Insolvency & legal protection

Latvia's national airline airBaltic reported a net loss of €18.1 million in the first 17 days of its US Chapter 11 restructuring, even as available cash increased. The US court has allowed it to raise up to €350 million in new financing, and for now nothing changes for passengers, with the airline continuing to operate flights.

The US Bankruptcy Court for the Southern District of New York on 20 October approved another €35 million tranche of debtor-in-possession financing for Latvia's airBaltic. The funds form part of the airline's overall up-to-€350 million restructuring financing used during its US Chapter 11 process.

On 20 October the US Bankruptcy Court for the Southern District of New York issued a final order approving airBaltic's debtor-in-possession financing structure of up to €350 million, finding the fundraising process transparent. The ruling clears the way for further tranches as the airline's restructuring continues.

As part of its US restructuring process, airBaltic has been given until 10 November to meet one of its conditions — keeping certain agreements with the Lufthansa group in place. The extension was backed by most of the new creditors providing the airline with up to €350 million in financing, and failing the condition could affect future disbursements.

Draft amendments to the Civil Procedure Law, open for consultation until 26 October, would exempt employees from court fees when filing for their employer's insolvency over unpaid wages, and would suspend certain claims against a business successor during the process.

airBaltic has asked the US court to approve hiring financial advisory firm Seabury for its restructuring, with a proposed €250,000 monthly fee plus success fees tied to raising financing. The court has not yet approved the request; a hearing is scheduled for 19 October.

Amendments to the AML/CFT Law, published 14 October, remove references to the Insolvency Administrators' Association and several related articles. A transitional provision moves the Insolvency Control Service's procedural rights and duties in pending appeals of AML-breach decisions to the Ministry of Justice. The Saeima adopted the law on 1 October, the President promulgated it on 14 October, and it took effect 15 October - the day after promulgation.

After drinks maker Amber Latvijas Balzams's legal protection proceedings (opened in February 2026) were terminated in early October, the State Revenue Service reinstated its block on the company's bank accounts over overdue excise tax payments. The company says a global slump in the strong-spirits market and falling export orders caused cash-flow problems, and it is actively discussing ways to keep operating. With the case closed, creditors can revive their earlier claims.

The journal article traces the Insolvency Control Service's development from the Maksātnespējas administrācija agency created in 2002 through to its recent institutional reform.

The article analyses the Insolvency Law amendments adopted by the Saeima on 11 June 2026, drafted to align the law with the Cabinet's planned institutional reform.

The US Bankruptcy Court for the Southern District of New York has approved several uncontested first-day motions by airBaltic, allowing it to continue its aviation contracts, insurance, customer programmes, payments to certain foreign suppliers, tax payments and employee pay during its Chapter 11 process. The ruling means core operations can carry on while the restructuring proceeds.

The Ministry of Justice clarified that under the Insolvency Law, an administrator must include all creditors' identification and contact details in the creditors' claims register and send it to every creditor, so this data disclosure is lawful. However, each creditor counts as a data recipient under GDPR and may not use other creditors' data beyond the insolvency process's purposes. The question arose after a complaint that an administrator had sent roughly 500 people's personal data to all creditors in a case.

The Court Administration reports that in the first nine months of 2026 the employees' claims guarantee fund paid out EUR 2.17 million to satisfy 808 employee claims at 52 insolvent companies — almost double the same period in 2025. The largest payouts involved employees of companies including Skai Baltija, Ditton Piedvadķēžu Rūpnīca and SmartLynx Airlines.

The Court Administration published its September review of insolvency-process administration: decisions were taken on deposit payouts in over 30 corporate and nearly 60 personal insolvency cases, 19 orders transferred deposits to the state budget, and 429 decisions covered administrators' fees. The review gives a monthly snapshot of the insolvency administration workload.

In a judgment delivered 30 September in case No. 2025-23-01, the Constitutional Court found provisions widening the criteria for discharging individuals from debt obligations incompatible with Article 105 of the Constitution; the challenge was brought by a debt-collection company. The court held the rules lacked adequate mechanisms to verify that discharge reaches only genuinely insolvent debtors, upsetting the balance between creditors' and debtors' rights. The contested provision becomes void on 1 October 2027, giving the legislature time to revise it.

In case No. 2025-23-01 the Constitutional Court found that provisions of the Natural Person Insolvency Law, which allow a debt discharge based only on income and formal criteria without assessing expenses and assets, violate Article 105 of the Constitution. The Court held that this can result in unwarranted discharge of solvent debtors, infringing creditors' property rights. The provisions lose force from 1 October 2027, giving the legislature time to design a new mechanism based on proven inability to pay.

Russian-language outlet bb.lv covers the same Constitutional Court ruling on personal debt-discharge rules, adding comments from judge Jānis Neimanis and court chair Irēna Kucina. The judge notes that after the rules were widened, the number of people using the debt-discharge procedure rose from nine to several hundred. The current rules stay in force until October 2027 while the legislature prepares a replacement.

On 30 September, in case No. 2025-23-01, the Constitutional Court found provisions of the Law on Discharge of Individuals from Debt Obligations unconstitutional under Article 105, because they do not ensure that only debtors genuinely unable to pay are discharged. The case was brought by a licensed debt-recovery service provider, which argued that the current income and debt-amount thresholds excessively restrict creditors' property rights.

As of 1 October 2026, the functions of the Insolvency Control Service are split between the Justice Ministry, the Court Administration, and the Latvian Insolvency Administrators' Association. The Ministry takes over supervision of administrators and TAP overseers plus disciplinary cases, while the Court Administration manages the employee-claims guarantee fund and the insolvency records system.

A five-member unsecured creditors' committee for airBaltic has been formed in the US Bankruptcy Court for the Southern District of New York as part of the airline's Chapter 11 restructuring. Members include Airbus Canada, leasing firms Jackson Square Aviation Ireland and AVAP Leasing (Europe), plus the Tallinn and Lithuanian airports. The first creditors' meeting is set for October 22. Among airBaltic's largest obligations are about $66.5 million owed to Pratt & Whitney and €42.4 million in EU emissions-quota liabilities.

The Insolvency Control Service reminds that companies facing financial difficulty can use the legal protection proceeding (TAP), during which the debtor's own management stays in charge while a supervising person oversees the process under the Insolvency Law. TAP aims to restore solvency while safeguarding creditors' and employees' claims, particularly unpaid wages.

Latvia's Insolvency Control Service ceases operations on 30 September, and from 1 October its functions split between the Justice Ministry (administrator supervision, discipline), the Court Administration (employee guarantee fund, deposits, the EMUS electronic registry) and the Administrators' Association (exams, ethics). Pending filings transfer automatically, and payers must use the Court Administration's new deposit account from 1 October.

Also reported by: lvportals.lv

MKD explains that legal protection proceedings (TAP) let a financially struggling company restructure without becoming insolvent; existing management keeps running the business while a court-appointed supervisor oversees the process. Employees get special protection - wages cannot be cut or delayed without the employee's consent, and disputes should first go to the employer, then to the supervisor. From 1 October 2026 the Ministry of Justice takes over this supervisory function from MKD.

TV3 reports that in the remaining months of this year the Latvian government must decide on new investment in national carrier airBaltic and on guarantees for repaying a €350 million loan. The company must reach agreement with at least two investors by year-end, or it faces bankruptcy.

The article details national carrier airBaltic's funded debt and leasing obligations, running to hundreds of millions of euros, as they stood on 14 September when the company filed for Chapter 11 restructuring in the US.

"Ir" analyses the protest staged by passenger carriers two weeks before the elections, for which they now face a fine of almost one million euros, and assesses whether the action achieved its goal.

"Ir" examines what national carrier airBaltic's announced debt restructuring under the US Chapter 11 framework means, and how it could affect the company's creditors and passengers.

Latvia's Insolvency Control Service (MKD) ceases operating on 30 September 2026, with its functions transferring to the Justice Ministry and the Court Administration. From 1 October, insolvency-process deposits must go to a new Court Administration account (LV42TREL819045817100B), and employee-claim/administration-cost reimbursements to account LV44TREL219045817700B; MKD's email and official e-address can only be used until 12:00 on 30 September.

Latvia's regional passenger carriers warn that long-term contracts signed before a succession of global crises no longer match economic reality. They say rising fuel prices and other costs have made fulfilling the state contract loss-making for some companies, creating a risk of bankruptcy.

In an interview, Deputy State Secretary of the Ministry of Justice Anda Smiltēna explains why, from 1 October, the functions of the Insolvency Control Service (MKD) will be split between the Ministry of Justice, the Court Administration and the Insolvency Administrators' Association. She notes that so-called "empty" insolvency proceedings remain a major problem, with unsecured creditors recovering only about 5% of claims on average, and stresses that reform of the sector must better protect creditors' interests.

Valka region's financial situation remains critical: over the course of 2026 the municipality has failed to substantially improve it, and the Ministry of Environmental Protection and Regional Development is weighing further measures, including deferring payments, to prevent the region sliding into insolvency.

airBaltic disclosed that most of its first €140 million Chapter 11 financing tranche — €78.925 million — will fully repay €71.666 million owed to Export Development Canada and Axiom Baltic Services, secured by aircraft, spare engines and simulators pledged as collateral. Total DIP financing reaches €350 million at SOFR +8%, with the process expected to conclude by mid-2027.

The Senate's Civil Cases Department has confirmed that an insolvency process administrator has no right to decide, in place of an heir, whether to accept or reject an inheritance — the Senate rejected the administrator's ancillary complaint against a Riga Regional Court ruling, holding the claim inadmissible.

LV portāls answers whether a court would approve personal insolvency proceedings for a debtor with €40,000 in consumer-credit debt who recently gambled and registered a 50-year self-exclusion. The Insolvency Control Service explains that the law does not explicitly bar gambling, but participation within the three years before filing can indicate bad faith and affect the court's decision. Insolvency is meant as a second chance only for good-faith debtors, and courts assess each case individually.

With MKD closing on September 30, from October 1 insolvency-process deposits must go to a new Court Administration account (LV42TREL819045817100B) instead of MKD's account. MKD asks that deposits not be paid into its account on September 30 itself but be held until October 1; existing balances will be transferred automatically. MKD's email and official e-address will be open only until 12:00 on September 30, after which enquiries go to the Ministry of Justice or Court Administration.

The Senate rejected an insolvency administrator's appeal seeking to void a debtor's failure to accept his mother's inheritance, which the administrator argued harmed creditors' interests. The Senate ruled that accepting or renouncing an inheritance is a personal, non-transferable right of the heir that an insolvency administrator cannot exercise on the debtor's behalf. This upholds the lower courts' refusal to let the administrator bring such a claim in the debtor's name.

PTAC reminds the public that despite airBaltic's US court protection filing, the airline must still fully honour EU Regulation 261/2004 passenger rights on delays, cancellations and denied boarding, including refunds, care and compensation. PTAC encourages consumers to keep using tickets already bought, since the carrier keeps operating, and says it will keep monitoring compliance.

An explainer describes the US Chapter 11 procedure, which lets a financially troubled company keep operating while restructuring debts and other creditor obligations under court supervision. It notes airBaltic chose this route because the US court system has extensive experience with such cases, and that a successful process could leave the airline smaller but more financially stable.

The Insolvency Control Service (MKD) will cease operating on September 30, 2026; from October 1 its functions pass to the Ministry of Justice and the Court Administration, ensuring continuity of services and pending cases. MKD's website stays online until December 31, 2026 as a signpost to the new arrangements, and documents already filed will not need to be resubmitted. Content is being migrated to the new agencies' sites gradually.

On September 8 the Cabinet of Ministers adopted Regulation No. 533 keeping the business-risk state fee unchanged for 2027, at 0.36 euro per employee per month. The fee funds the Employees' Claims Guarantee Fund, which covers employee claims when an employer becomes insolvent; the Fund's administration moves from MKD to the Court Administration on September 30. The regulation takes effect January 1, 2027.

A US court has approved airBaltic's filed documents and opened Chapter 11 proceedings, placing the airline under US jurisdictional protection from creditor claims. The carrier secured a binding commitment from lenders (Barclays, Hayfin Capital Management, Morgan Stanley, Oaktree Capital Management, Strategic Value Partners) to provide €350 million in DIP financing at roughly 12% interest to keep operations running during the process.

airBaltic has filed for Chapter 11 protection in a US court, a procedure that lets the airline keep operating while restructuring its debts and other obligations with creditors under court supervision. Prime Minister Andris Kulbergs stressed the solution requires no extra state-budget funding, and simultaneously asked for government decisions on airBaltic over the past 20 years to be declassified.

airBaltic has filed for Chapter 11 financial restructuring in a US court and published a list of its 30 largest creditors. The process takes place ahead of any formal insolvency filing and shields the company from individual creditor claims, letting it negotiate debt restructuring under court supervision while flights and customer service continue uninterrupted.

airBaltic's US bankruptcy court filing states its creditors could number between 10,001 and 25,000, with both assets and liabilities estimated at $1–10 billion. In the disclosed list of the 30 largest unsecured creditors, the biggest claim — $66.518 million — belongs to engine maker Pratt & Whitney, followed by Latvia's Environment, Geology and Meteorology Centre ($42.432 million), the state via the Transport Ministry ($20.067 million) and the SRS tax authority (€15.428 million).

MKD published the results of its first-half-2026 inspections of insolvency administrators' compliance with the anti-money-laundering/counter-terrorism-financing law and the sanctions law. The most common issues were incomplete documentation, weak internal control systems and inadequate client due diligence; four administrators received guidance for minor breaches, and one case resulted in a formal sanctions report for failing to report a suspicious transaction. MKD notes the pattern of violations is largely unchanged from 2024-2025.

At a conference on September 9, around 150 participants discussed the future of insolvency policy, emphasizing a shift from a "liquidation culture" to a "rescue culture" focused on early detection of financial trouble and preserving viable businesses. The Insolvency Control Service will cease operating on September 30, 2026, with its functions transferring to the Ministry of Justice and the Court Administration from October 1. Officials named four priorities: balancing process speed with oversight, closer inter-agency coordination, developing the EMUS register into an analytical tool, and reviewing board-member liability rules.

Debt-collection firms that bought debt portfolios at market price are challenging amendments in force since 21 January 2025 that widened who can have debts written off, arguing the rules disproportionately limit property rights and cut portfolio values; the case is heard in writing, with a ruling due within 30 days of the hearing.

In August 2026 the Insolvency Control Service (MKD) adopted 92 decisions satisfying employee claims from the employee claims guarantee fund, paying out a total of EUR 223,388 to 87 employees in the proceedings of nine insolvent employers. The largest payouts went to insolvent AS "Ditton pievadķēžu rūpnīca" (50 employees, EUR 125,920) and insolvent SIA "GBM" (13 employees, EUR 48,303). The fund is made up of employers' monthly contributions of EUR 0.36 per employee.

The Insolvency Control Service (MKD) has compiled data on the disbursement of insolvency proceedings deposits in August 2026: 15 decisions were adopted on the disbursement of EUR 23,000 in legal-entity insolvency proceedings and 67 decisions on the disbursement of EUR 56,640 in natural-person proceedings. By 16 orders, EUR 16,760 in legal-entity deposits were transferred to state budget revenue, and by one decision EUR 740 was refunded from the MKD's deposited funds account at the Treasury. The deposit is paid to the administrator to cover the costs of the proceedings or refunded to the applicant if the proceedings are not declared or are financed otherwise.

On 9 September 2026 the Insolvency Control Service is holding the conference "Insolvency Transformation" on the sector's future during the transition period: the Service will cease operating as an independent institution on 30 September 2026, and from 1 October its functions pass to the Ministry of Justice and the Court Administration. On the agenda: disbursement of funds in insolvency proceedings, supervision of proceedings, the redesign of the Electronic Insolvency Records System and the effectiveness of board members' liability. In-person attendance is by invitation, with a live stream on the Ministry of Justice's YouTube channel.

Also reported by: mkd.gov.lv

The Insolvency Control Service (MKD) has created a website section, "Insolvency Transformation", on the Service's liquidation and the redistribution of its functions under Cabinet of Ministers Order No. 138 of 13 March 2026. The MKD's last working day is 30 September 2026; from 1 October, supervision of administrators, examination of complaints and disciplinary matters pass to the Ministry of Justice, while administration of the employee claims guarantee fund passes to the Court Administration; administrators' qualification examinations will be organised by the Latvian Association of Insolvency Administrators. Pending cases continue to be handled by the MKD until 30 September.

On 20 August the Insolvency Control Service held an online seminar for insolvency administrators on filing employee claims in the EMUS system and applying labour law during insolvency proceedings. 45 administrators attended; the session was led by the Service and the State Labour Inspectorate. Topics included termination of employment contracts and guarantee fund payouts.

Latvia's Finance Ministry and central bank are advancing bills implementing an EU directive on recovery and resolution for insurers and reinsurers in distress: firms must first prepare recovery plans, and if these fail, a resolution authority could use asset sales, a temporary bridge entity, or liability restructuring. The plans also include an insurance protection fund and lighter requirements for small, simple insurers. The bills are currently before the government.

airBaltic bondholders agreed to capitalize interest payments due 14 August and 14 November — adding them to the bond principal instead of cash payment — allowing the state airline to avoid declaring insolvency. Investors also temporarily waived minimum liquidity requirements until 14 November. Quarterly interest obligations total EUR 13.775 million, tied to a 2024 bond issue of EUR 380 million at 14.5% annual interest.

Draft amendments to Regulation No. 995 have been submitted to ministries for approval, changing the procedure by which the insolvency process administrator submits employees' claims against an insolvent employer — going forward the Court Administration will receive them. The amendments also clarify the procedure for paying the administrator's remuneration. The change affects employees seeking compensation from an insolvent employer.

Amendments to Cabinet Regulation No. 837 have been submitted for inter-ministerial approval, providing that applications for inclusion in, or exclusion from, the list of insolvency administrator candidates will now be handled by the Ministry of Justice. The change shifts this function to a different responsible authority. It affects the selection and oversight procedure for insolvency administrator candidates.