Questions and Answers on Voluntary Liquidation Process

How to lodge creditors’ claims?

After commencement of the voluntary liquidation, all clients being creditors according to the bank’s accounting data will receive notifications about the initiated voluntary liquidation. In this notification, the creditors will be invited to lodge their claims within three months, providing grounds for the claim and the amount thereof, as well as presenting the updated identification and representation documents. Read more here.

In order to lodge a claim, the creditor should fill in an application for individuals or legal entities available at www.ablv.com, or prepare a document in a free form indicating the information requested in the application, as well as any other information that in the creditor’s opinion is necessary to justify the claim.

Upon lodging a claim, the creditor confirms that he/she has read, agrees and finds binding the General terms of liquidation of ABLV Bank, AS in liquidation.

How long will it take to review the claims?

Given the number of the creditors, after the end of the application period there will be about three months needed to review the lodged claims, accept them and draft a list of creditors.

Upon making the decision on voluntary liquidation, the bank had more than 23 thousand creditors having the total amount of claims against the bank reaching 2.96 billion euros. More than 80% of creditors with the total amount of claims more than 480 million euros can already receive their funds from the money that the bank had transferred to the Deposit Guarantee Fund. The disbursement is carried out by Citadele banka.

In what order will the claims of the creditors satisfied?

The procedure of voluntary liquidation and the Law on Credit Institutions provide the following order of satisfying the claims of the creditors:

  1. For the claimants having up to EUR 100,000 in their accounts with ABLV Bank, the disbursement of guaranteed compensations was started on 3rd March 2018, and the bank has already transferred more than EUR 480 million to the Deposit Guarantee Fund. These claims (first priority claims) are already being disbursed by Citadele banka, AS and one do not need to apply for them to the bank.
  2. Claimants who still have cash in their ABLV Bank, AS accounts after receiving the guaranteed compensations up to EUR 100 000 from Citadele banka, AS. Those are individuals, micro, small and medium-sized companies in accordance with the provisions of Law on Recovery and Resolution of Credit Institutions and Investment Brokerage Firms entitled to claim the principal amount of the deposit.
  3. The expected claims of employees of ABLV Bank, AS regarding remunerations, unpaid leave allowances, severance pays.
  4. Tax payments and other payments (debts) to state or municipality budgets, as well as transit credits.
  5. Debts to creditors accrued when the credit institution accepted for execution but did not execute client’s payment order about money transfer to state or municipality budget accounts.
  6. State claims regarding repayment of state guaranteed loans.
  7. Other creditors – principal amounts (e.g. depositors not falling in the second order; straight bonds, claims not related to receiving financial services (such as arising from a contract or invoice).
  8. Interest payments regarding the claims submitted after the said three-month period.
  9. Creditors who applied after the set three-month period, including interest payments for such claims.
  10. Claims about funds lent by creditors to the credit institution for a certain term upon a condition that premature redemption of funds could be requested only upon liquidation of the credit institution (liabilities on subordinated bonds).

How will the settlements with the creditors be carried out?

Currently it is planned that the claims of the creditors will be settled through quarterly payments by disbursing currently available funds partly or fully, yet in equal shares to cover claims of all creditors of the particular order.

The draft plan provides that the first payments for covering claims of the creditors could be disbursed in Q4 2018, yet more detailed information will be announced in the second half of 2018.

As soon as all the necessary funds for settlement with the creditors of a certain order are ensured in full, the disbursement of the funds for the next following group of creditors will start.

Why was the decision on voluntary liquidation made?

The shareholders of the bank were forced to consider this decision as the most reasonable in response to the decisions made by the European Central Bank (ECB) and the Single Resolution Board (SRB) on 23 February 2018, when the ECB made a decision that ABLV and its subsidiary bank in Luxembourg is failing or likely to fail. The bank has filed a claim to the European Court of Justice asking to review the lawfulness of the decisions by the ECB and SRB, as well as the order of making thereof, yet it does not revoke the announced voluntary liquidation process.

What is the key objective of the voluntary liquidation?

The objective of the voluntary liquidation is to satisfy claims and interests of all creditors of the bank. The voluntary liquidation measures imply various activities for ensuring settlement of liabilities of ABLV against all creditors in full.

The voluntary liquidation is the best possible option in case of ABLV Bank, given the history of liquidation procedures of other credit institution initiated any other way in Latvia, as well as given the size of the ABLV group.

It stands to note that voluntary liquidation of ABLV Bank is going to be the biggest liquidation process that has taken place in Latvia. It is a group of companies being liquidated with current assets amounting to EUR 2.4 billion (after having transferred 480 million euros to the Deposit Guarantee Fund).

How will the liquidation process be carried out?

The process of the voluntary liquidation shall be carried out in accordance with the voluntary liquidation application submitted to the FCMC, and the applicable Latvian laws. Latvian Law on Credit Institutions provides a precise order of satisfying the claims of the creditors, and the liquidators are obligated to strictly follow it.

According to the law, on 18 June 2018 the liquidators posted an announcement about the liquidation of the bank in an official newspaper “Latvijas Vēstnesis” and two other newspapers.

Who will make decisions regarding the bank being voluntarily liquidated and about the satisfaction of the creditors’ claims?

In order to ensure maximum transparency, shareholders of the bank have approved the liquidation committee consisting of four liquidators: Eva Berlaus, Arvīds Kostomārovs, Andris Kovaļčuks and Elvijs Vēbers.

The task of the liquidation committee is to get maximum gain from the sale of the bank’s assets in order to satisfy interests of all creditors. In certain cases, given the volume and complexity of the bank’s assets, external resources may be engages – auditors, attorneys and other experts. For the support of the liquidators, an international auditing firm has provided them with an independent analysis of voluntary liquidation process assumptions.

The operation model of the liquidation committee provides that its decisions will be valid only if at least three liquidators take part in decision-making. The liquidation committee is entitled to make decisions unanimously if three liquidators take part in decision-making, or by a simple majority of votes if all four liquidators take part in decision-making.

The FCMC’s permanent officials will also be engaged in decision-making and they will monitor the process of satisfying claims of the creditors.

Also, every month a report on the performance of the liquidators shall be published in the official newspaper “Latvijas Vēstnesis” and at the bank’s website.

What are the planned terms of the voluntary liquidation?

It is planned that in about two years 95% of the deposits with the bank will be disbursed.

In general, our calculations submitted to the FCMC provide that the voluntary liquidation, which implies a list of complex transactions and fulfilment of legal requirements, could be fully completed in 5 years.

Should one continue covering one’s obligations (repaying loans) during the voluntary liquidation?

Voluntary liquidation does not affect the procedure of covering the existing liabilities, therefore if you have any liabilities to be settled with the bank, please continue carrying out the payments as usually. You should continue fulfilling your liabilities in order to avoid worsening of your status of a responsible borrower.

After the revocation of the banking licence, the funds for repaying liabilities shall be credited to another licenced credit institution. Each client will be informed thereof individually at the earliest opportunity.