Foreign investors blast lack of action on insolvency law reform

Despite Latvia's Justice Ministry and government having resolved to reform the oft-criticized insolvency administration area in Latvia, there are no tangible results yet, Ģirts Greiškalns, director of the Foreign Investors Council in Latvia, told Latvian Radio Wednesday.

Greiškalns said that numerous but fruitless meetings over insolvency law reform have taken place following a spring publication of research by the council, showing that insolvency abuse may have cost Latvia hundreds of millions of euros.

"At least two pairs of trousers have been worn thin in these meetings," said the foreign investors' representative.

He claimed that no results have been brought about by these meetings and what's being done passes for an imitation of actual work.

According to Greiškalns, the Justice Ministry has assumed a "cozy bureaucratic role" by creating work groups, however it should do more to monitor and investigate possible criminal activities, which is already permissible according to Latvian law.

He claimed that the prosecution lacks resources to investigate crimes and that the Insolvency Administration should review insolvency processes and consider re-qualifying insolvency administrators.

At least one foreign capital company is turning to the council each week after facing problems in insolvency administration, said Greiškalns.

Foreign investors have long been pointing out insolvency abuse problems in Latvia.

Companies might be using the insolvency process to avoid surcharged taxes, and there have been claims over cases where insolvency administrators and courts prevent creditors from retrieving funds during insolvency processes.

According to the study by the Foreign Investors Council in Latvia and the auditing firm Deloitte, malicious insolvency processes and the overall abuse of insolvency has led to the Latvian economy losing €665 million between 2008 and 2014, and this number could increase to €852 million in the next ten years.

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