This article completes what we wrote last week.

The Covid-19 pandemic has thrown the global economy into recession. However, the warning issued by the industry experts and backed by the authors of a World Bank study  that the economy will experience a rapid increase in the number of insolvency proceedings and legal protection proceedings (LPP) at the end of Covid-19, has not come true as yet. This is because the financial difficulties brought on by the pandemic were countered with an unprecedented government intervention in the market and a huge package of financial aid, including working capital grants and idleness benefits. The economic downturn is now being aggravated by Russia’s invasion of Ukraine, as the consequences of the war are pushing up energy prices and fuelling price rises in general, inevitably leading to debt crises. Latvia seems likely to face an inevitable wave of insolvencies and LPP, so this article aims to introduce companies to Latvian LPP and out-of-court workouts in simple terms in order to highlight the characteristics of these debt restructuring tools, as well as the role of the debtor, the creditors and the supervisor within these proceedings.

When it comes to approving an action plan for a debtor’s legal protection proceedings, it is important to know which of its creditors can vote and to properly interpret the rules that place voting restrictions on certain persons. The insights outlined in this article can help companies in financial distress, creditor representatives and supervisors of legal protection proceedings find out whether only voting creditors have approved an action plan or whether the vote includes any person ineligible to vote.