Sometimes debt maynot be recovered for the reason that debtors are too slow in collecting their receivables. The Lithuanian laws permit the creditors to issue a claim on behalf of the debtors, where such debtors failed to exercise their rights or refused to enforce their rights and so reduced own financial capacity to repay the debt (Indirect claim). The purpose of the indirect claim is to protect creditors' rights, when debtors are not acting in their best interests or have no interest in enforcing their rights. We advise our clients on all matter related to issuing the indirect claim or defending against it.
Knowledge & Insights
Terms for filing an indirect claim
The indirect claim can be made only when certain conditions are met:
If the indirect claim is upheld by the court, the assets returned shall be accounted as the debtor’s assets and must be used to meet all prorated creditors’ claims. This is different from the Pauliana claim, which is used to protect the interests of the creditor bringing claim only.
In case a debtor undergoes bankruptcy proceedings, bringing of an indirect claim has certain peculiarities. After the bankruptcy proceedings are opened, the company’s managing bodies are deprived of all of their corporate powers and the company is managed by the bankruptcy administrator, who is the relevant person to collect any outstanding receivables. In cases where the bankruptcy administrator does not collect receivables, the Lithuanian case law acknowledges the right of a creditor to bring an indirect claim in the name of the bankrupt company and so protect the rights of all creditors.
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