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Ease of Doing Business in

Latvia

Latvia Download Profile (1740.9KB, pdf)
Region Europe & Central Asia
Income Category High income
Population 1,978,440
GNI Per Capita (US$) 14,900
City covered Riga

190

1

DB 2017 Rank

1

100

DB 2017 DTF (% points)

  • local_library
  • group
Topics DB 2017 Rank DB 2016 Rank info_outline Change in Rank DB 2017 DTF (% points) info_outline DB 2016 DTF (% points) info_outline Change in DTF (% points) info_outline
Overall 14 17 up
3
80.61 79.14 down
1.47
Starting a Business 22 20 down
2
94.15 94.15
-
Dealing with Construction Permits 23 20 down
3
78.93 78.94 down
0.01
Getting Electricity 42 57 up
15
82.14 78.99 up
3.15
Registering Property 23 23
-
81.87 81.87
-
Getting Credit 7 19 up
12
85.00 75.00 up
10.00
Protecting Minority Investors 42 40 down
2
63.33 63.33
-
Paying Taxes 15 16 up
1
89.79 88.84 up
0.95
Trading across Borders 25 25
-
95.26 95.26
-
Enforcing Contracts 23 23
-
71.66 71.66
-
Resolving Insolvency 44 43 down
1
63.95 63.39 up
0.56

Positive= Doing Business reform making it easier to do business.Negative= Change making it more difficult to do business.

DB 2017 Rank:

44

DB 2016 Rank:

43

Change in Rank:

down1

DB 2017 DTF (% points):

63.95

DB 2016 DTF (% points):

63.39

Change in DTF (% points):

up0.56

Indicator Latvia Europe & Central Asia OECD high income
Recovery rate (cents on the dollar) info_outline 49.1 38.2 73.0
Time (years) info_outline 1.5 2.2 1.7
Cost (% of estate) info_outline 10 13.1 9.1
Outcome (0 as piecemeal sale and 1 as going concern) info_outline 0 .. ..
Strength of insolvency framework index (0-16) info_outline 12 9.9 12.1
  • Indicator Explanation Answer
    Recovery rate (cents on the dollar) 49.1
    Proceeding Mirage management is likely to file for reorganization (legal protection) in order to benefit from certain protections, such as stay of enforcement proceedings. However, BizBank is not likely to approve a reorganization plan, because it would not get paid for 2 years (given Mirage's current financial state). At that time, proceedings would be converted into liquidation. liquidation (after an attempt at reorganization)
    Outcome Reorganization of Mirage does not seem viable, therefore, most likely that liquidation proceeding will commence. Mirage's assets will be sold piecemeal, but could be consolidated by the same buyer to continue operating the hotel. Although Latvian insolvency framework includes provisions on sale of business as a going concern, they are almost never applied in practice. Therefore, the most likely outcome is that hotel's assets will be sold piecemeal at the end of the liquidation proceedings. piecemeal sale
    Time (in years) The process of reorganization converted into liquidation will take approximately 18 months. It will take 3-4 months for the debtor to file for reorganization and for the court to consider and reject the petition due to lack of support from creditors. After that, the debtor or its unsecured creditors will likely file for insolvency. The court will consider the case and issue a decision within 1-2 months. The insolvency proceedings will take around 10 months (includes submission of claims, creditors' meetings, etc). The sale of assets and other necessary formalities would take a few more months before BizBank receives its payment. 1.5
    Cost (% of estate) The main fees will be as follows: court fees - <1%, attorneys’ fees - 1.5%, publication costs - <1%, administrator costs - 8% (2.5% as remuneration for selling the assets and 5.5% as monthly salary), fees of accountants - <1%. 10.0
    Answer Score
    Strength of insolvency framework index (0-16) 12.0
    Commencement of proceedings index (0-3) 2.5
    What procedures are available to a DEBTOR when commencing insolvency proceedings? (a) Debtor may file for both liquidation and reorganization 1.0
    Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? (b) Yes, but a creditor may file for liquidation only 0.5
    What basis for commencement of the insolvency proceedings is allowed under the insolvency framework? (c) Both (a) and (b) options are available, but only one of them needs to be complied with 1.0
    Management of debtor's assets index (0-6) 5.0
    Does the insolvency framework allow the continuation of contracts supplying essential goods and services to the debtor? Yes 1.0
    Does the insolvency framework allow the rejection by the debtor of overly burdensome contracts? Yes 1.0
    Does the insolvency framework allow avoidance of preferential transactions? No 0.0
    Does the insolvency framework allow avoidance of undervalued transactions? Yes 1.0
    Does the insolvency framework provide for the possibility of the debtor obtaining credit after commencement of insolvency proceedings? Yes 1.0
    Does the insolvency framework assign priority to post-commencement credit? (b) Yes over ordinary unsecured creditors but not over secured creditors 1.0
    Reorganization proceedings index (0-3) 2.5
    Which creditors vote on the proposed reorganization plan? (a) All creditors 0.5
    Does the insolvency framework require that dissenting creditors in reorganization receive at least as much as what they would obtain in a liquidation? Yes 1.0
    Are the creditors devided into classes for the purposes of voting on the reorganization plan, does each class vote separately and are creditors in the same class treated equally? Yes 1.0
    Creditor participation index (0-4) 2.0
    Does the insolvency framework require approval by the creditors for selection or appointment of the insolvency representative? Yes 1.0
    Does the insolvency framework require approval by the creditors for sale of substantial assets of the debtor? No 0.0
    Does the insolvency framework provide that a creditor has the right to request information from the insolvency representative? No 0.0
    Does the insolvency framework provide that a creditor has the right to object to decisions accepting or rejecting creditors' claims? Yes 1.0

Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice”.