A victory in the Supreme Court of Lithuania shaping the practice of enforcement proceedings

The Supreme Court of Lithuania has ruled in favour of the client, overruling the decisions of the courts of lower instance and adopting very important clarifications on issues not regulated by the legislation on enforcement proceedings.

Our client was involved in enforcement proceedings involving selling the debtor’s property to the debtor’s proposed buyer. The buyer proposed by the debtors offered a certain price for the property, paid the price and the bailiff issued an order to sell the property to him. However, our client, who was also interested in acquiring the property, offered an even higher price and subsequently paid it. The bailiff issued a new order and decided to sell the property to the client. The factual situation was similar to an auction, but the legislation did not regulate such a situation.

The first buyer appealed against the bailiff’s order to sell the property to the client, arguing that he should have been informed of the higher price and given the opportunity to bid even higher. During the court proceedings, the first buyer declared that he would have indeed offered a higher price, but did not specify what price he would have offered, nor did he make any offer in general. Our team argued on behalf of our client that the first buyer had been given every opportunity to make a bid, but did not take advantage of this opportunity.

The courts of the first and appellate instance protected the interests of the first buyer, annulled the bailiff’s order and ordered the bailiff to re-start the sale proceedings. The bailiff gave both buyers a deadline to make new bids. Within the time limit set by the bailiff, the client bid €60’000 higher than previously and the first buyer did not submit any bid. Thus, the client would have had to pay a significantly higher price for the property due to the unfairness of the first buyer.

The Supreme Court examined the situation and eventually ruled in favour of the client. The Supreme Court overturned the decisions of the lower courts, finding that the bailiff’s order to sell the property to our client did not preclude the right of the first buyer to submit a higher bid. The Supreme Court pointed out that the first buyer did not exercise this right even after the courts of lower instance had ruled in his favour.

As a result, the property was sold to the client for the price of the first offer, which was as much as €60’000 lower than the price of the subsequent offer. We are also pleased that the Supreme Court has provided clarifications on issues not regulated by the norms of enforcement proceedings.

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