Payout of Creditor Claims

Assets of ABLV Bank, AS in liquidation (hereinafter – the Company) are sufficient to satisfy all creditor claims. In accordance with Paragraph 78 of the Transitional Provisions of the Credit Institution Law of the Republic of Latvia, the rank of each creditor’s claim is determined in accordance with the wording of Sections 191 to 195 of the Credit Institution Law of the Republic of Latvia that was in effect until 14 November 2018.

It means that creditor claims will be satisfied in the following order:

  1. Claims for deposits in the amount not exceeding EUR 100,000.
    Depositors, who are eligible for guaranteed compensation from the Deposit Guarantee Fund and who thus lose their right of claim against ABLV Bank, AS in liquidation regarding that amount.
    Disbursement of guaranteed compensations began on 3 March 2018, and the Company has transferred more than EUR 480 million to the Deposit Guarantee Fund for this purpose. These claims (first priority claims) are already being disbursed by Citadele banka, AS, and creditors should not submit claim applications for such.
  2. Claims stated in Clause 11 of Section 192 of the Credit Institution Law of the Republic of Latvia
    Deposits (principal) exceeding the covered deposit, namely, depositors who still have funds in account held with the Company after receiving guaranteed compensation (the 1st group) in the amount of EUR 100,000 from Citadele banka, AS. 
    Please note that this group of creditors is comprised of depositors that are natural entities, as well as micro, small and medium-sized enterprises as defined in the Law on Recovery and Resolution of Credit Institutions and Investment Brokerage Companies of the Republic of Latvia.1

    • Principles of Determining Creditor's SME Status

      1 Law on Recovery of Activities and Resolution of Credit Institutions and Investment Brokerage Companies of the Republic of Latvia sets forth that micro, small and medium sized enterprise is an undertaking fulfilling the criteria of annual turnover reflected in its annual report laid down in Annex I to Commission Regulation No. 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market in the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union (more information is available here: https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32014R0651&from=EN).

      Therefore, annual reports obtained from public registers that contain data on public entities (institutions) are used to determine whether creditor can be regarded as a micro, small or medium sized enterprise. Annual report should contain a confirmation from a tax authority on the receipt of the financial statement, evidence of filing the statement with the tax authority electronically, or a statement of a sworn auditor which meets all the criteria listed below:

      • auditor practices in the country of creditor’s registration;  
      • auditor’s obligations and responsibility are set forth in legislation;
      • auditor’s commercial practice is supervised by a public entity (authority) or a professional association delegated with the supervisory function from the government;
      • auditor is subject to AML/CFT legislation, which sets forth its obligations; 
      • auditor bears responsibility for the statement, and the statement explicitly indicated whether financial statements included in the annual report (including the consolidated annual report) truly and fairly reflect the financial situation of a client, its profit and loss, as well as cash flow, in accordance with financial reporting principles (standards) and whether they comply with legislation.

      Information should be provided on all upstream and downstream enterprises in the chain of owners of capital shares of affiliated enterprises down to a natural entity who is the ultimate beneficial owner. Please note that according to Paragraph 3 of Article 3 of Annex I of Commission Regulation No. 651/2014, “enterprises which have one or other of such relationships through a natural person or group of natural entities acting jointly are also considered linked enterprises if they engage in their activity or in part of their activity in the same relevant market or in adjacent markets”.

      Annual reports (original or derivative of a document) should be submitted in Latvian, Russian or English, or supplemented with a notarised translation in any of these languages.

      Creditor or creditor’s representative should submit documents in person at the Company’s main office during its working hours or send the original or notarised copies of documents by mail.

      In order to prove that enterprises registered in the Republic of Latvia qualify as micro-sized enterprises, creditor may provide information from a public authority attesting to creditor being registered as a micro-sized enterprise.

      If creditor does not meet these requirements, its claim will be satisfied along with creditors included in groups 7 – 10.

  3. Claims stated in Clause 2 of Section 192 of the Credit Institution Law of the Republic of Latvia
    Employees with possible claims against ABLV Bank, AS in liquidation regarding remunerations, annual vacation pay, severance pay.
  4. Claims stated in Clause 3 of Section 192 of the Credit Institution Law of the Republic of Latvia
    Tax and other payments (debts) to state or municipal budgets, as well as transit credits.
  5. Claims stated in Clause 4 of Section 192 of the Credit Institution Law of the Republic of Latvia 
    Debts to creditors which have arisen from a credit institution accepting, but failing to fulfil, payment orders from a customer regarding money transfer to accounts of the state or municipal budgets.
  6. Claims stated in Clause 5 of Section 192 of the Credit Institution Law of the Republic of Latvia 
    State claims regarding repayment of loans guaranteed by the state.
  7. Claims stated in Clause 1 of Section 193 of the Credit Institution Law of the Republic of Latvia
    Deposits (principal) of, e.g., depositors not falling in the 2nd group, straight bonds, claims not related to receiving financial services (claims arising from a contract or invoice).
  8. Claims stated in Clause 2 of Section 193 of the Credit Institution Law of the Republic of Latvia 
    Interest on principal for which a creditor claim was submitted in the set three-month period.
  9. Claims stated in Clause 3 of Section 193 of the Credit Institution Law of the Republic of Latvia
    Claims submitted after the set three-month period, including interest on their principal.
  10. Claims stated in Clause 4 of Section 193 of the Credit Institution Law of the Republic of Latvia
    Claims for funds loaned by creditors to a credit institution for a definite period on a condition that they may be requested before the expiry of such a period only in the case of liquidation of a credit institution (subordinated liabilities).

Payout to creditor is made provided the following three conditions are met:

  • compliance (creditor compliance review is completed and decision is made to satisfy creditor’s claim);
  • payment (decision is made to commence payments to all creditors of a particular group);
  • there are no other legal obstacles to the payment.

Execution of Sworn Bailiff Orders

Orders of sworn bailiffs regarding seizure and transfer of funds will be executed only when the group where the respective claim for the seized funds is included will be due to be satisfied (pursuant to Sections 192—193 of the Credit Institution Law of the Republic of Latvia).

Orders of sworn bailiffs will be executed regardless of whether a creditor’s claim for the respective funds is submitted by a debtor.

Orders submitted by sworn bailiffs should be made as orders for recovery of funds due from another person.

The above process applies to orders of sworn bailiffs regarding recovery of funds from Company’s creditors.