2002年-世界发展银行全球_Lithuania___Insolvency_and_Creditor_Rights_Systems_16页_603kb

Summary of Lithuania's Insolvency and Creditor Rights Systems

Core Content

This report provides an assessment of Lithuania's insolvency and creditor rights systems, focusing on legal and regulatory frameworks, enforcement procedures, and credit risk management practices. It was prepared by the World Bank based on information from Lithuanian authorities and is part of a broader joint IMF-World Bank initiative on standards and codes. The review was conducted in the context of the Financial Sector Assessment Program (FSAP) mission to Lithuania in November 2001.

Main Points

Legal Framework for Creditor Rights and Enforcement

• Collateral Regime: Lithuania has a reasonably effective legal environment for supporting creditor rights and debt enforcement, with a centralized and modernized collateral system.
• Types of Collateral: Security interests can be granted in both immovable and moveable assets, including receivables and future property.
• Market Development: While the legal framework is in place, markets for moveable assets remain underdeveloped and illiquid, limiting the effectiveness of such collateral.
• Enforcement Procedures: Unsecured claims require a writ of judgment for execution. The process can take 3–4 months without appeals, but may extend to over a year with appeals.
• Auction Mechanisms: Auctions are a key method for realizing secured claims, but the initial bid prices are set at the higher of the appraised value or the total claim amount, which may not be efficient. There is no provision for setting prices at a liquidation value.
• Price Setting Improvement: The report recommends improving price-setting practices to enhance creditor recovery and reduce delays.

Corporate Insolvency System

• Insolvency Laws: Lithuania has three insolvency laws in effect, including the Law on Enterprise Bankruptcy (1997), the Law on Enterprise Restructuring (2001), and the new Law on Enterprise Bankruptcy (2001).
• Bankruptcy Process: The insolvency process in Lithuania has been predominantly one of liquidation, with a slow and inefficient pace. Cases often take more than 3 years to resolve, with some taking up to 7–8 years.
• Case Backlog: From 1993 to 2000, only 215 of 1,030 filed cases were closed, indicating a significant backlog.
• Recovery Rates: Creditors recover minimal amounts from bankruptcy cases, with banks recovering about 1.1% and general creditors about 4.2% of the total claim value. Real recovery is nearly non-existent due to inflation and administrative inefficiencies.
• New Restructuring Law: The new Enterprise Restructuring Law (2001) aims to promote restructuring to avoid liquidation. However, it has been criticized as unworkable and unfavorable to creditors, with only a few cases filed under it as of November 2001.

Regulatory Framework for Insolvency

• Judicial System: The insolvency system is fragmented and inefficient. Judges lack specialization and are overloaded with bankruptcy cases.
• Administrators: The profession of bankruptcy administrators is marked by low standards, over-licensing, inadequate training, and inconsistent performance.
• Licensing and Training: The Bankruptcy Management Department of the Ministry of Economy is the primary regulator, but lacks capacity to effectively implement and monitor the system. Training courses are available, but they do not adequately prepare administrators for complex crisis situations.
• Professional Standards: The National Association of Bankruptcy Administrators (NABA) is working to improve standards and provide continuing education, but has not yet achieved its goals of standardization and regulation.
• Accountability Issues: There is low accountability for administrators, as the concept of professional liability is not well-developed. Administrators are not required to post bonds or carry liability insurance.

Credit Risk Management and Informal Workouts

• Internal Guidelines: Credit institutions in Lithuania have internal guidelines for debt monitoring and restructuring, which take into account the borrower's financial situation, business performance, and country risk.
• Restructuring Practices: Debt restructuring involves amending credit terms, such as extending repayment periods, changing interest rates, or capitalizing accrued interest.
• Informal Resolution: Informal corporate workouts are limited, and the legal framework for such practices is not well developed.
• Need for Improvement: The report suggests that better training, clearer procedures, and more efficient systems are necessary to improve the effectiveness of both formal and informal debt resolution mechanisms.

Key Recommendations

• Improve Auction Bidding Practices: Set more reasonable initial bid prices to enhance creditor recovery and reduce delays.
• Enhance Training and Professional Standards: Develop more comprehensive training programs and stricter licensing criteria for administrators.
• Promote Specialization: Encourage specialization among judges to improve the efficiency of bankruptcy proceedings.
• Strengthen Legal and Regulatory Frameworks: Harmonize and simplify the multiple insolvency laws to reduce confusion and improve case management.
• Develop Continuing Education: Implement continuing education requirements for administrators to maintain professional competence.

Conclusion

Lithuania's insolvency and creditor rights systems are in the process of development and modernization, but they remain inefficient, fragmented, and slow. While the legal environment is reasonably effective, enforcement procedures and the professional standards of administrators are inadequate. The new insolvency laws aim to improve the system, but their implementation is lagging. A more structured, specialized, and efficient approach is needed to support the recovery of creditors and the timely resolution of insolvency cases.