Following an October 15 discussion on the subject a broad coalition of organizations – the American and Norwegian Chambers of Commerce in Latvia, the Foreign Investors’ Council in Latvia (FICIL) and the Latvian Chamber of Commerce and Industry – said continued reform of the insolvency system is needed "in order to provide confidence and security of both foreign and local investments."
"Inefficient insolvency process has a negative impact on the economy causing losses to the businesses, employees and the public sector... Over the course of the past two years there have been several attempts to reform the insolvency system.
Although the legislation has been amended, difficulties still prevail. As a result the economy is facing tremendous losses.
Therefore the business community continues to voice its concerns about the credibility of the insolvency system," a statement released via the American chamber of Commerce in Latvia said.
Investors are concerned that the average recovery rate of secured creditors in Latvia (42%), is substantially below that in OECD high-income countries (72%).
The recovery rate of unsecured creditors, including the State Revenue Service, in last 7 years was less than 2%, also behind international benchmarks.
The current system is costing Latvia around a billion euros a year, it was claimed.
Those interested in seeing a video of the whole insolvency discussion can do so HERE.
Proposals for the reform of the insolvency laws written by FICIL can be read HERE.
