Proposed Changes on the Lithuanian Law on the Banks: to Legitimate Equal Protection of All Bank Creditors
As a result of the bank Snoras bankruptcy case some changes of the Law on the Banks have been proposed and registered on 8th October at the Lithuanian Parliament. The purpose of suggested changes is to vouchsafe equal protection of all bankrupt bank creditors property rights.
According to the present regulation the state enterprise “Deposits and Investments Insurance” has priority against other creditors of a bankrupt bank, claims whereof are satisfied in a second row; while claims of all other creditors (with few specific exceptions) are satisfied in a fourth row. In initiators point of view current law gives an untenable priority for the state enterprise “Deposits and Investments Insurance”. Initiators of changes believe current order is discriminative and are seeking to abolish exclusive rights for the state saying the state takes part in commercial relations as all other private individuals and legal persons.
If these new changes of the law would be adopted, in case of a bank bankruptcy when there is not enough bank assets to satisfy claims of all the creditors, claims would be satisfied proportionally with no privileges to the state enterprise “Deposits and Investments Insurance”.