Debt recovery

During the execution of the restructuring programme of the banks in 1996–1999, Turto Bankas took over or bought for VVP the assets of four commercial banks. To hasten the liquidation of banks that has been going on since 1995–1997, since 2002 Turto Bankas has taken over the non-realised assets of another ten bankrupted commercial banks free of charge. All these banks have been dissolved and de-registered; however, the debt recovery from the bank’s debtors is ongoing.

Article 33 Part 16 of the Law on Tax Administration of the Republic of Lithuania determines the right of the tax administrator to submit by proxy or transfer claims relating to the recovery of arrears in payments to Turto Bankas, in accordance with the procedure established by the Minister of Finance. By following this provision, the State Tax Inspectorate and the Lithuanian Customs have transferred the recovery of tax arrears to Turto Bankas. Furthermore, debts are recovered in accordance with the Contract on the Transfer of the Claim Right to Turto Bankas, which was signed by following the Government of the Republic of Lithuania Decree No 472 ‘On the Transfer of the Guarantee Fund’s Claim Right to the AB Turto Bankas’ of 5 April 2002, and the Government of the Republic of Lithuania Decree No 685 ‘On the Partial Amendment of the Establishment of the Guarantee Fund’ dated 7 June 2001, which was valid until 30 March 2013.

After the end of the third quarter of 2024, Turto Bankas was recovering tax arrears and claim rights from 82 debtors. The balance of taken over tax arrears is EUR 10.1M.

On 23 December 2014 the Government of the Republic of Lithuania issued Decree No 1459 ‘On the Amendment of the 30 May 2005 Government of the Republic of Lithuania Decree No 590 ‘On the Approval of Rules for the Return of Financial Aid Paid-out and/or Used Through the Infringement of Statutes of Law to the State Budget of the Republic of Lithuania’’ (link). This determines that the institution administering the European Union’s financial aid funds shall transfer to Turto Bankas the claim rights towards those project executors who, after receiving the aid funds, had improperly used them and did not return them to the state budget within the period determined by the administering institution. By following this provision, contracts on the transfer of claim rights have been signed with various institutions.

Since the end of the third quarter of 2024, Turto Bankas has been recovering debts from 134 debtors who improperly used the European Union’s financial aid funds. The balance of taken over claim rights is EUR 20.9M.

At the end of the third quarter of 2024, Turto Bankas controlled EUR 63.1M worth of loans, claim rights transferred for recovery and a portfolio of inactive assets taken over from the dissolved banks being administered in accordance with the contracts of assignment.

The legal entity or natural person of the Republic of Lithuania, in accordance with the contract concluded with the state or in accordance with other binding debt documents, has received a loan from the loan funds received on behalf of the state:

• having assumed an obligation to the state in regards to the use and repayment of the loan;
• or having received a loan in accordance with the contract concluded with domestic or foreign creditor;
• or in accordance with other binding debt documents, the execution of which is guaranteed by the state (save for commercial banks and municipalities, until the full execution of obligations without a written permission of the Ministry of Finance or Turto Bankas).

When this company administers the loans and other property obligations transferred by the Ministry of Finance, and without coordinating the conditions for the performance of these actions, it shall not have the right to:

• reorganise the company;
• decrease the authorised capital;
• sell or in any other way transfer, lease or pledge fixed assets;
• warrant or in any other way guarantee the execution of obligations of other operators through their own assets;
• grant loans (save for consumer credit);
• invest assets to other economic operators;
• assume new obligations by issuing debt securities, signing loan contracts, financial lease contracts or other binding debt documents.

Turto Bankas, has recovered debts to the state and administered the loans, state guarantees and other property obligations that the Ministry of Finance of the Republic of Lithuania transferred to it in accordance with the assignment contracts. It sells the claim rights in accordance with the debts that were transferred to it for recovery, and takes over the property of debtors or third persons to the ownership of the state. If Turto Bankas were unable to sell it in accordance with the procedure indicated in the Civil Procedure Code of the Republic of Lithuania and/or Law on Enterprise Bankruptcy of the Republic of Lithuania, then Turto Bankas administers and sells it by following the Government of the Republic of Lithuania Decree No 262 ‘On the Approval of the Procedure Schedule of the Sale Through Public Auction of Property Belonging to the Debtors or Third Persons That Was Taken Over on the State Right of Claim and to the Ownership of the State’ of 18 March 2015.

By following the Law on Controlling Investment Companies of the Republic of Lithuania No IX-1710 of 4 July 2003 (link) and Government of the Republic of Lithuania Decree No 1165 ‘On the Approval of Rules for Dissolving the Investment Joint Stock Companies’ of 15 September 2004 (link), Turto Bankas was appointed to be the liquidation administrator of 112 investment joint stock companies through court orders. The liquidation procedures of all companies have been completed; they are de-registered from the Register of Legal Entities.