Insolvency & legal protection

The Constitutional Court has initiated a case on the compliance with the Constitution of provisions of the Law on the Release of Natural Persons from Debt Obligations – provisions allowing a person to be released from debts if their income and the amount of their obligations are below the statutory thresholds and the social criteria are met. The application was filed by a licensed debt collection company, which argues that widening the circle of eligible persons has substantially reduced the value of its portfolio of claims purchased at market price, violating property rights and the principle of legitimate expectations.

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.

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.

The Insolvency Control Service (MKD) has announced the conference "Insolvency Transformation" on 9 September 2026 at the Ministry of Justice (10:00–14:30, with a live stream on YouTube), held ahead of the Service's closure on 30 September and the transfer of its functions to the Ministry of Justice and the Court Administration from 1 October. Four panel discussions: guarantee fund payouts and financing of proceedings; insolvency supervision and AML requirements; development of the Electronic Insolvency Records System (EMUS); the effectiveness of board members' liability as a creditor protection tool. Participants include MKD Director Baiba Banga, Ministry of Justice representatives, judges, administrators and creditor representatives.

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.

Artūrs Ševčuks and Elīna Rišmite analyse the civil liability of board members in a company's liquidation proceedings. The end of their term of office does not end liability for acts or omissions during that term: under Section 169 of the Commercial Law, board members are jointly and severally liable for losses caused to the company unless they prove that they acted as diligent managers or in good faith carried out a lawful decision of the members. Commencing liquidation does not release them from such claims. The article is paywalled.

The Cabinet approved draft laws by the Finance Ministry and the Bank of Latvia transposing EU Directive 2025/1 on recovery and resolution of insurers. Insurance and reinsurance companies will have to prepare recovery plans, and if a company faces serious difficulty, the supervisor may apply resolution tools such as business or asset sales, a bridge institution, or write-down of liabilities. Costs will be covered by the Insurance Guarantee Fund, funded by licensed insurers.

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.

Fintech firm Capitalia launched a monthly financial-health index for Latvian companies, scoring over 3,000 firms in July. The average score was 87/100, but over a quarter carried tax arrears. The tool could help creditors gauge counterparty insolvency risk.

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.