Proceedings / Effects of Registration

Can judicial decisions opening insolvency proceedings be registered in the Land registry in accordance with your legislation?

If affirmative, what effects do these registrations produce?

The Land Registry in Lithuania does not register opening insolvency (bankruptcy) proceedings, even as the legal fact.

In the Land Registry we record the following legal fact “Final decision (judgement) of the court that affects legal status of real property” where the following information is entered: “On opening of insolvency (bankruptcy) proceedings” and information about the person who is appointed as insolvency (bankruptcy) administrator is entered in the Register entry.

There are two types of insolvency (bankruptcy) proceedings distinguished:

a)    If insolvency (bankruptcy) proceedings are opened against legal entity, the court seizes property of that legal entity, and such seizure restricts all actions with that property unless the institution that seized property is informed thereof.

b)  If insolvency (bankruptcy) proceedings are opened against natural person, the Land Registry, having received a judgement of the court where real property is identified, registers legal fact in Real Property Register about final decision (judgement) of the court that affects legal status of the real property concerned.

Article 10 “Opening of Insolvency (Bankruptcy) Proceedings in Court” in the Law on Bankruptcy of Enterprises of the Republic of Lithuania says that:
Upon adopting a ruling to initiate insolvency (bankruptcy) proceedings, the court or the judge must:

1) appoint the bankruptcy administrator of the enterprise;

2) seize the immovable property and other tangible fixed assets of the enterprise effective until the entry into force of the ruling to initiate bankruptcy proceedings;

3) not later than on the next working day issue a written notification of the initiated bankruptcy proceedings to the Register of Legal Entities, to the institution authorised by the Government specified in paragraph 10 of Article 11 of this Law, the enterprise (where the ruling has been adopted in written proceedings – also to the creditors and administrator), to the Bank of Lithuania if bankruptcy proceedings have been initiated against an enterprise which is included in the list of system participants published by the Bank of Lithuania in accordance with the Law on Settlement Finality in Payment and Securities Settlement Systems.
Also if bankruptcy proceedings have been initiated against an insurance and reinsurance company, a financial brokerage firm, a management company, an investment company or a public limited liability company considered to be an issuer of securities under the Law on Securities not later than on the next working day following the entry into force of the court ruling to initiate bankruptcy proceedings to the Register of Legal Entities and within ten days from the entry into force of the ruling to initiate bankruptcy proceedings to: the creditors, all persons who have leased, borrowed or are keeping the assets of the enterprise in custody or using or managing them on any other grounds.
The Ministry of Finance if the enterprise is the recipient of a loan borrowed on behalf of the State or guaranteed by the State, the tax administrators, the state social insurance and compulsory health insurance administrators, credit institutions, financial brokerage firms and insurance companies providing services to the enterprise and the institution exercising the rights and duties of the owner of the state or municipal enterprise in bankruptcy.

Article 6 “Opening of Insolvency (Bankruptcy) Proceedings against Natural Person” in the Law on Bankruptcy of Natural Persons says that when a judgement of the courtopen insolvency proceedings is final, the court must not later than on the next working day issue a written notification, including a certified copy of the judgement, to:

4) bailiffs whom instruments permitting enforcement are sent to with regard to recovery from that natural person or seizure of his/her property;

5) credit institutions that service that natural person;

6) state registers that administer data on the property subject to registration.

As it was mentioned before, there are two types of insolvency (bankruptcy) proceedings distinguished: if insolvency (bankruptcy) proceedings are opened against legal entity, the court seizes property of that legal entity. Seizure is registered in the Register of Property Seizure Acts, and information through the register interface is transferred to the Real Property Register. Such seizure restricts all actions with that property unless the institution that seized property is informed thereof.

If insolvency (bankruptcy) proceedings are opened against natural person, the court notifies the state registers that administer data on the property subject to registration (e.g. the Real Property Register) and such state registers record the legal fact about a final decision (judgement) of the court.

Registration is performed when a decision (judgement) is received. Such registration is also possible if the decision (judgement) is submitted by the appointed bankruptcy administrator or other person interested in registration of such a decision (judgement).