possible to assess the likelihood of corruption occurring also in associations that have been granted public administrative powers on the basis of laws, including the Chamber of Insolvency Administrators.
According to the Minister of Finance, this decision would ensure that all entities performing public administrative functions are assessed according to the same standards of transparency and responsibility, regardless of their legal form, and that corruption prevention measures are applied consistently and effectively across the framework.
Changes in administrative responsibility
In order to promote entrepreneurship and to reduce demotivating factors, it is envisaged to waive administrative liability to the managers of legal entities for failure to submit or late submission to the court of a petition for commencement of bankruptcy proceedings. “We want businesses not to be afraid of second chances. The managers’ fear of mistakes should not inhibit entrepreneurship, and the responsibility for initiating the bankruptcy process must be proportionate and rational”, K. Vaitiekūnas emphasises.
Last updated: 13-03-2026
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