{"id":2891,"date":"2026-10-07T18:00:54","date_gmt":"2026-10-07T15:00:54","guid":{"rendered":"https:\/\/linden.lt\/paslaugos\/company-law\/company-bankruptcy-and-insolvency\/"},"modified":"2026-10-07T18:04:33","modified_gmt":"2026-10-07T15:04:33","slug":"company-bankruptcy-and-insolvency","status":"publish","type":"paslauga","link":"https:\/\/linden.lt\/en\/services\/company-law\/company-bankruptcy-and-insolvency\/","title":{"rendered":"Company bankruptcy and insolvency"},"parent":1347,"menu_order":0,"template":"","class_list":["post-2891","paslauga","type-paslauga","status-publish","hentry"],"acf":{"visi_puslapiai_cta_statusas":false,"visi_puslapiai_cta_antraste":"","visi_puslapiai_cta_formos_id":"","visi_puslapiai_cta_papildomas_tekstas":"","visi_puslapiai_cta_nuotrauka":null,"paslauga_vidinis_1_tipas":"inner","paslauga_vidinis_1_nuoroda":"","paslauga_vidinis_1_trumpas_aprasymas":"This page covers when a company is insolvent, who starts restructuring or bankruptcy proceedings and how, and what happens once a case is opened. We act for the company and its CEO, for shareholders and for creditors: we assess the situation, draft notices and court applications, and represent you in insolvency proceedings.","paslauga_vidinis_1_klientai":null,"dinamiski_blokai":[{"acf_fc_layout":"tekstas","tekstas":"

A company is insolvent when it cannot meet its property obligations on time or when its liabilities exceed the value of its assets (Article 2(7) of the Law on Insolvency of Legal Entities of the Republic of Lithuania (JAN\u012e)). The law offers two routes: restructuring, which aims to keep the company alive and avoid bankruptcy (JAN\u012e Article 2(10)), and bankruptcy, in which the company is liquidated and creditors are paid from its assets (JAN\u012e Article 2(4)). The process is started by the company's CEO (vadovas<\/em>) (in liquidation, the liquidator) or by a creditor, not by the shareholders (JAN\u012e Articles 4(1) and 5(2)). We act for the company and its CEO, for shareholders and for creditors: we assess the situation, draft notices and court applications, and represent you in insolvency proceedings.<\/p>\r\n

When you need this service<\/h2>\r\n

The company is close to insolvency or already insolvent.<\/strong> A likelihood of insolvency exists when it is realistically likely that the company will become insolvent within the next three months (JAN\u012e Article 2(7\u00b9)). The CEO must then inform the members without delay and take steps to protect creditors' interests (JAN\u012e Article 6(1)). Once the company is insolvent, the CEO must initiate insolvency proceedings without delay (JAN\u012e Article 6(2)(2)). From 1 January 2027 this duty is made more specific: if no assistance agreement is reached and no decision to run the bankruptcy out of court is taken within the period set in the notice to creditors, the CEO must file an application with the court without delay (JAN\u012e Article 6(2)(2), version from 2027-01-01).<\/p>\r\n

You are a shareholder.<\/strong> Shareholders, as shareholders, do not start insolvency proceedings: the law gives that right to the CEO and to a creditor (JAN\u012e Article 4(1)). A shareholder can initiate them only as a creditor, where the company owes it money and the due date has passed (JAN\u012e Article 4(1)(2)). Who starts bankruptcy proceedings and how is covered in our article Does bankruptcy need shareholder consent? How insolvency is established<\/a>. The general meeting of shareholders may not decide to liquidate an insolvent company (Article 73(3) of the Law on Companies of the Republic of Lithuania (AB\u012e)). In restructuring the draft plan must be approved by the members of the legal entity (JAN\u012e Article 106(1)). However, if the members do not approve it, the court may approve the plan on the creditors' proposal where, among other conditions, the plan does not change the scope of the dissenting members' ownership and other rights and duties connected with the company and in each class it has been approved by the affected creditors holding more than 2\/3 of the class's claims approved by the court (JAN\u012e Article 111\u00b9(1)(2) and (3)). From 1 January 2027 this share is counted only against the claims of the class creditors affected by the plan (JAN\u012e Article 111\u00b9(1)(3), version from 2027-01-01).<\/p>\r\n

A company in liquidation has run short of assets.<\/strong> If it turns out during liquidation that the company is insolvent, the liquidator must suspend all payments and initiate bankruptcy proceedings without delay (JAN\u012e Article 5(2); JAN\u012e Article 7). More: Liquidation or bankruptcy: what to do when a company runs short of assets<\/a>.<\/p>\r\n

You are a creditor.<\/strong> Insolvency proceedings may be initiated by a creditor whose claim has fallen due (JAN\u012e Article 4(1)(2)). The creditor sends the company a notice naming an undisputed unperformed obligation (JAN\u012e Article 9(2)) and sets a period of no less than 15 and no more than 30 days (JAN\u012e Article 9(3)). The right to go to court arises when that period ends (JAN\u012e Article 16(1)(1)). If no application is filed within 3 months, the notice must be sent again (JAN\u012e Article 16(2)). If bankruptcy proceedings against the debtor are already open, the key point is not to miss the deadline for lodging the claim (JAN\u012e Article 41(1)).<\/p>\r\n

Claims are being brought against you as CEO.<\/strong> The CEO must compensate damage caused by failure to perform, or improper performance of, the duties set by the Law on Insolvency of Legal Entities (JAN\u012e Article 13(1)). The Supreme Court of Lithuania (Lietuvos Auk\u0161\u010diausiasis Teismas<\/em>) has held that damage from initiating the proceedings late is the increase in the company's debts between the time the CEO should have initiated the proceedings and the opening of the case, to the extent those debts remain unpaid (ruling of 6 March 2025 in civil case No. e3K-3-40-381\/2025, paragraph 54). A court may bar the CEO for 1 to 5 years from acting as a CEO or as a member of a collegial management body if the CEO failed to initiate insolvency proceedings, caused a deliberate bankruptcy or failed to hand over assets, documents and information to the administrator (JAN\u012e Article 13(2)); from 1 January 2027, also if the CEO failed to file an application with the court to open insolvency proceedings (JAN\u012e Article 13(2)(1), version from 2027-01-01). The court declares a bankruptcy deliberate if the insolvency resulted from deliberately poor management or from transactions that breach creditors' rights (JAN\u012e Article 70(1)). What remains for the CEO and shareholders after deregistration is covered in Are shareholders and the CEO liable for debts after deregistration?<\/a>.<\/p>\r\n

Restructuring: when the company is to be saved<\/h2>\r\n

Restructuring proceedings are opened if the company has financial difficulties, is viable and is not being liquidated due to bankruptcy (JAN\u012e Article 21(1)). The CEO is responsible for preparing the restructuring plan (JAN\u012e Article 104(1)). The plan runs for no more than 4 years from the court ruling approving it (JAN\u012e Article 105(1)); the court may extend it once by no more than one year (JAN\u012e Article 105(4)). It must be approved by the members (JAN\u012e Article 106(1)) and by the affected creditors in classes (JAN\u012e Article 107(1)). A class approves the plan if creditors holding more than 1\/2 of the class's claims vote for it (JAN\u012e Article 107(2)). From 1 January 2027 this share is counted only against the claims of the class creditors affected by the plan (JAN\u012e Article 107(2), version from 2027-01-01). If the members or a class of creditors do not approve, the court may still approve the plan, but only on the conditions set by law (JAN\u012e Article 111\u00b9(1) and (2)). A creditor may initiate restructuring only if its overdue claims exceed a threshold set in the law (JAN\u012e Article 4(2)).<\/p>\r\n

Bankruptcy in court and out of court<\/h2>\r\n

Bankruptcy may be run out of court if, on the day of the decision, there are no court cases against the company over property claims, no enforcement against its assets and no tax investigation or tax audit in progress (JAN\u012e Article 11(1)). If these conditions are not met, the consent of the tax administrator, the claimant or the enforcing creditor is needed (JAN\u012e Article 11(2)). The decision is taken if creditors holding no less than 3\/4 of all the company's liabilities approve it (JAN\u012e Article 11(3)). The creditors' meeting then decides the matters that would otherwise go to the court and appoints the insolvency administrator (JAN\u012e Article 12(1) and (2)). From 1 January 2027 there is an additional condition: the company must have no untreated waste, contaminated soil, ground or mining plots, and consent of the tax administrator, claimant or enforcing creditor cannot replace this condition (JAN\u012e Article 11(1)(4) and (2), version from 2027-01-01). In all other cases bankruptcy proceedings are opened in court if the company is insolvent and no restructuring proceedings are being opened (JAN\u012e Article 21(2)).<\/p>\r\n

Liquidation and bankruptcy<\/h2>\r\n

The Civil Code treats them as separate grounds for liquidation: the members' decision to wind up the business, and a decision of the court or of the creditors' meeting to liquidate the legal entity due to bankruptcy (Article 2.106(1) and (2) of the Civil Code of the Republic of Lithuania (CK)). A company is liquidated due to bankruptcy under the Law on Insolvency of Legal Entities (AB\u012e Article 73(4)). The court rules to liquidate the company due to bankruptcy once 3 months have passed since the ruling approving creditors' claims became final, unless in that time the administrator has applied for restructuring or a settlement (JAN\u012e Article 83(1)). The court may extend this period once by no more than 3 months or, on a reasoned request of the creditors' meeting, rule earlier (JAN\u012e Article 83(2) and (3)). The insolvency administrator then performs the liquidator's functions (JAN\u012e Article 84(1)). If the company's assets do not even cover the costs of administering the bankruptcy and nobody pays them, the court refuses to open bankruptcy proceedings and instructs that liquidation be started on the initiative of the Centre of Registers (Registr\u0173 centras<\/em>) (JAN\u012e Article 23(4); CK Article 2.70(1)(7)). Liquidation of a solvent company is described on our service page Liquidation of companies<\/a>.<\/p>\r\n

What we do<\/h2>\r\n