FAQs – DEALING WITH A BANKRUPT’S AFFAIRS IN LATVIA

These FAQs are to assist official receivers in understanding the subject and should be read in conjunction with the more detailed guidance given in the main body of the Technical Manual chapter.  Links to the relevant parts of the Technical Manual are given within the FAQs.

Why might I need to know how to deal with a bankrupt’s affairs in Latvia?

Generally here we are talking about Latvian nationals who have chosen to re-locate to the UK leaving assets (probably property) behind in Latvia.  The EC Regulation on Insolvency Proceedings 2000 provides that an order made in one country of the EU (except Denmark) is recognised throughout the EU, giving the trustee power to deal with property situated elsewhere in the EU – which includes Latvia (see paragraph 43.15.7).

The official receiver should, however, check that the bankrupt’s centre of main interests is in England/Wales – otherwise the order ought not to have been made here (see Chapter 43.0, Part 2).

So, assuming the order has been correctly made, the official receiver automatically has power to deal with property in Latvia?

Not quite.  Latvian Law provides that, before the official receiver, as trustee, can take any action in respect of property situated in Latvia, he/she must register the bankruptcy in that country (see paragraph 43.15.2).

How is this registration achieved  (amended May 2014)?

This is achieved by sending a form, accompanied by a notarised translated copy of both the bankruptcy order and the notice of no meeting, to the relevant Latvian authority (see paragraph 43.15.3).

What is a notarised translation?

This is a copy of a document (the bankruptcy order in this case) that has been certified to be an official translation.  This can be carried out by The Service’s translation service providers (see paragraph 43.15.5).

So the official receiver can then deal with property?

Yes, but he/she must respect the rights of the chargeholders (essentially the same as he/she would in the UK) (see paragraph 43.15.8) and, of course, the property must be worth the costs of dealing with (see paragraph 43.15.10).

How might I value a Latvian property?

The value of the property might be apparent from information and documents provided by the bankrupt (see paragraph 43.15.13), or the information might be available on the internet, by comparing the prices of similar properties (see paragraph 43.15.14).  If not, it may be necessary to engage a local estate agent (hopefully for free) or a local surveyor/valuer (see paragraph 43.15.15).  To establish how much the property is worth to the estate, it will also be necessary to ascertain the amount of outstanding charges and any third-party interests.  This is achieved the same way as for a property in the UK – that is, from correspondence with the chargeholders and/or documentation provided by the bankrupt (see paragraph 43.15.16).

I need to know who the chargeholders are on the property as the bankrupt is not sure.  Can I conduct a search?

It is possible to conduct an on-line search of the property details at the Latvian Land Registry, following the guidance in the Technical Manual (see paragraph 43.15.21).

Assuming the property is worth dealing with, how might the official receiver protect his interest?

For the most part, this is the same as for a property in England and Wales – that is, ask the chargeholder(s) to note the official receiver’s interest in the property and seek to protect the interest at the Latvian land registry (see paragraph 43.15.17).

Of course, the official receiver may instead seek the appointment of an insolvency practitioner as trustee in the event that the bankrupt’s interest is significant (see Chapters 16 and 17).

How might the official receiver protect his/her interest in property at the Latvian land registry?

The final details of this are still being investigated by Technical Section.  It is likely to be possible to achieve the necessary registration by writing to the Latvian land registry, but it is probably also necessary to engage a Latvian notary (a type of lawyer) to oversee the process.  Official receivers who need to seek protection of the property at the Latvian land registry should seek advice from Technical Section (see paragraph 43.15.19).

What should I do after protecting the interest in the property?

The property interest may then be passed to the LTAU to monitor in the usual way before seeking to realise – for which the engagement of a local solicitor will be required (see paragraph 43.15.30).

What if the property is not worth the cost of protecting?

The official receiver may simply ‘abandon’ the property to the chargeholders, asking them to note his/her interest in any surplus following a sale (see paragraph 43.15.11).

What about a disclaimer?

It is possible to disclaim the property, but only if it has some onerous obligation attached to it – such as an obligation to obtain public liability insurance if it is empty (see paragraph 43.15.11).