The personal bankruptcy framework in Lithuania has been in place for more than a decade – since 1 March 2013, when the Law on Personal Bankruptcy entered into force. Over this period, it has evolved from an exceptional measure into an increasingly common practical tool enabling honest individuals who can no longer meet their financial obligations to restore solvency and return to economic life.
This trend is reflected in the latest statistics. In the first half of 2026, bankruptcy proceedings were initiated against 64 individuals, 6.7% more than during the same period in 2025 (60 individuals).
By contrast, bankruptcy proceedings involving legal entities are moving in the opposite direction. In the first half of 2026, 513 bankruptcy proceedings involving legal entities were initiated, of which fourteen were later annulled. During the same period in 2025, there were 550 such proceedings, of which nine were later annulled. This represents a 6.7% decrease.
The amendments adopted this year to the Law on Insolvency of Legal Entities of the Republic of Lithuania and the Law on Personal Bankruptcy of the Republic of Lithuania reflect a broader legislative direction. This article reviews the key amendments, most of which will enter into force on 1 January 2027. The provisions on the digitalisation of creditors’ meetings will apply from 1 January 2028.
Amendments to the Law on Insolvency of Legal Entities
Stricter impartiality requirements for insolvency administrators
One of the most important amendments is the significant expansion of restrictions on the appointment of insolvency administrators and the strengthening of their impartiality requirements.
In practice, conflicts of interest often arise not directly, but through family, kinship or business ties. Therefore, under the new regulation, an insolvency administrator will be able to enter into transactions with other insolvency administrators, related legal entities or other entities where a conflict-of-interest risk may arise only with creditors’ approval. This requirement will also apply to transactions with legal entities related to the administrator, its participants, manager, members of management bodies, accounting personnel, employees or their close relatives.
A prohibition is also introduced on an insolvency administrator who is a natural person working in more than one legal entity. This restriction aims to prevent potential manipulation of the administrator selection system and ensure fair competition. During the transitional period, until the end of 2027, administrators handling proceedings commenced before the entry into force of the law will still be allowed to work in several companies, provided that a reorganisation by way of merger is taking place and is completed by 2028.
Enforcement measures and monetary fines
The range of enforcement measures applicable by the supervisory authority and in relation to the Chamber of Insolvency Administrators is being expanded by introducing monetary fines. Such fines may range from 1 to 50 minimum monthly wages, currently amounting to almost EUR 58,000.
The supervisory authority will also be entitled to impose financial sanctions on the Chamber of Insolvency Administrators itself if it improperly performs its assigned functions, including organising examinations, professional development or supervision of professional ethics.
Environmental safeguards
The amendments introduce additional environmental safeguards where the assets of a bankrupt company include unmanaged waste or contaminated soil. In such cases, out-of-court bankruptcy proceedings will not be possible. The court will be required to inform the environmental protection authority about each such case and approve the amount of waste management costs.
Digitalisation of creditors’ meetings
Creditors will be able to vote electronically through the Insolvency Portal. This is expected to speed up decision-making, increase transparency, reduce the administrative burden and limit the use of paper documents.
Changes to directors’ liability
The amendments provide more detailed regulation of the obligations of the manager of a legal entity to initiate insolvency proceedings, including where an assistance agreement is not being implemented.
At the same time, administrative liability of managers of legal entities for failing to file, or filing late, an application for the opening of bankruptcy proceedings is being abolished. This is intended to encourage entrepreneurship and reduce excessive restrictions on honest entrepreneurs.
Amendments to the Law on Personal Bankruptcy
Abolition of the minimum debt threshold
The most significant change for individuals is the amendment of the definition of insolvency, abolishing the requirement to have a minimum amount of debt.
Until now, an individual could apply for personal bankruptcy only where overdue debt amounted to at least 25 minimum monthly wages, currently approximately EUR 26,000. From 2027, the assessment will no longer focus on a specific debt amount, but on whether the person is objectively able to meet their financial obligations within a reasonable period and whether they are acting in good faith.
This means that bankruptcy proceedings will become available to individuals who, due to formal criteria, have so far been unable to use this process, even though they were in fact insolvent.
This approach is also in line with the practice of many European Union Member States. In most of them, no minimum debt threshold applies at all, for example in Poland, Germany, France and the Netherlands. By comparison, the threshold previously applicable in Lithuania was one of the highest, while in Latvia the minimum threshold is EUR 5,000.
More flexible solvency restoration plan
Until now, the duration of the solvency restoration plan was generally linked to a three-year period. From 2027, the plan may last up to three years, allowing greater flexibility. Where solvency can be restored faster in a specific situation, it will no longer be necessary to apply the maximum term.
Greater digitalisation
Creditors’ meetings in personal bankruptcy proceedings will be convened through an information system, electronic voting will be introduced, and data on registrable assets will be processed using state registers and information systems. These solutions are expected to speed up procedures, increase transparency and reduce the administrative burden for both debtors and creditors.
New creditors’ voting procedure
To better balance the interests of different creditors, the procedure for organising creditors’ meetings and voting will be changed. Creditors will be divided into separate groups. Mortgage and pledge creditors will be assessed separately from other creditors. Creditors will also be able to vote electronically through an information system.
Stricter requirements for insolvency administrators
The amendments will also affect the activities of insolvency administrators in personal bankruptcy proceedings.
If an individual proposes a candidate for bankruptcy administrator, the administrator’s consent-declaration will also have to be submitted. This declaration must confirm that the administrator agrees to administer the proceedings, that there are no circumstances restricting their appointment, that they meet the requirements of impeccable reputation and that they are covered by mandatory professional civil liability insurance.
If no administrator candidate is proposed, the administrator will be appointed by the court based on a candidate proposed by the institution authorised by the Government.
These amendments aim to strengthen the role of the insolvency administrator as an independent participant in the process. The administrator should be perceived not as a representative chosen by one of the parties, but as an independent professional ensuring a lawful, transparent and objective process, as well as a balance of interests of all participants.
Conclusion
The insolvency law amendments entering into force from 2027 demonstrate a clear legislative direction in Lithuania: greater transparency of proceedings, independence of administrators, digitalisation and a more flexible approach to personal insolvency.
For businesses, the most important changes relate to stricter impartiality requirements for administrators, new supervisory measures and clearer regulation of insolvency proceedings. For individuals, the greatest practical significance will be the abolition of the minimum debt threshold, the assessment of individual financial circumstances and more flexible possibilities for restoring solvency.
