Skip to content
Insolvency lawyerTadas Ugintas
LT

Creditors and insolvency administrators

Legal services for creditors and insolvency administrators

Most foreign clients come to us for one of two reasons: a Lithuanian customer or partner has stopped paying, or the debtor is already in insolvency or restructuring proceedings and the creditor needs someone on the ground to protect its claim. We represent creditors, including foreign companies, and insolvency administrators in dealings with Lithuanian debtors, in insolvency and restructuring proceedings, in negotiations and in court.

Tadas Ugintas is a Lithuanian attorney-at-law and insolvency administrator with 17 years in insolvency. He has taken part in more than 150 corporate and personal bankruptcy proceedings. He knows how administrators assess claims, what creditors’ meetings decide and where creditors usually lose money: late or poorly supported claims, passivity at creditors’ meetings and transactions that nobody challenges.

When a Lithuanian debtor stops paying

Before insolvency, the creditor still has the most room to act. We can:

  • check the debtor in the public registers, including whether insolvency or restructuring proceedings have already been started;
  • send a formal demand and negotiate a payment schedule, security or settlement;
  • choose the court route: a simplified payment order procedure for undisputed monetary claims, a European Payment Order under Regulation (EC) No 1896/2006 for cross-border claims, or an ordinary claim where the debt is disputed;
  • enforce a judgment, including one obtained in another EU country, through a Lithuanian bailiff;
  • assess whether the debtor’s financial position justifies applying for insolvency proceedings yourself, and what you would gain from it.

When the debtor is in insolvency proceedings

Once insolvency proceedings are opened, individual enforcement stops and every creditor has to act within the proceedings. For a creditor this means:

  • lodging the claim on time and with evidence. The administrator and the court check the basis and the amount. A claim that is late or not supported by documents may be reduced or left out;
  • taking part in creditors’ meetings. The meeting approves the administrator’s reports and decides key questions, including how assets are sold. We attend and vote on your behalf;
  • checking other creditors’ claims. Fictitious or inflated claims, often by related parties, reduce what genuine creditors receive. They can be challenged;
  • monitoring the administrator. If harmful transactions are not challenged or assets are not recovered, a creditor can raise this at the creditors’ meeting or challenge the administrator’s decisions as provided by law;
  • challenging transactions. Payments to related parties, sales below market value and other transactions that harmed creditors can be challenged, including under actio Pauliana;
  • pursuing the people responsible. Claims against former directors, de facto directors and shareholders can increase what creditors recover. Where the bankruptcy is found to be intentional, a creditor may in certain cases bring a direct claim against the responsible person even after the company has been liquidated.

When the debtor is restructuring

If a Lithuanian debtor opens restructuring proceedings, individual enforcement of earlier debts is restricted, and your claim will be dealt with under the restructuring plan. Creditors vote on the plan in classes, and in certain cases the court can approve it even if one class votes against. We check the debtor’s viability and cash flow forecasts, compare what you would receive under the plan with what you could expect in bankruptcy, negotiate the terms on your behalf and object to the plan if it treats you unfairly. More on company restructuring.

For insolvency administrators

We also act for insolvency administrators:

  • challenging transactions that harmed the company;
  • bringing claims against former directors and other responsible persons;
  • applying to have the bankruptcy declared intentional;
  • resolving disputes over the company’s assets, documents and creditors’ claims.

Working with us from abroad

We work in English. Most matters are handled remotely: documents are exchanged electronically, we report on each step in writing and attend hearings and creditors’ meetings for you. At the start we tell you what is realistic: whether the debtor has assets, how long each route is likely to take and what it is likely to cost compared with the amount at stake.

Related reading: director liability in insolvency and administrator claims against former directors.

Frequently asked questions

Do I need to be in Lithuania, or speak Lithuanian, to recover a debt or take part in Lithuanian insolvency proceedings?

No. We act for foreign clients remotely and in English. You give us the contract, invoices and correspondence electronically, we explain each step in English and deal with the debtor, the court, the bailiff and the insolvency administrator in Lithuanian on your behalf.

I am a creditor in another EU country. Can I lodge my claim in a Lithuanian insolvency case?

Yes. Under the EU Insolvency Regulation (EU) 2015/848, creditors from other Member States have the same right to lodge claims as local creditors. The Regulation provides a standard claim form and allows the claim to be lodged in any official EU language, although a Lithuanian translation may be required. What matters in practice is acting within the time limit and supporting the claim with documents, because an unsupported or late claim may be left out of the approved list of claims.

I already have a court judgment against the debtor from another EU country. Do I have to sue again in Lithuania?

Usually not. Under the Brussels I bis Regulation (EU) No 1215/2012, a judgment given in one EU Member State is recognised in the others and can be enforced without a separate declaration of enforceability. In Lithuania enforcement is carried out by a bailiff. If the debtor is already in insolvency proceedings, the judgment is used to support your claim in those proceedings instead.

The insolvency proceedings have ended and my claim as a creditor was not paid. Can I still do anything?

Yes. The Supreme Court of Lithuania has held that where the insolvency proceedings of a legal person have ended and a creditor's claim remains unpaid, the creditor may, under the conditions set by law, bring a direct claim against the person responsible for the intentional bankruptcy, even if the company has already been liquidated. These are separate court proceedings, independent of the insolvency case.

The insolvency administrator is trying to place liability on the registered director, but I have evidence that someone else actually ran the company. What can I do?

Lithuanian case law recognises the liability of a de facto director: a person who was not formally appointed but systematically ran the company in practice. Relevant evidence includes who negotiated the key contracts, who controlled the bank accounts, who gave instructions to the registered director and who dealt with the main creditors. If you believe the administrator's version does not reflect the real management structure, a creditor may submit this evidence to the court independently or raise the issue at a creditors' meeting.

I think the administrator is not protecting creditors' interests actively enough, or is not challenging obviously harmful transactions. What are my options as a creditor?

The creditors' meeting has the right to approve the administrator's reports and decide key questions in the proceedings, which is one way of influencing what the administrator does. If you consider that the administrator's decisions or inaction harm creditors' interests, they may also be challenged in the manner set by law. In each case it is important to assess whether the administrator's position rests on objective data or simply has not been examined thoroughly.

Another creditor has lodged a claim that I believe is unfounded or artificially inflated. Can I challenge it?

Yes, a creditor may challenge claims lodged by other creditors that have not yet been approved. This matters particularly where a fictitious claim or a claim by a related party is suspected, intended to reduce the share other creditors receive. To challenge a claim you need specific information that casts doubt on its validity or amount, not just a general suspicion.

For administrators: what evidence is needed to establish a de facto director's liability when the registered director disputes it?

Showing that the registered director held the office is not enough. You need a body of evidence that proves systematic, real control: bank statements showing who initiated payments, negotiation records and correspondence, board or shareholder decisions, information on access to online banking and the accounting system, and statements from employees and accountants. One-off advice or a shareholder's interest in the company does not prove de facto management. Systematic and real control of the company must be shown, and it can only be reconstructed from several independent sources.

For administrators: why do courts dismiss some claims against former directors, and how can this be avoided?

The most common reason is that the damage is calculated as the full amount of unpaid claims in the insolvency case, without identifying which part actually resulted from the specific acts being challenged. In a case concerning a claim of EUR 101,000, for example, the court dismissed it precisely because insolvency and the payments made were not enough; a causal link between a specific act and a specific amount of damage had to be proved. Each challenged transaction or payment should be justified separately, linked to the person who took the decision and to a calculated, individualised amount of damage.

Other services