On Thursday, June 11, Latvia’s parliament, the Saeima, adopted amendments to the Insolvency Law and related laws in the final reading, which liquidate the Insolvency Control Service and transfer its functions to the Ministry of Justice, the Court Administration and the Latvian Association of Insolvency Administrators. From now on, the Ministry of Justice will have to supervise insolvency administrators.
“The amendments will ensure the division of competences in the field of insolvency, strengthen the quality of supervision and at the same time reduce the administrative burden. This is an important step in improving insolvency processes, which will promote the efficiency of public administration,” Andrejs Judins (New Unity), the chairman of the Legal Committee responsible for the progress of the draft law in the Saeima, previously stated.
The Ministry of Justice will continue to ensure the supervision of insolvency administrators and persons supervising the legal protection process, the examination of administrative violation cases, as well as the appointment, removal and initiation of disciplinary cases of administrators.
In turn, the Court Administration will take over the functions related to the Employee Claims Guarantee Fund, including the consideration of applications for the satisfaction of claims of employees of insolvent employers, the payment of deposits and the maintenance of the electronic insolvency accounting system.
The amendments also provide for the improvement of the regulation of the examination and disciplinary liability of administrators. Similar to other legal professions, the role of the industry association has been strengthened in this area. The provisions of the law have been harmonized with the judgment of the Constitutional Court, which clarifies the restrictions for candidates for the position of insolvency administrators.
The changes are necessary to improve the efficiency of public administration and optimize the use of resources in the field of insolvency supervision. It is planned that out of 55 full-time positions in the Insolvency Control Service, 16 will be eliminated, 22 will be transferred to the Ministry of Justice, and 17 will move to the Court Administration.
The amendments to the law will enter into force on October 1st.