During a UAB liquidation: employees, creditors, audit and the bank account

A liquidation does not wait until every employee has left. The company becomes a company in liquidation from the date of the decision, and the employees work out their notice period in a company that is already in liquidation. The waiting comes only at the end: the company is normally deregistered when the State Tax Inspectorate (Valstybinė mokesčių inspekcija, VMI) notifies the register that the company has settled with the budgets and funds, or that the VMI has no data on this. If the liquidator does not file the deregistration documents within the time limits in Article 2.110(3) of the Civil Code (CK), the register deregisters the company in liquidation itself (point 200¹ of the JAR Regulations). From 15 October 2026 this is done automatically, and only if the VMI has not reported any of the circumstances listed in the JAR Regulations (for example, that the company has debts, open employment contracts or a tax dispute), or has reported that they no longer exist (points 200¹ and 23.28¹ of the JAR Regulations, as in force from 2026-10-15). Creditors are paid in the order set by law, and the shareholders receive only what is left after the creditors. You need an accountant until the very end. We found no separate requirement to audit the liquidation financial statement. The bank account does not close by itself – the liquidator closes it.

How to start a liquidation and when to give employees notice is covered in Starting a UAB liquidation: documents, employees and creditors. How long it takes is covered in a separate article. This article is about what happens during the liquidation itself.

Can the liquidation go on while employees are still working

Yes. Article 73(6) of the Law on Companies of the Republic of Lithuania (ABĮ) provides that the company acquires the status of a company in liquidation from the day the decision to liquidate is adopted. Employees can be given notice on the liquidation ground only after that decision, because the ground is a decision of an organ of the employer that brings the employer to an end (Article 57(1)(5) of the Labour Code of the Republic of Lithuania (DK)). They keep working and are paid until their notice period ends. A company in liquidation may enter only into transactions connected with ending its activities or provided for in the decision to liquidate (Article 2.111 of the Civil Code of the Republic of Lithuania (CK)).

Employees hold up the end, not the start. The register deregisters a liquidated legal entity when it receives the deregistration documents and the VMI notice that the entity has settled with the budgets and funds, or that the VMI has no data on this (points 38.7.7.1 and 201 of the Regulations of the Register of Legal Entities (JAR nuostatai)). In our practice the VMI does not give this confirmation while the company still has employees. So a long notice period makes the whole liquidation longer, but it does not stop it. The notice period can also grow: if at its end the employee is temporarily unable to work or on leave, the end is postponed until the incapacity or leave ends (Article 64(4) DK).

The notice period can be shortened only by agreement with the employee. There are two routes, and they differ:

• No work during notice. With the employee’s consent, the employer may at any time before the notice period ends decide to terminate the employment contract, moving the end of the employment relationship to the last day of the notice period, not letting the employee work during the notice period, but paying the full salary due for the whole notice period (Article 64(5) DK). The employment relationship still ends on the last day of the notice period.
• Agreement of the parties. The employment contract can be terminated by agreement of the parties (Article 54 DK). The written offer states when the employment relationship ends and the amount of compensation (Article 54(2) DK). If the employee does not reply within five working days, the offer is deemed rejected (Article 54(3) DK). In our practice this route ends the employment earlier, and the employee is paid compensation for the rest of the notice period plus the severance pay.

A few cases we check in advance:

• A pregnant employee. Her contract may also be terminated when an organ of the employer adopts a decision that brings the employer to an end (Article 61(1) DK). However, if maternity leave or childcare leave is granted before the baby is four months old, the contract can be terminated only after that leave ends (Article 61(2) DK).
• Military service. Article 61(4) DK prohibits dismissing, on the employer’s initiative without fault on the employee’s part or at the employer’s will, an employee called up for compulsory military service, voluntary non-permanent military service or alternative national defence service. The liquidation ground is Article 57(1)(5) DK – in the same article on termination on the employer’s initiative without fault on the employee’s part. So we assess such a case separately, before any notice is given.
• The manager. The manager loses their powers from the appointment of the liquidator (Article 73(6) ABĮ). The employment contract with the manager of a legal entity ends when the manager is removed (Article 104(1) DK). In our practice the manager’s employment contract is ended from the day the liquidator is appointed: keeping the manager on longer serves no purpose, because they no longer have any powers. The manager is entitled to severance pay if the employment lasted more than two years and the removal was not caused by their own fault (Article 104(2) DK).

Notice periods and severance pay are covered in Dismissal without employee fault: notice and severance.

In what order the liquidator pays creditors

A company in liquidation first settles with its creditors, following the order set by the Civil Code (Article 73(13) ABĮ). That order is set by Article 2.113(1) CK:

1. First, claims secured by a pledge of the company’s assets – from the value of the pledged assets.
2. First ranking – employees’ claims connected with employment, and claims for damage from injury to health, occupational disease or death at work, and claims of individuals for payment for agricultural produce bought for processing.
3. Second ranking – taxes and other payments to the budget, and social and health insurance contributions, and claims under foreign loans guaranteed by the State or the Government.
4. Third ranking – all other creditors.

The claims of each later ranking are satisfied only after the claims of the earlier ranking have been satisfied in full. If there is not enough money for all the claims of one ranking, they are satisfied proportionally (Article 2.113(2) CK). In practice this means that the salaries and severance pay of employees still working out their notice come before suppliers’ invoices.

If during the liquidation the company becomes insolvent – it cannot perform its property obligations on time, or its liabilities exceed the value of its assets (Article 2(7) of the Law on Insolvency of Legal Entities (JANĮ)) – the liquidator must suspend all payments and immediately initiate bankruptcy proceedings (Article 7 JANĮ). From then on the liquidator no longer pays creditors by ranking – payments are suspended, and the matter continues in the bankruptcy proceedings (Article 7 JANĮ).

What is left after the creditors goes first to the accumulated dividend for holders of cumulative preference shares, and the remaining assets are divided among the shareholders in proportion to the nominal value of their shares (Article 73(13) ABĮ). Assets may be distributed to shareholders no earlier than 2 months after all the steps required by Article 73(10) ABĮ have been completed: three public announcements at intervals of no less than 30 days, or one public announcement plus written notice to all creditors (Article 73(14) ABĮ). If there is a court dispute over the company’s debts, the assets are not distributed until the dispute is resolved and the creditors are paid (Article 73(15) ABĮ). The liquidator records the transfer to the shareholders in asset transfer certificates (Article 74(2)(2) ABĮ). What to do if assets come to light only after deregistration is covered separately.

Do you still need an accountant during the liquidation

Yes, until the very end. The liquidator has the rights and duties of the company’s manager (Article 74(1) ABĮ). The manager organises the accounting: they choose the person who keeps the accounts, unless the law gives that right to another management body (Article 13(1)(1) of the Law on Financial Accounting (FAĮ)) and ensure that, when the manager changes, the accounting documents are handed over in good time (Article 13(1)(5) FAĮ). So responsibility for the accounts passes to the liquidator, but the work stays with the accountant.

It is the liquidator’s duty to prepare the liquidation financial statement on the basis of data as at the company’s last day of activity before the end of the liquidation (Article 74(2)(1) ABĮ; Article 15(2) of the Law on Reporting by Undertakings and Groups of Undertakings (IIGAĮ)). In our practice this statement and the final tax returns are prepared by the company’s accountant, and the liquidator works with them. Most often the accounting services contract that the company had before the liquidation is kept in force.

There is no need to take the documents away from the accountant early. In our practice they stay with the accountant until the VMI confirmation is received, and only then are they handed over to the archive.

If the liquidation runs past a financial year end, see the audit section below.

One common question: a customer will pay the company only in a few months – does the start of the liquidation have to be postponed? In our practice it does not. The liquidation can start, and the final statements and returns are prepared once the last payment has come in.

Does a liquidation need an audit

In the laws we reviewed, we found no separate requirement to audit the liquidation financial statement. We checked ABĮ, IIGAĮ, the Law on the Audit of Financial Statements and Other Assurance Services (AUD) and the JAR nuostatai. What the rules themselves show:

• The audit law sets out whose annual financial statements are audited (Article 3(1) AUD) and who must have them audited when, on the last day of the financial year, at least two of the three asset, revenue and headcount indicators set in the law are exceeded, or state or municipal funding or support exceeds the limit set in the law (Article 3(2) AUD).
• IIGAĮ says who carries out audits of annual and interim financial statements (Article 33 IIGAĮ); when an audit is mandatory is set by AUD.
• The liquidation financial statement is a separate document (Article 15(2) IIGAĮ). The deregistration documents listed in point 198 of the JAR nuostatai include the statement itself, but not an auditor’s report (point 198 JAR nuostatai).

An audit may still be needed in two cases. First, if a financial year ended before the end of the liquidation, a set of annual financial statements is normally prepared for it. It may be omitted if no more than 3 months passed between the end of the financial year and the last day of activity, and all material information is given in the liquidation financial statement (Article 15(3) IIGAĮ). If the liquidation lasts longer than a year, the liquidator draws up a set of annual financial statements and a liquidation report no later than within 3 months after the end of each financial year (Article 74(3) ABĮ). If an audit of the company’s annual statements is mandatory, only an audited set is approved (Article 58(2) ABĮ). The annual statements of public limited companies (AB) are always audited (Article 3(1)(3) AUD). A UAB must be audited if the state or a municipality is a shareholder (Article 3(1)(4) AUD) or if it meets at least one of the conditions in Article 3(2) AUD. Second, a shareholder may ask for an audit, for example for its group’s consolidated statements – that is a matter of agreement, not of law.

The bank account: who closes it and when

Nothing closes automatically. Neither the liquidator’s functions listed in Article 74(2) ABĮ nor the list of deregistration documents in point 198 JAR nuostatai mention the bank account. It is the liquidator who asks the bank to close the account, because the liquidator has the manager’s rights (Article 74(1) ABĮ).

Closing it too early is a mistake. The liquidator pays employees, taxes and creditors through the account. In our practice the account is closed later, once it is clear whether any more taxes will be due and whether the VMI will refund an overpayment – the refund goes to the company’s own account. The accountant will also need an account statement before the final statements, so it is worth obtaining one when closing the account.

Whatever is left in the account after the creditors is transferred to the shareholders (Article 73(13) ABĮ). And how do you pay expenses that arise after the account is closed – the accountant’s last invoice, sorting out the archive? In our practice there are two ways. Such invoices are issued directly to the shareholder. Or part of the funds is held temporarily in an escrow account until the liquidation is complete, and only then transferred to the shareholder.

How to start

Send us the latest extract from the Centre of Registers (Registrų centras) and tell us how many employees are still working and when their notice periods end, whether there are unpaid debts, who keeps the accounts and how many bank accounts the company has. We will plan the liquidation so that the last employee, the VMI confirmation and the closing of the account do not hold each other up.

Phone +370 5 212 1506, email info@linden.lt

More about this service: liquidation of companies.