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05.05.2021

M. Petrošiutė, G. Šarauskaitė: Appeal in cassation against insolvency rulings – is that allowed by law?

By the ruling of the Supreme Court of Lithuania, made in civil case No. e3K-3-211-823/2021 on 31 March 2021, the final and undisputed practice was formed, regarding the possibility to appeal in cassation against the ruling adopted by the Lithuanian Court of Appeal to open the insolvency proceedings.

  • Regulation. The Law on Insolvency of Legal Entities of the Republic of Lithuania (hereinafter – the “Insolvency Law”), which entered into force on 1 January 2020, provides the right to submit an appeal against the decision of a regional court to initiate insolvency proceedings to the Lithuanian Court of Appeal. However, contrary to the Law on Bankruptcy of Enterprises of the Republic of Lithuania, which was in force before the Insolvency Law, the Insolvency Law does not establish a prohibition to appeal in cassation against the ruling of the Lithuanian Court of Appeal in insolvency proceedings.
  • Problem. In the absence of direct regulation allowing or prohibiting the appeal in cassation of such rulings, the question arose as to whether the rulings of the Lithuanian Court of Appeal on the initiation of insolvency proceedings could be appealed to the Supreme Court of Lithuania. For this reason, there were persons who filed appeals in cassation against the ruling of the Lithuanian Court of Appeal to open the insolvency proceedings.
  • Solution. In its final and undisputed ruling, the Supreme Court of Lithuania clarified that in civil proceedings a court’s procedural decision to initiate a case cannot be reviewed nor in appeal, neither in cassation. As a result, there is an exception formulated in Insolvency Law, by indicating one specific court to which an order for insolvency proceedings may be appealed – the Lithuanian Court of Appeal. However, the cassation against the rulings of this court to open the insolvency proceedings is not possible, even in the absence of a separate regulation in Insolvency Law.
  • Importance. After the Supreme Court of Lithuania explained in detail that the rulings of the Lithuanian Court of Appeal to open the insolvency proceedings are not the subject to appeal in cassation, it was ensured that issues related to the insolvency of legal entities would be resolved more promptly, preventing delays in insolvency proceedings.

Commentary by PRIMUS Dispute Resolution Practice Group:

Monika Petrošiutė
Associate
monika.petrosiute@primus.legal

Gabrielė Šarauskaitė
Junior Associate
gabriele.sarauskaite@primus.legal

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