Legal Advice
- A company that I work for doesn’t pay salaries for a few months. According to unofficial information, the owner of the company plans to submit application for initiation of the insolvency proceedings. What are the chances to receive unpaid salary, if the company will be declared bankrupt?
08.06.2011
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After declaring insolvency proceedings, the company is managed by an administrator appointed by the court. If the company didn’t pay out the salary to its employee, then he or she shall submit a relevant creditor claim to administrator. A creditor claim shall contain grounds for the request of salary payments, information regarding amount of unpaid salary, and other necessary information. All documents proving the claim of the employee shall be attached thereto.
If the claim of the employee is founded and documents submitted comply to the law, administrator shall satisfy the request of the employee. In such case the salary will be paid to the employee from the funds of the insolvent company (if there are any), or from the guarantee fund, hereinafter referred to as the Fund.
Administrator shall submit an application in respect of satisfying the claims of the employees to the government agency “Insolvency administration”. Insolvency administration examines whether the claims of the employees are founded and takes a decision for granting the money for the needs of satisfying the claims of employees in respect to the unpaid salaries and other sums due to employees in accordance with the law.
An employee has the right to receive the money from the Fund in conformity with the order mentioned in the Law On Protection of Employees in the Case of Insolvency of the Employer. According to Section 4 of the Law, an employee is entitled to receive money from the Fund regarding work remuneration, reimbursement for annual paid leave, reimbursement for other types of paid leave, severance pay in connection with the termination of an employment legal relationship, reimbursement for injury in connection with an accident at work or an occupational disease.
In accordance with clause 7 of the Transitional Provisions of the Law On Protection of Employees in the Case of Insolvency of the Employer, the overall sum due to employee from the Fund shall not exceed the amount of 4 minimal monthly salaries for one employee, if the application for satisfying the claim of an employee has been submitted to Insolvency Administration in the period from the 10th of July 2009 till 21st of December 2011.
Jevgenijs Belajevs
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- I want to buy a garage for my son. He’s married. How to make an entry in the Land Register so that the garage is deemed his own private property. I don’t want to execute this transaction in two stages, i.e. to register myself as the owner and then make the property over to my son by means of the gift. Is there a way to make this transaction in one go? I don’t want to ask the wife of my son to sign any documents.
08.06.2011
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According to Section 91 of Civil Law of the Republic of Latvia, the separate property of each spouse is property, which was acquired gratis during the marriage by one of the spouses, as well as the property that replaces such property.
The gift of funds may be executed in your case. The funds will be deemed as a gift given to your son without remuneration. With this in mind, your son will be able to buy the garage using the gifted funds and register it in the Land Register as his separate property. In this case his wife won’t have the right to claim interest in this property.
You may, of course, at first register yourself as the owner of the property and only after that give it as a gift to your son. However, in this case the transaction will have to be made in two stages, which will incur additional expenses for services of the notary and ownership rights registration.
We also would like to inform that in case of a dispute it will be your son who will have to prove that the property is his own separate property. Therefore, the acquiring of the property during marriage shall be carried out carefully with due respect to the provisions of gift contract, property purchase contract and corroboration request for registration of the ownership rights in the Land Register, as the entry in the Land Register shall state that the property is a separate property of your son.
Santa Garshniece
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- A friend of mine asked me to lend him some money. Though I know that person for a long time, I want him to issue a relevant promissory note. Therefore I would like to know whether it is necessary to notarize the promissory note or not?
08.06.2011
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In order to reduce any risks the promissory note shall be drawn up in the form of a notarial deed. The difference is that if your friend will sign a promissory note in a private procedure or even if the notary public will simply certify his signature on the promissory note, then (if the debt won’t be returned in due time) the procedure of recovering the money through court may be complicated. In this case you will have to go through long court proceedings, including all court instances in accordance with general provisions (considering all possible judicial proceedings it may take up to 5 years).
However, if the promissory note will be drawn up in the form of a notarial deed, then the procedure for obtaining a relevant decision of the court (i.e. the procedure for undisputed compulsory execution of obligations) won’t take more than a month.
Aleksandrs Lenkovskis
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- I drove at 50 km/h – permitted speed limit in a populated area. The traffic police stopped me and informed that the speed limit was exceeded. I asked to show the speed displayed on the radar, but the police officer informed me that he used a built-in radar and he’s not obliged to show it. After that a report-decision was drawn-up for the imposing of the fine. I would like to know whether such actions of the police are lawful?
08.06.2011
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A person who is subject to administrative liability has the right to become acquainted with all the materials of the matter, as well as with the evidence upon which the decision is taken. The radar information is considered essential evidence in this case.
According to Section 61 of the Administrative Procedure Law, a participant in an administrative proceeding has the right to become acquainted with the matter and express his or her opinion at any stage of the proceedings. According to Sections 260 of the Latvian Administrative Violations Code, a person who is subject to administrative liability has the right to personally, as well as with the assistance of a representative, to become acquainted with all the materials of the matter, provide explanations, submit demands and express requests. Section 62 of the Administrative Procedure Law also prescribes that, in deciding in regard to the issuing of such administrative act as might be unfavourable to the addressee or a third party, an institution shall clarify and assess the opinions and arguments of the addressee or the third party in such matter.
By depriving you of your rights the police had violated the law, which is the reason to appeal the decision for imposing a fine in the administrative court. When appealing the decision of the police you shall ask the police to show to court the videotape that was recorded by the radar and that can prove whether there was or wasn’t a violation of road traffic regulations. If there were friends of yours in the car they can also testify that the police refused from showing you the radar indications.
Aleksandrs Koposovs
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- We’ve been told in a bank that member of the board of our company has to renew his representation rights in the Register of Enterprises since the term of his representation right has expired. What documents shall we submit to the Register of Enterprises and how long will it take to renew his representation rights? 05.05.2010
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According to the Commercial Law, the board of directors is the executive body of the company, which manages and represents the company. All members of the board of directors have representation rights. Members of the board of directors shall represent the company jointly if the articles of association do not specify otherwise. A member of the board of directors shall be elected for a period of three years, if the articles of association do not specify a shorter term. In case the term of representation rights has expired, the meeting of shareholders can take a decision to elect the member of the board for a new period.
The following documents shall be submitted to the Register of Enterprises for the renewal of the representation rights:
- application (Form No.18), which can be found on the website of the Register of Enterprises;
- the minutes of the meeting of shareholders or an extract of the minutes (if there are two or more shareholders in a company), or the decision of the sole shareholder;
- power of attorney issued to the person that will submit and receive the documents in the Register of Enterprises (if member of the board is not the person submitting the documents);
- Receipt for payment of the state fee in amount of LVL 10,- and receipt for publication in the newspaper Latvijas Vēstnesis in amount of LVL 8,-.
The Register of Enterprises shall examine the documents within 4 working days. If necessary the representation rights can be renewed also within 2 days, however, in this case the state fee shall be paid in amount of LVL 30,- (the payment for publication in Latvijas Vestnesis remains the same).
Irina Papakule
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- Is it true that a company can be protected from claims of the creditors for a period of one year upon court order? In what cases the procedure can be initiated? 05.05.2010
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Lately many entrepreneurs face problems with financial solvency. Often the financial difficulties are temporary and a company simply needs some time to overcome the problems. For such cases there’s a special procedure provided for by the Law on Insolvency that can protect a company from the claims of the creditors. According to Section 32 of the Law on Insolvency, a company has the right to submit a legal protection petition subject to the following conditions: the solvency of the company is limited, the company has been registered in the Register of Enterprises for not less than three years and company’s annual accounts for the last three years have been submitted to the relevant institutions.
Subject to the aforementioned conditions a company is entitled to submit a petition of legal protection process to the court. In case the court satisfies the petition of the company then the creditors will be unable to bring actions or to submit insolvency petitions against the company due to the initiation of the legal protection process. The decision of the court regarding the initiation of the legal protection process is also the reason for the augmentation of late charges and interest to be discontinued. According to Section 42 of Law on Insolvency the period of legal protection process shall not exceed two years from the date, when judgment of the court regarding the initiation of the legal protection process has come into lawful effect.
Andrejs Sviksh
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- We would like to give an apartment as a gift to our daughter, who is 16 and wants to start living independently. According to the Land Register my husband is the only owner of the apartment. Is it true that a permission of the Orphan’s court is needed before we proceed with signing the gift agreement at a notary? 05.05.2010
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It’s true. Orphan’s court is a guardianship and trusteeship institution established by a local government, which ensures the protection of rights and legal interests of children. One of the main duties of an Orphan’s court is to defend the personal and property interests of children, which also applies in cases when a child is to receive immovable property as a gift. An Orphan’s court shall ascertain whether there’s no encumbrances, pledges or debts of the immovable property.
Therefore, you should turn to the Orphan’s court of your place of residence first and bring the following documents with you:
1) Land Register certificate;
2) Passports;
3) Your daughter’s birth certificate;
4) Extract from the Land Register proving that the apartment is not encumbered with anything;
5) Statement about declared residence place;
6) Statement from house administration proving there are no debts for public services;
Your husband, as the owner of the apartment, will have to submit an application that he wants to give the apartment as a gift to his daughter. The written consent of the other parent is also necessary. Moreover, the Orphan’s court will have to find out the opinion of the child regarding the acceptance of the gift (the views of the child shall be ascertained considering the age when a child is able to formulate such).
You and your husband shall decide who will be the guardian of your daughter. The guardian is a person who accepts the gift on behalf of the child and administers the immovable property until child has reached the age of majority. Usually the parent, who doesn’t own the property, is appointed as the guardian.
The case hearing will be determined within a month from the date the aforementioned documents were submitted. The Orphan’s court will take a decision regarding the acceptance/denial of the gift by the child. The services of the Orphan’s court are free of charge.
Karina Katz
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- My wallet containing cash and payment cards was stolen. Unfortunately thief managed to withdraw some money from the card before it was blocked. I heard that a bank has to compensate all losses in such cases. Is it really so and what should I do in order to receive my money back? 05.05.2010
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It is important to know when exactly the card was utilised by the thief, was it before you reported to the bank or after. However, even if the thief managed to utilize your card before you were able to report to the bank, it is still possible to receive compensation.
In this case the possibility of receiving compensation depends on the way thief used your credit card or charge card. The bank, which issued the card, is not liable for losses if the card was utilised with help of identification code. However, if a thief used your card in a shop where payments are verified by the buyer’s signature instead of the identification code, and representative of the shop didn’t verify signatures on the card and on the receipt, or simply didn’t give meaning to the difference between the signatures, then you are entitled to receive compensation from the bank.
According to Section 311, Paragraph 1 of the Consumer Rights Protection Law, “If a consumer’s charge card has been illegally utilised, he or she has the right to request the credit institution, which has issued the charge card to the consumer, to revoke the relevant charge or repayment of the illegally debited amount.” According to Section Section 311, Paragraph 2 of the Consumer Rights Protection Law, “If the consumer asserts that his or her charge card has been illegally utilised, and if the credit institution, which has issued the charge card to the consumer cannot prove that the relevant charge was verified with an identification code or any other proof of identification or that the consumer has acted negligently or in bad faith, it shall repay the illegally debited amount.”
Jevgenijs Belajevs
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- There was an attachment placed on my immovable property prior to bringing a court action. Therefore I’m unable to act with my property until the dispute won’t be finally settled in the court, which may take a lot of time. The claim of the plaintiff is absolutely unfounded. What can be done in this case? 05.05.2010
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According to Section 140 of the Civil Procedure Law, you have the right to submit an application to the court, which rendered the decision regarding securing the claim, requesting to remove the attachment. However, the application shall be reasonable. Securing of a claim may be used in case, if there is a reason to believe that the execution of a court judgment in a matter may become impossible. Therefore you need to prove that you will be able to execute the judgment, and this can be done by arguing against the reasons of the plaintiff for securing the claim, etc. Your application will be considered at a court sitting, where you will have the opportunity to explain your position in detail.
Andrejs Sviksh
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- I would like to buy a company in Latvia. The seller, who owns 100% of the equity capital shares, wants to receive the purchase price at the time of signing purchase contract and other documents. But I’m worried about the transfer of ownership rights after the purchase price is paid. What if for some reason I won’t be registered in the Register of Enterprises as the new owner or the previous member of the board won’t be recalled? Is there a way to avoid such risks when buying a company? 21.04.2010
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In order to reduce risks the parties may open an escrow account in a bank – a service, which is widely used for immovable property transactions. In this case the procedure will be as following:
Step 1. The parties sign a purchase contract, specifying all the essential elements, that is, the subject-matter of the purchase, the procedure of the transaction, as well as the procedure of paying the price, the order for recalling the seller from the position of member of the board and terms for fulfilling obligations of the parties.
Nevertheless the buyer shall also draw attention to financial obligations and the condition of the company he wishes to buy, (i.e. creditors, debtors, off-balance sheet liabilities, fixed assets, clients, etc.), as well as the liability of the seller for the nonconformity of the provided guarantees.
Step 2. On the basis of the concluded purchase contract the parties and the bank sign a tripartite agreement in which they agree on the necessay documents and terms and conditions, as well as the procedure for the submission of such documents and the order for making the payment of the purchase price.
Step 3. The buyer puts the purchase price into an escrow account and presents a document to the seller in order to prove that he made the payment.
Step 4. The parties sign necessary documents, which are needed for the registration of the buyer’s ownership rights and other changes (recall of the seller from the position of member of the board, etc.).
Step 5. The seller or the buyer shall carry out the registration of the relevant changes in the Register of Enterprises (this duty can be entrusted to the seller so that the buyer wouldn’t be accused of violating the contract in case if the Register of Enterprises will refuse to register the changes due to some reasons, however, the buyer also can carry out the registration if he wants to control the process himself).
Step 6. After the registration of the changes the seller submits the proof of registration and other necessary documents to the bank on the basis of delivery and acceptance deed, whereafter the bank transfers the purchase price to the seller’s account.
Alexander Lenkovsky
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- Why is it forbidden to carry a weapon to concerts in Latvia if I have the right to carry a weapon according to the law? 21.04.2010
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A security company, which is liable for maintaining security at the public events, is entitled to forbid the visitors to carry a weapon at a concert in accordance with the law on safety of the public entertainments and festive events. According to the law a security company is an entity that has acquired a special permit (licence) to perform security guard activities and is entitled to maintain public order at the relevant event on the basis of the contract concluded with the event organizer.
According to Section 13 of the Law on safety of the public entertainments and festive events, a security company is obliged to control and prevent people that carry fire-arms (as well as explosive materials, flammable and toxic substances, psychotropic substances, drugs, etc.) from attending the event.
Moreover the aforementioned law prescribes obligations also for the guests of the relevant event. According to Section 14 of the law, the visitors of the public event shall obey the instructions of the security company in regard to safety and public order. If the visitors of the public event fail to fulfil this obligation they shall be brought to liability.
Therefore, it is allowed to carry a weapon if the relevant permit is received, it is also allowed to use it, however, it is strictly forbidden to carry one at a concert.
Aleksandr Koposov
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- I’m not able to perform the obligations of the mortgage loan agreement due to financial difficulties for about 6 months now. The bank (in Latvia) is ready to extend the loan repayment period only in case of my consent to the amendments of the loan agreement, which prescribe the rise of the interest rate. Otherwise my property will be sold through auction. Is there any way to solve this problem? 14.04.2010
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The borrower, who acknowledges that he won’t be able to fulfill his obligations in the nearest time, should start looking for a solution immediately. Even a short delay might lead to negative consequences. However, it doesn’t mean a borrower shall inform bank of his problems right away. First of all a borrower shall turn to relevant experts in order to find out possible ways of solving the problem, as well as to obtain information about the rights and obligations of both bank and the borrower. The negotiations with bank shall be commenced only after the borrower is fully prepared.
There are different options how the decrease of the borrower’s monthly payments can be reached. For example, a borrower can ask the bank for the extension of loan repayment period, change of interest rate’s type, postponement of the principal repayments, loan currency change, etc. The bank, of course, might refuse from satisfying the requests of the borrower, but nevertheless it’s worth a try.
People sometimes make a lot of mistakes when try to negotiate with bank on their own and as a result the situation may become even more complicated. Besides borrowers shouldn’t forget that actions of the bank are always aimed at protection of its own interests only, still some people are way too trustful. Therefore, the temporary relief from the amendments of the loan agreement may have negative consequences in the long term. Which is why experts shall be involved in the process of debt restructuring.
It stands to mention that a borrower who started looking for a solution timely has a lot more options to reach an agreement with a bank on more favorable conditions rather than a borrower, who has stopped performing his obligations half a year ago. Still the solution shall be searched for and can be found regardless of the stage.
Jevgenijs Beļajevs
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- I’m not satisfied with judgment of the court regarding the recovery of losses. How to file for an appeal? 14.04.2010
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The judgment of the court of first instance may be appealed in the higher court with an appellate complaint. An appellate complaint shall be submitted within 20 days from the date of pronouncement of the judgment. If an abridged judgment has been pronounced at a court sitting, the time period for appeal shall be calculated from the date, which the court has announced for drawing up of a full judgment. An appellate complaint shall contain the following information: the court which rendered the judgment, the extent to which the judgment is being appealed, how the error in the judgment is manifested, etc. The complaint shall be addressed to the appellate instance court, but shall be submitted to the court which rendered the judgment. The State fee for an appeal is 50 per cent of the rate calculated in accordance with the disputed amount.
The court may leave an appellate complaint not proceeded with and set a time period to rectify deficiencies, if the State fee has not been paid or the complaint doesn’t contain all the required particulars or the complaint is not accompanied by all required true copies. If the deficiencies are rectified within the time period set, the appellate complaint shall be deemed to have been submitted on the date when it was first submitted. Otherwise, the complaint shall be returned to the submitter.
Dmitrijs Shustovs
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- I’ve given immovable property (an apartment) to my relative as a gift in 2005, but prior to that received a mortgage loan, which was secured by husband’s property. At the moment I’m unable to pay the loan, so probably the bank will sell the pledged property of my husband through auction. I’m afraid the money received from the sale of the pledged property won’t suffice to fully satisfy the debt, and the bank, knowing about the gift I made, will demand satisfaction of the debt from the apartment gifted to my relative. 14.04.2010
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Most likely the creditor refers to Section 1927 of the Civil Law, according to which, a property is considered to be donated only insofar as the donor’s debts have been deducted from it. In cases where a donor is unable to pay the debts outstanding at the time of making the gift, not only may the creditors demand satisfaction from the donor’s gift, but also the donor may himself or herself demand from the donee the return of the portion of the gift necessary for the payment of these debts. An agreement between the donor and the donee that the latter is not liable for the debts of the former is only in effect as against the creditors if the creditors have consented to it. Therefore the actions of the bank might be considered legal. However, the abovementioned Section is included in the “Gift of entire property”, a sub-chapter in the Civil Law, as a result there’s also a completely different view of the situation. Some lawyers insist that a creditor is unable to demand satisfaction if the gift consists only of one particular property, i.e. not the entire property of the donor. Considering aforementioned, resolution of this situation is within the competence of the court only.
Santa Garšniece
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- I’m a guarantor for the mortgage loan of my friend. Recently I received a decision from the court stating that the sum of the loan and interest was recovered from me. I didn’t know anything about any court hearing and never received any requests for summons. Are the actions of the bank and court lawful? 29.03.2010
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Most likely, there was used a so-called procedure of undisputed compulsory execution of obligations against you. According to Section 400, Paragraph 1, Clause 1 of the Civil Procedure Law, undisputed compulsory execution of obligations is permitted pursuant to agreements regarding obligations which are secured with a public mortgage or a commercial pledge.
The main point of this procedure is that a mortgage creditor submits an application to the court with request to perform the undisputed compulsory execution of obligations regarding the loan, but the judge, without informing the debtor and creditor, examines the application within 7 days and takes the adjudication. At this stage the court is not adjudicating the matter on the merits (whether the loan was paid off or not, in what amount was the loan paid off, were the payments delayed or not, etc.), but only considers the procedural issues and the correctness of the documents. After considering that the submitted application is well-founded and recognizing that it shall be satisfied, the judge takes an adjudication which specifies what obligation and in what amount it shall be executed in the undisputed compulsory way.
The bank is entitled to submit application for undisputable compulsory execution of obligations against principal debtor, as well as against the guarantor in case if he has undertaken obligations as a principal debtor (Section 402 of the Civil Procedure Law).
Therefore, if in the contract of guarantee you have taken the obligation to be liable for the loan as principal debtor, then the court has the right to use the procedure of undisputed compulsory execution of obligations against you. The adjudication for allowing the executing of the procedure may not be appealed and comes into force immediately. However, according to Section 1704 of the Civil Law the guarantor has the right to bring a subrogation action against the principal debtor.
Dmitriy Shustov
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