“The quality of the insolvency system affects not only the private sector, but also the public sector, as the state budget loses the funds that are not recovered in business insolvency cases. Therefore, a properly functioning system is crucial for national economic development and sustainability; its quality affects the development of the business environment, as well as the appeal of the state for investors,” Inese Lībiņa-Egnere, Deputy Speaker of the Saeima, said in her opening address at a discussion on the rule of law in insolvency proceedings and bailouts, hosted by the Saeima on Friday, 3 June.
Referring to a report by the State Audit Office, recommendations issued for Latvia by the European Commission, as well as various studies on insolvency, Lībiņa-Egnere noted that the efforts to improve public supervision over insolvency process administrators have met some obstacles.
“Latvia is lagging behind other countries in regard to recovering assets from insolvent businesses. According to this year’s Doing Business study by the World Bank, in Latvia creditors have almost 50% less chance than in other OECD countries to recover their assets after the conclusion of insolvency proceedings,” Lībiņa-Egnere said.
The Deputy Speaker of the Saeima highlighted that during the last month, in reaction to the startling conclusions of this study, the Judicial Policy Subcommittee of the Legal Affairs Committee has raised the issue of insolvency regulations. Lībiņa-Egnere expressed her satisfaction that the Saeima, in cooperation with the Foreign Investors’ Council and the Latvian Chamber of Trade and Commerce, has managed to bring together all three branches of power – the legislature, the executive and the judicial power – as well as entrepreneurs to seek the most efficient solutions to the problems identified within the insolvency process and to sketch out future possibilities for cooperation.
Addressing participants of the discussion, Gaidis Bērziņš, Chairman of the Legal Affairs Committee of the Saeima, said that a fair, transparent and predictabile insolvency process generates a secure business environment and promotes national economic growth. He noted that “any honest entrepreneur sets up their business aiming to generate profit, not to arrive at insolvency. But if that does happen, then it is important to talk about an honest debtor. Therefore, insolvency is a crucial element in the possible conclusion of a business’s existence.”
In his address the Chairman of the Legal Affairs Committee highlighted the legal protection procedure in insolvency, emphasising that necessary documents are often submitted too late and entrepreneurs lack proper understanding of the essence of this procedure. Bērziņš also noted that today's discussion provided a good opportunity to talk about these issues prior to next week’s meeting of the Legal Affairs Committee where it will examine amendments to the Insolvency Law, which include changing the system of supervising administrators and setting up an option of extraordinary recertification.
Today the Saeima is hosting a discussion “Rule of Law in Insolvency Practices: for a Healthy Economy”.
The discussion is divided in two panels. The first panel, which focuses on insolvency and the rule of law and is moderated by Ilze Znotiņa of Deloitte Legal, brings together the following participants: Solvita Āboltiņa, Chairperson of the National Security Committee of the Saeima and the Judicial Policy Subcommittee, Dzintars Rasnačs, Minister of Justice, Evika Siliņa, Parliamentary Secretary of the Ministry of the Interior, Ēriks Kalnmeiers, Prosecutor General, Aigars Strupišs, justice of the Civil Chamber of the Supreme Court, Pēteris Bauska, Head of the Economic Crimes Unit of the National Crime Agency, as well as Neil Jennings, entrepreneur and investor.
The second panel on insolvency as an opportunity to save a business is moderated by Māris Vainovskis, representative of the Foreign Investors’ Council in Latvia, and brings together Gaidis Bērziņš, Chairman of the Legal Affairs Committee, Romāns Naudiņš, Chairman of the Economic, Agricultural, Environmental and Regional Policy Committee, Arvils Ašeradens, Minister of Economics, Elita Krūmiņa, Auditor General, Jānis Endziņš, Chairman of the Chamber of Trade and Commerce of Latvia, Mārtiņš Bičevskis, President of the Association of Commercial Banks of Latvia, Santa Garanča, Deputy Director of the Tax Debt Recovery Department of the State Revenue Service, as well as Sven-Olav Mattsson, Senior Credit Advisor at SEB Group.
Photos from the event: https://www.flickr.com/photos/saeima/albums/72157666670204824
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Saeima Press Service