LITHUANIA Law and Practice Contributed by: Gintautas Šulija and Eduard Plešak, Šulija & Partners
2.9.2 Overview of Relevant Types of Voluntary and Involuntary Restructurings, Reorganisations, Insolvencies and Receivership Restructuring and bankruptcy proceedings in Lithu - ania are regulated by the Law on Insolvency of Legal Entities. The restructuring process aims to preserve a viable company in temporary difficulties, while still operating, and to help it avoid bankruptcy by getting assistance from creditors to overcome financial dif - ficulties through economic, technical, organisational and other measures. The bankruptcy process is aimed at liquidating a legal entity – ie, removing an insol - vent market participant from the market, even though bankruptcy proceedings can be transformed into restructuring proceedings and vice versa. The law states that bankruptcy proceedings can be carried out in out-of-court and in-court proceedings. The out-of-court bankruptcy proceedings are sub - ject to the consent of the company’s creditors by a qualified majority of votes (75%) and some additional conditions prescribed in the law. The restructuring proceedings can only be carried out under the super - vision of the court. Bankruptcy and restructuring proceedings can be vol - untary (initiated by the company itself) or involuntary (initiated by the creditors). According to the Civil Code 2001, reorganisation is described as the end of a legal entity without a liqui - dation procedure. A company may be reorganised in the following principal ways: • merging; and • splitting (dividing). As a matter of transaction law, reorganisation typically involves M&A transactions or is the result thereof. A resolution to reorganise a legal person shall be passed by members of the legal person or by the court in cases provided for by law. 2.9.3 Co-Ordination, Recognition or Relief in Connection With Overseas Proceedings Lithuania has not enacted any specific legislation based on the UNCITRAL Model Law on Cross-Border Insolvency. However, Lithuania has established a legal
framework for cross-border insolvency co-operation within the EU, primarily based on the Regulation (EU) 2015/848 and respective provisions of the Law on Insolvency of Legal Entities that ensure co-operation between courts and insolvency practitioners in differ - ent members states. For cases involving non-EU countries, Lithuanian courts apply principles of international co-operation and reciprocity to manage cross-border insolvency issues. 2.9.4 Effect of Lessee’s Insolvency on a Deregistration Power of Attorney The initiation of the insolvency proceedings should not affect the validity of the deregistration power of attorney. However, the deregistration power of attor - ney will be considered to have expired in the event that the lessee is liquidated as a result of the insol - vency proceedings and deregistered from the Register of Legal Entities. Please also refer to 2.8.7 Deregistration Power of Attorney regarding the potential unenforceability of a deregistration power of attorney issued by the lessee. 2.9.5 Other Effects of a Lessee’s Insolvency From the date of entry into force of the court order to open a bankruptcy case, all deadlines for the fulfilment of a legal entity’s obligations are considered to have expired. The insolvency administrator may inform the lessor that the lease agreement will continue if the administrator finds it economically reasonable for the company and its creditors. The law does not prohibit the lessor from terminating the lease and repossessing the aircraft when insolven - cy procedures are initiated. The rights of the lessor to repossess the aircraft should generally be respected and not be affected by the insolvency procedures. If restructuring proceedings are initiated, an aircraft lease agreement may be considered an essential agreement under the Law on Insolvency of Legal Enti - ties. The law prohibits creditors from terminating or changing the terms of an essential agreement to the detriment of the lessee until a court order approving the restructuring plan takes effect.
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