Successfully contested 2 million EUR creditor claim

Our Dispute Resolution team successfully represented a bankrupt company, securing a significant victory in the Supreme Court of Lithuania.

The dispute centered on the validity of a creditor’s request to approve a financial claim exceeding EUR 2 million. The bankrupt company argued that the claim stemmed from decisions made by the general shareholders in violation of the legal prohibition against awarding and paying dividends when a company has outstanding obligations.

The Supreme Court of Lithuania clarified that dividends constitute a liability to the company’s shareholders. If dividends allocated to shareholders are not paid by the legal deadline, the company is deemed to have overdue obligations, making the shareholder a creditor. Furthermore, if unpaid dividends were previously assigned, no new decisions on the same matter can be adopted. Any such decisions must be considered a breach of the prohibition against awarding and paying dividends in a company with overdue obligations.

This ruling is highly significant. Prior case law on this issue has been inconsistent, but this decision marks a major step toward establishing unified court practice in interpreting the legal norms of the Law on Joint Stock Companies.