The Ministry of Justice, in co-operation with the Insolvency Control Service, has prepared a report concluding that the spread of Covid-19 infection has not adversely affected the insolvency area and no significant risks have been identified in the insolvency area since the third emergency, informs the Ministry of Justice.
The Ministry, in co-operation with the State Revenue Service and the Ministry of Economics, as well as inviting the Bank of Latvia if necessary, will continue to carefully assess the current situation, including in the context of declaring a state of emergency, annual report data and other insolvency issues.
In general, the analysis of the insolvency situation and the shadow of the spread of Covid-19 infection and its mitigation, including the assessment of insolvency indicators since March 2020, and thus also the insolvency data of previous emergencies, shows that the available state support mechanisms undoubtedly contribute to solvency. maintaining or restoring the situation, thus reducing the number of insolvent merchants.
For example, during the pandemic, a benefit for employee downtime was introduced, another benefit was also introduced – wage subsidies, as well as working capital grants are available to entrepreneurs, and so on.
TM points out that due to the support mechanisms, the number of legal protection proceedings and the number of insolvency proceedings of a legal person have decreased. However, discussions with business and creditors’ organizations show that the overall situation with regard to insolvency aspects at the onset of the third emergency is relatively stable, and it is therefore too early to talk about renewing or extending previous or existing temporary regulations.
As in the case of legal entity insolvency proceedings, the reduction in the number of natural person insolvency proceedings compared to pre-Covid-19 infection is significant.3 This could be due to various support mechanisms, mainly those related to the suspension of certain activities, as well as impossibility to submit an application for insolvency proceedings of a natural person in person.
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