Legal Aspects of Insolvency of Natural Persons in the Baltic States

Author:Goda Ambrasaite, Rimvydas Norkus
Pages:176-185
 
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176 JURIDICA INTERNATIONAL 21/2014
Goda Ambrasait Rimvydas Norkus
Dr., Associate Professor Dr., Professor
Mykolas Romeris University, Vilnius Mykolas Romeris University, Vilnius
Judge, Vilnius Regional Court Judge, Supreme Court of Lithuania
Legal Aspects of
Insolvency of Natural Persons
in the Baltic States
1. Introduction
After several years of intense discussions, the Law on Personal Bankruptcy of the Republic of Lithuania
(LPB) came into force, on 1st March 2013. Lithuania was the last of the Baltic States to introduce a legal
mechanism to deal with insolvency of a natural person to its legal system. In Estonia, provisions for pro-
ceedings for release of a debtor who is a natural persons from obligations took effect in 2004 (via Chapter
11 of the Bankruptcy Act), while in Latvia they were introduced in 2008 and substantially amended in 2010,
with a view to facilitating and increasing the availability of bankruptcy proceedings.
The LPB is often criticised as being too laconic and leaving too many questions to be resolved by judicial
practice, which has only begun its evolution. The purpose of this article, therefore, is to analyse the main
features of the model for bankruptcy of a natural person as chosen by the Lithuanian legislator, in compari-
son with the legal regulation of the other states in its region—Latvia and Estonia—with particular emphasis
on the principle of good faith and the need to balance the interests of the debtor and creditors. The authors
attempt to assess whether initial judicial practice corresponds to the intents of the legislator and propose
some solutions for more effective functioning of the legal institution of personal bankruptcy.
2. Objectives in the establishment of a legal basis
for bankruptcy of a natural person, adoption of the Law
on Personal Bankruptcy of the Republic of Lithuania,
and rst experiences in its application
The modern doctrine of a ‘fresh start’ re ects the difference between the previous paradigm, of punishment
for an insolvent person, and the recent focus on economic activeness and ef ciency*1. By legalising the
bankruptcy of an individual, two, at rst glance contradictory, aims are pursued: to protect the interest of
creditors and to grant a fresh nancial start to the debtor by releasing him from some debts. In the opinion
1 P. Astromskis et al. Fizinio asmens bankroto problema: teisiniai aspektai [‘The problem of bankruptcy of a natural person:
Legal aspects’]. – Jurisprudencija 121 (2010)/3, p. 214 (in Lithuanian).
http://dx.doi.org/10.12697/JI.2014.21.16

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