REPUBLIC OF LITHUANIA                                     
                                                                                
                               LAW                                              
                    ON ENTERPRISE BANKRUPTCY                                    
                                                                                
                            Chapter 1                                           
                                                                                
                       General Provisions                                       
                                                                                
     Article 1. Purpose of the Law                                              
                                                                                
     This Law  shall regulate  the relations  which arise   while               
instituting  and  examining  bankruptcy  cases  and  implementing               
bankruptcy procedures.                                                          
                                                                                
     This  Law   shall  apply  to  all  economic  entities  whose               
activities are  determined by  the Republic  of Lithuania  Law on               
Enterprises and  other laws  which  regulate  the  activities  of               
enterprises.  The   peculiarities   of   instituting   bankruptcy               
proceedings  against   banks  and   other  credit   institutions,               
insurance  agencies,   and  agricultural   enterprises   may   be               
established by  other standard  acts regulating the activities of               
said enterprises.                                                               
                                                                                
     This  Law   shall  not   apply   to   specialpurpose   State               
enterprises, budgetary  and public  organisations, or  non-profit               
organisations (enterprises).                                                    
                                                                                
     Article 2. Enterprise Bankruptcy Procedure                                 
                                                                                
     Enterprise   bankruptcy    procedure   shall   involve   the               
appointment of  an enterprise  liquidator, the  conclusion  of  a               
settlement  between   the   creditors   and   the   debtor,   the               
reorganisation or  rehabilitation of  the enterprise with the aim               
of avoiding  bankruptcy, as  well as the liquidation of insolvent               
enterprises. Enterprise  bankruptcy  procedures  may  be  applied               
according to judicial or extrajudicial procedure.                               
                                                                                
     The institution of  bankruptcy proceedings,  its course, and               
the bankruptcy  procedure implemented  at an  enterprise must  be               
recorded in the Enterprise Register.                                            
                                                                                
     Article 3. Conditions for Instituting Enterprise Bankruptcy                
               Proceedings                                                      
                                                                                
     The court  shall institute enterprise bankruptcy proceedings               
in accordance with:                                                             
                                                                                
     1)   petitions of  creditors concerning the insolvency of an               
enterprise. These  petitions may  be filed three months after the               
expiration of  the period  established in  laws,  other  standard               
acts, and agreements between creditors and the enterprise, or, if               
the  term   is  not  established  in  the  agreements,  upon  the               
expiration of  the said  period after  the creditor requests that               
liabilities  be   fulfilled,  by  indicating  that  the  debtor's               
liabilities exceed his assets;                                                  
                                                                                
     2)   petitions of creditors concerning the excessive debt of               
an enterprise. These petitions may be filed when the assets of an               
enterprise having the rights of a legal person are not sufficient               
to satisfy  its debts  (in the  balance, the  debtor's  aggregate               
property is estimated to be less than the loan capital);                        
                                                                                
     3) petitions  of creditors  concerning the improper disposal               
of an  enterprise's assets (gratuitous transfer, selling at lower               
prices, or  other squandering)  or other  actions  which  provide               
grounds for  the creditors  to believe that their claims will not               
be satisfied from the debtor's assets; and                                      
                                                                                
     4)   petitions filed by the owner(s) of an enterprise or its               
managing  body   within  whose  competence  is  the  adoption  of               
decisions concerning  the reorganisation  or liquidation  of  the               
enterprise, if  the enterprise  is insolvent or if its insolvency               
is actually  (provably) expected,  or if  the available assets of               
the enterprise are insufficient to meet the liabilities incumbent               
on it.                                                                          
                                                                                
     Documents proving the validity of the petition  to institute               
enterprise  bankruptcy   proceedings  must  be  attached  to  the               
petition.                                                                       
                                                                                
     Article 4. Application of Extrajudicial Bankruptcy Procedure               
                                                                                
     Debtors and creditors may refrain from applying to the court               
for the  institution of  an enterprise  bankruptcy proceedings if               
the debtor  publicly announces  that he  is unable to satisfy the               
liabilities incumbent on him, and notifies every creditor thereof               
in writing.  The notice  must contain  the name of the enterprise               
and other  requisites, as well as the date and place of the first               
meeting of creditors.                                                           
                                                                                
     Decisions  concerning   the  application   of  extrajudicial               
bankruptcy procedure  may be  adopted by  a meeting  of creditors               
upon agreement  with the  debtor, provided  that the  decision is               
unanimously approved by all the creditors.                                      
                                                                                
      The  procedure for implementing the decisions of the meeting              
of creditors  and satisfying their claims  shall be established in              
accordance  with   the  judicial   procedure  and  conditions  for              
investigating  bankruptcy   cases  as  established  in  this  Law.              
(Amended 28 September 1993)                                                     
                                                                                
     In the  event that  the parties  fail to  reach an agreement               
concerning the  application of  bankruptcy procedure,  or if  the               
meeting of  creditors, in  pursuance of the procedure established               
by this  Law, cannot  adopt a  decision concerning the conditions               
and procedure  for satisfying  the claims,  the  issue  shall  be               
referred to the court.                                                          
                                                                                
     The extrajudicial  bankruptcy procedure shall be implemented               
by the meeting of creditors.                                                    
                                                                                
                                                                                
     Article 5. Fraudulent Bankruptcy                                           
                                                                                
     Fraudulent  bankruptcy   shall  be   the  activities  of  an               
enterprise  as  established  by  a  court  decision  whereby  the               
enterprise is  seeking to  evade full  or partial settlement with               
creditors.                                                                      
                                                                                
     Upon establishing fraudulent bankruptcy of an enterprise, the              
court must  examine the  transactions concluded  by the enterprise              
within the  12 months  prior  to  the  institution  of  bankruptcy              
proceedings  and  must  determine  their  legality.    The  assets              
transferred in  accordance with  the transactions declared invalid              
by the  court must  be appropriated  for the  satisfaction of  the              
creditors' claims.                                                              
                                                                                
     Upon establishing  fraudulent bankruptcy,    creditors  whose              
financial claims  have not  yet matured  shall have  the right  to              
request the  payment of  debts from  the day of the enforcement of              
the court decision.                                                             
                                                                                
     Fraudulent bankruptcy  of enterprises  may be established on               
the initiative  of the  court on  the basis of petitions filed by               
the meeting of creditors or by individual creditors.                            
                                                                                
     In cases  of fraudulent  bankruptcy, the  creditors'  claims               
shall be  satisfied in  accordance with the procedure established               
by this Law.                                                                    
                                                                                
     Liability for  actions which  were the  cause of  fraudulent               
bankruptcy shall  be established  by the  laws of the Republic of               
Lithuania.                                                                      
                                                                                
     The court  decision acknowledging  fraudulent bankruptcy may               
be appealed  in the  manner established  by  the  Code  of  Civil               
Procedure.                                                                      
                                                                                
                                                                                
                            Chapter 2                                           
                                                                                
      Court Investigation of Cases of Enterprise Bankruptcy                     
                                                                                
     Article 6. Instituting Bankruptcy Proceedings in Court                     
                                                                                
     Enterprise bankruptcy proceedings shall be instituted by the               
court of  the district  wherein the main office of the enterprise               
is located.                                                                     
                                                                                
     The court  shall have  the  right  to  refuse  to  institute               
bankruptcy proceedings  if the  petition was  filed by  only  one               
creditor or  if the  total claims  of  the  creditors  are    not               
substantial in  comparison  with  the  enterprise's    authorised               
capital. In  such an event, property claims of the debtor and the               
creditors  shall  be  settled  in  accordance  with  the  general               
procedure for settling property disputes.                                       
                                                                                
      Upon  accepting petitions  of the  debtor or  creditors and               
preliminarily determining  the validity of claims for instituting               
legal action  concerning the  bankruptcy of  an  enterprise,  the               
court shall  adopt a  decision to  institute proceedings within 7               
days and must:                                                                  
                                                                                
     1) warn   the  debtor in  writing that  he must  immediately               
inform of changes of the main office of the enterprise;                         
                                                                                
     2) notify  the known  creditors,  the  financial  and  credit              
institutions  servicing   the  enterprise,   the  founder  of  the              
insolvent state  or state  joint stock  enterprise, as well as the              
registrar  who   registered  the  enterprise,  of  the  instituted              
proceedings, and give public notice thereof specifying:                         
                                                                                
     the court  which shall  investigate the  bankruptcy case  as               
well as the number of the case;                                                 
     the requisites of the insolvent enterprise;                                
     the date and place of the first meeting of creditors; and                  
     the term within which the creditors may file their claims.                 
                                                                                
     3) appoint  a liquidator  of the enterprise. If the court has              
information that  the enterprise's  assets are being squandered or              
that the  rights of  the creditors  are being  violated  by  other              
actions, a  provisional liquidator  may be  appointed by  a  court              
order before instituting the enterprise bankruptcy proceedings;                 
                                                                                
     4) notify the enterprise of the prohibition from terminating               
labour relations  with its  employees at  the initiative  of  the               
managing body;                                                                  
                                                                                
     5) suspend   other  legal  actions  instituted  against  the               
enterprise  in   this  court,   and  notify  other  courts  which               
investigate any  other cases  regarding  the  enterprise  of  the               
bankruptcy proceedings  being instituted   in order to have other               
legal actions brought against the enterprise suspended; and                     
                                                                                
     6) inquire  of the  body responsible  for rehabilitation for               
the  possibility   to  apply   rehabilitation  measures   to  the               
enterprise. If  the proceedings  are instituted  against a  state               
enterprise or a state joint stock enterprise, the court must also               
inquire of  the founder  thereof. The rehabilitation body and the               
founder must  respond to  the inquiry  within one  month from its               
receipt.                                                                        
                                                                                
     The  decision   of  the   court  to   institute   bankruptcy               
proceedings may be appealed in the manner established by the Code               
of Civil Procedure.                                                             
                                                                                
     In the  event  that    a  case  against  the  enterprise  is               
dismissed on  the grounds  of  a  settlement,  reorganisation  or               
rehabilitation, notice  thereof shall be given to the finance and               
credit institutions  servicing the enterprise, the founder of the               
state  enterprise  or  state  joint  stock  enterprise,  and  the               
registrar of  the enterprise,  and shall be publicly announced as               
well.                                                                           
                                                                                
     In  the   event  that   the  court   institutes   bankruptcy               
proceedings:                                                                    
                                                                                
     the managing  bodies of  the  enterprise  shall  lose  their               
powers. If  the case  against the  enterprise is dismissed on the               
grounds provided  for in  this Law,  the managing  bodies of  the               
enterprise shall  have the  right to  continue carrying out their               
functions;                                                                      
                                                                                
     the payment   of all debts, including interest and taxes, as               
well as  their recovery by suing for claims or without suit shall               
be prohibited; the distribution or other allocation of the assets               
of the  enterprise without  a special  court order  shall also be               
prohibited, with  the exception  of current  payments  which  are               
necessary for  the enterprise  to continue  its activities during               
the investigation of the case.                                                  
                                                                                
     Article 7. The Enterprise Liquidator                                       
                                                                                
     The liquidator  shall be the manager of an enterprise during               
the period of the investigation of the bankruptcy case.                         
                                                                                
     Representatives of  the debtor  (owner(s) of the enterprise,               
member of  its board,  administration head)  may not be appointed               
liquidator.                                                                     
                                                                                
     During the  investigation of enterprise bankruptcy case, the               
liquidator shall have the following rights and duties:                          
                                                                                
     1) to  represent the  enterprise in court, in the meeting of               
creditors, and in economic activities;                                          
                                                                                
     2)   to manage  and dispose  of the assets of the enterprise               
and to  direct the  current commercial-economic activities of the               
enterprise;                                                                     
                                                                                
     3)  to   examine  all  the  transactions  concluded  by  the               
enterprise during  the 12  months prior  to  the  institution  of               
bankruptcy proceedings or public declaration of the enterprise as               
insolvent, and  to lodge  claims to  declare  the    transactions               
invalid if they prove to have been detrimental to the enterprise;               
                                                                                
     4) to  compile a  list of creditors' claims and submit it to               
the court  for approval,  and to  contest  ungrounded  claims  of               
creditors;                                                                      
                                                                                
     5) to employ or dismiss employees;                                         
                                                                                
     6) to  raise new  credits and  to lease or sell a portion of               
the enterprise's property; and                                                  
                                                                                
     7) to make decisions concerning the further implementation or              
termination of   the enterprise's prior transactions,  the term of              
implementation whereof has not yet expired.                                     
                                                                                
     Article 8. Approval of the Liquidator's Decisions and his                  
               Responsibility                                                   
                                                                                
     All  decisions   of  the   liquidator  which   increase  the               
enterprise's debt  as well  as those related to the sale or other               
transfer of  the enterprise's  assets must  be  approved  by  the               
meeting of  creditors or,  upon the commission of the meeting, by               
the chairperson  of the meeting, with the exception of cases when               
these decisions  are necessary to guarantee the activities of the               
enterprise. These  decisions shall  be invalid  without the  said               
approval.                                                                       
                                                                                
     The liquidator  shall compensate  for losses incurred by the               
enterprise  while  implementing  decisions  enumerated  in  Par.1               
hereof which were not duly approved.                                            
                                                                                
     Article 9. Rights of Creditors upon the Institution of                     
               Enterprise Bankruptcy Proceedings by the Court                   
                                                                                
     Upon the institution of enterprise bankruptcy proceedings by               
the court,  the  creditors  shall  have  the  right,  within  the               
courtestablished period  which shall  be at  least 30 days and no               
more than  3 months  from the day the proceedings are instituted,               
to lodge their monetary claims with the liquidator and to specify               
securities for the claims.                                                      
                                                                                
     The court  shall have  the right, up until the conclusion of               
the case  investigation, to  accept claims of creditors which are               
lodged in  violation of  the term  established in  Par.1  hereof,               
provided that the violations were for valid reasons.                            
                                                                                
                                                                                
                            Chapter 3                                           
                                                                                
                    The Meeting of Creditors                                    
                                                                                
     Article 10. The Work Procedure of the Meeting of Creditors                 
                                                                                
     The  liquidator   shall  include,   in  the  creditor  list,               
creditors who  have lodged  claims against  debtors in accordance               
with the procedure established in Article 9 of this Law. The list               
shall be  approved by the meeting of creditors; in the event that               
the enterprise  is adjudged  to be  a bankrupt, the list shall be               
approved by the court in accordance with the legal procedure.                   
                                                                                
     All of  the creditors  shall have equal rights regardless of               
their place  of  registration,  the  location  of  their  foreign               
capital, their form of ownership and their citizenship.                         
                                                                                
                                                                                
     The court  shall appoint  the chairperson  of the creditors'               
meeting.                                                                        
                                                                                
     Owners of  insolvent enterprises  or their  representatives,               
enterprise liquidators  appointed by  the court,  as well  as the               
representatives of  the founder  of state  enterprises and  state               
joint stock  enterprises shall  have the  right to participate in               
the sittings  of the  creditors' meeting.  Only creditors  (their               
representatives) shall be entitled to vote.                                     
                                                                                
     The court,  the owner(s) of an enterprise which has declared               
that it  is not  in position  to satisfy  its liabilities, or the               
managing  body  which  has  the  competence  to  adopt  decisions               
concerning the  reorganisation or  liquidation of the enterprise,               
shall have  the right to call the first meeting of creditors. The               
first meeting of creditors shall be called within 30 days of:                   
                                                                                
     1)  the  day  that  enterprise  bankruptcy  proceedings  are               
instituted, when the case is raised in court; and                               
                                                                                
     2) the  day that  the enterprise  publicly  declares  itself               
bankrupt.                                                                       
                                                                                
     The court  and the  chairperson of  the  creditors'  meeting               
shall  have   the  right  to  call  subsequent  sittings  of  the               
creditors' meeting.  Groups of  creditors  whose  sum  of  claims               
amounts to  at least  one-third of  the total  claims  lodged  by               
creditors shall  have the right to apply for the convocation of a               
meeting.                                                                        
                                                                                
     Written notices  of the  convocation of  a creditors' meeting              
sitting must  be sent to participants of the meeting no later than              
10 days prior to the commencement of the sitting.                               
                                                                                
     Article 11. Procedure for Adopting Decisions of the Meeting                
               of Creditors                                                     
                                                                                
     Decisions of  the  meeting  of  creditors  shall  be  deemed               
adopted when,  in an  open vote,  they are  voted in favour of by               
creditors whose  total amount  of claims is more than half of the               
total amount  of claims  lodged by  all creditors,  not including               
claims of  creditors who  are absent from the meeting without due               
cause.                                                                          
     The procedure  for  adopting  decisions  provided  in  Par.1               
hereof shall  be  valid  for  settling  all  issues,    with  the               
exception of cases specially provided for in this Law.                          
     Decisions of  the meeting  of creditors  shall be binding to               
all creditors.  The meeting  of creditors  must, within  5  days,               
notify  all   known  creditors  as  well  as  the  court  if  the               
proceedings are instituted in court,  of its adopted decisions.                 
     If creditors,  having received a notice,  fail for the second              
time to  attend a  meeting without a valid reason, the court shall              
not investigate the bankruptcy case.                                            
                                                                                
     Article 12. The Rights of the Meeting of Creditors                         
                                                                                
     Upon the  institution of bankruptcy proceedings, the meeting               
of creditors shall have the right to:                                           
     1) request  that the  court replace  the liquidator  who has               
already been appointed;                                                         
     2) demand  that  the  liquidators  give  accounts  of  their               
activities, and  to approve  said accounts.  If  the  meeting  of               
creditors does  not approve  a liquidator's  account, it  may  be               
approved by the court at the request of the interested persons;                 
     3)  grant   permission  to   the  liquidator   to   conclude               
transactions related  to  the  sale  or  other  transfer  of  the               
enterprise's assets, for which, in the cases provided for in this               
Law, the consent of the creditors' meeting is requisite;                        
     4) determine  liquidators' salaries.  The court may increase               
enterprise liquidators'   salaries which have been established by               
a meeting of creditors;                                                         
     5) conclude the settlement with debtors;                                   
     6) propose  that enterprises be reorganised or rehabilitated;              
and                                                                             
     7) request the liquidation of enterprises.                                 
                                                                                
     Article 13. Dismissal of Bankruptcy Cases upon the                         
               Relinquishment of Creditors' Claims                              
                                                                                
     Creditors shall have the right to abandon their claims. Upon               
the relinquishment  of claims  by a creditor, the bankruptcy case               
shall be  shall be dismissed at that point.                                     
     Enterprise bankruptcy  cases shall  be dismissed when all of               
the creditors  abandon their  claims. The court shall not dismiss               
the case  if this  contradicts the  law or  violates  a  person's               
rights or legal interests.                                                      
                                                                                
                                                                                
                            Chapter 4                                           
                                                                                
                         The Settlement                                         
                                                                                
     Article 14. The Rights of Creditors in Concluding                          
               Settlements                                                      
                                                                                
     A creditor  or group  of creditors may conclude a settlement               
with debtors.                                                                   
     The concluded  settlement document  must contain the balance               
of the  enterprise and  the list of debts, the conditions for the               
remission or  reduction of  debts  or  for  the  postponement  of               
payment thereof  as agreed  upon by  the parties,  as well as the               
term and procedure for fulfilling liabilities.                                  
                                                                                
     Article 15. The Term for Concluding Settlements                            
                                                                                
     Settlements between  debtors and  creditors may be concluded               
at any  stage of  the investigation  of the enterprise bankruptcy               
case.                                                                           
                                                                                
     Article 16. The Procedure for Adopting and Approving                       
               Settlements                                                      
                                                                                
     A settlement  shall be  deemed concluded  when it  has  been               
approved at  the creditors' meeting by all of the creditors whose               
claims are not secured by mortgage.                                             
                                                                                
     A  settlement   may  not  be  concluded  if  the  court  has               
established a fraudulent bankruptcy.                                            
                                                                                
     Creditors shall have the right to appeal to court to declare               
a settlement  invalid if  they believe  that it  was concluded in               
violation of  the requirements  of the law, or of their rights or               
interests which are protected by law.                                           
                                                                                
     A settlements  shall become  effective upon  its approval by               
the court. In the event that a settlement is concluded during the               
implementation of  extrajudicial bankruptcy  procedure,  it  must               
also be approved in court.                                                      
                                                                                
     Article 17. Invalidation of Settlements                                    
                                                                                
                                                                                
     The court  may declare  a settlement  invalid    if  it  was               
concluded in  violation of  the law or of the rights or interests               
of other persons which are protected by law.                                    
                                                                                
      In  the event  that a  settlement is  declared invalid,  all              
financial liabilities  of the enterprise which were valid prior to              
the conclusion of the settlement shall become enforceable.                      
                                                                                
     Article 18. Dismissal of Cases of Enterprise Bankruptcy upon               
               the Conclusion of a Settlement                                   
                                                                                
     Upon the  approval of  a settlement  by the  court, cases of               
enterprise bankruptcy shall be dismissed.                                       
                                                                                
                                                                                
                            Chapter 5                                           
                                                                                
                  Reorganisation of Enterprises                                 
                                                                                
     Article 19. Conditions for the Reorganisation of Enterprises               
                                                                                
     The  reorganisation   of  an   enterprise   shall   be   the               
transformation of  the  enterprise's  structure  by  dividing  or               
transferring its  assets (or  part  thereof)  to  other  economic               
entities and  the alteration of the character of the enterprise's               
activities in  order to  satisfy  the  claims  of  creditors,  as               
implemented by the creditors, the liquidator, and the owner(s) of               
the enterprise or his authorised representative.                                
     Upon the  proposal  of  the  meeting  of  creditors  or  the               
enterprise,  the  court  may  adopt  a  decision  concerning  the               
reorganisation of  the  enterprise,  provided  that  there  is  a               
possibility of attaining one of the following objectives:                       
     1) restitution of the enterprise's solvency; or                            
     2) realisation  of a part of the enterprise's assets with the              
aim of  fully satisfying its debts to creditors without suspending              
economic activities.                                                            
     In order  to adopt a decision to reorganise an enterprise, no              
less than  two-thirds of  the creditors  according to  the   total              
amount of  the claims lodged must vote by open ballot in favour of              
the decision.                                                                   
                                                                                
     Article 20. Plan for the Reorganisation of Enterprises                     
                                                                                
     The plan  for the  reorganisation of  an enterprise  may  be               
worked out by the creditors, the liquidator, or the debtor.                     
     The plan  for the  reorganisation of  an enterprise  must be               
prepared and  submitted to  the court  within  3  months  of  the               
adoption  of   the  decision  concerning  the  implementation  of               
bankruptcy procedures.                                                          
     The meeting  of creditors  shall  determine  the  length  of               
reorganisation of the enterprise.                                               
     The plan  for  the  reorganisation  of  an  enterprise  must               
indicate:                                                                       
     1) the  object of  reorganisation, as well as its objectives               
and term;                                                                       
     2) the  rights and  duties of  the liquidator conducting the               
reorganisation of  the enterprise,  but not  exceeding the powers               
established in Article 7 of this Law;                                           
     3) the rights of the meeting of creditors;                                 
     4) the rights granted to the enterprise; and                               
     5)   the procedure  for  the  liquidator's  account  to  the               
meeting of creditors.                                                           
                                                                                
     The plan  for reorganisation  of an  enterprise shall become               
valid from the day of its approval in the court.                                
                                                                                
     Upon  approval  of  the  plan  for    reorganisation  of  an               
enterprise by  the  court,  the  meeting  of  creditors  and  the               
enterprise shall  only have  the rights provided for in the plan.               
Investigation of  the bankruptcy case in court shall be suspended               
for the period during which the plan is valid.                                  
                                                                                
     Article 21. Termination and Completion of the Reorganisation               
               of Enterprises                                                   
                                                                                
     Reorganisation of  an  enterprise  shall  be  completed  upon              
attaining the objectives specified in the plan for reorganisation,              
and the enterprise bankruptcy case shall be dismissed.                          
     Reorganisation of  an enterprise  or its  activities may  be               
terminated by court decision if:                                                
                                                                                
     1) the  meeting of creditors concludes that the objectives of              
reorganisation shall not be attained; or                                        
     2) the  enterprise implements  actions  which violate or may               
violate the interests of individual creditors.                                  
     When  the   court  terminates   the  reorganisation   of  an               
enterprise, the initial claims of the creditors shall be restored               
and the bankruptcy case shall be reinstated.                                    
                                                                                
                                                                                
                            Chapter 6                                           
                                                                                
                  Rehabilitation of Enterprises                                 
                                                                                
     Article 22. Rehabilitation of Insolvent Enterprises                        
                                                                                
     The  rehabilitation   of  an   enterprise   shall   be   the               
administrative, economic,  and financial  measures applied to the               
enterprise with  the financial security furnished by the State or               
by third parties with the aim of preventing its bankruptcy.                     
                                                                                
     Rehabilitation may  be applied  to an  enterprise if, during               
the investigation of its bankruptcy case in court, the enterprise               
fails to  conclude a  settlement or  the court  does not  approve               
either the  settlement or  the plan for the reorganisation of the               
enterprise or its activities.                                                   
                                                                                
     The   court,    foreseeing   a   possibility   of   applying               
rehabilitation measures to an enterprise, may publicly announce a               
contest for the participation of legal and natural persons in the               
rehabilitation of the enterprise.                                               
                                                                                
     Enterprises  shall   either  be  rehabilitated  by  a  State               
rehabilitation agency  or by  natural or  legal persons chosen in               
the rehabilitation contest on the basis of submitted plans.                     
                                                                                
     Petitions for  the rehabilitation  of an  enterprise may  be               
submitted to  the court   within  2 months of the announcement of               
the contest for rehabilitation.                                                 
                                                                                
     Petitions concerning  the rehabilitation  of  an  enterprise               
must contain  the names  of  legal or natural persons who wish to               
rehabilitate it  as well  as   basic information  about them, and               
must define  the  nature  of  existing  economic  ties  with  the               
enterprise,  the   character,  objectives,   and     duration  of               
rehabilitation  measures,   and  the  term  for  satisfaction  of               
creditors' claims.                                                              
                                                                                
     Article 23. Conditions of Enterprise Rehabilitation                        
                                                                                
     The period  allotted for  enterprise rehabilitation  may not               
exceed 18  months. Upon  the proposal of the persons carrying out               
rehabilitation, the  court may  extend the  period for  up  to  6               
months.  The   day  that   the  court  adopts  the  decision  for               
rehabilitation   shall    be   considered    the   beginning   of               
rehabilitation.                                                                 
                                                                                
       At  least one-third  of the  total creditor claims must be               
satisfied within 12 months of the beginning of rehabilitation.                  
                                                                                
     During the rehabilitation period, the creditors' claims must               
be satisfied  in the  same sequence as provided in the event that               
an enterprise is liquidated.                                                    
                                                                                
     Article 24. Fulfillment of the Liquidator's Functions during               
               the Rehabilitation Period and Account to the                     
               Creditors                                                        
                                                                                
     During the  rehabilitation period,  a representative  of the               
persons implementing  rehabilitation shall  perform the functions               
of the liquidator.                                                              
                                                                                
     At the  request of  the creditors'  meeting, the  liquidator               
shall give an account of the enterprise's rehabilitation.                       
                                                                                
     Article 25. Procedure for Rehabilitating State Enterprises                 
               and State Joint Stock Enterprises                                
                                                                                
     The Government  of the  Republic of  Lithuania may establish               
other procedures  for rehabilitating  state enterprises and state               
joint stock enterprises.                                                        
                                                                                
     Article 26. Termination and Completion of Enterprise                       
               Rehabilitation                                                   
                                                                                
     During rehabilitation,  creditors or  the  owner(s)  of  the               
enterprise shall  have the  right to  apply to court to terminate               
rehabilitation because  it is  ineffective or because the actions               
of the  persons implementing  rehabilitation are  unlawful and by               
reason thereof  the  enterprise  is  suffering,  or  may  suffer,               
losses.                                                                         
                                                                                
     Upon  acknowledging   the  validity  of  the  creditors'  or               
enterprise's request  to terminate  rehabilitation, the court may               
terminate rehabilitation  of the  enterprise. Rehabilitation  may               
also be  terminated  by  a  court  decision  on  the  grounds  of               
violations of rehabilitation conditions specified in Article 23.                
                                                                                
     Upon   attaining   the   objectives   set   forth   in   the               
rehabilitation plan  during the  period  of  rehabilitation,  the               
procedure shall  be terminated   by  a  court  decision  and  the               
enterprise bankruptcy case shall be dismissed.                                  
                                                                                
     Upon the  completion  of  rehabilitation,  the  persons  who               
implemented the procedure shall acquire the right of ownership to               
the  portion  of  property  invested  in  the  enterprise  during               
rehabilitation.                                                                 
                                                                                
                                                                                
                            Chapter 7                                           
                                                                                
               Liquidation of Bankrupt Enterprises                              
                                                                                
                                                                                
     Article 27. Decision Concerning the Liquidation of  Bankrupt               
               Enterprises                                                      
                                                                                
                                                                                
      Liquidation  of an  enterprise on the grounds of bankruptcy               
shall be  the termination  of activities of a bankrupt enterprise               
on the  decision of  the court or the creditors' meeting by fully               
or partially   fulfilling  the   creditors'  claims  against  the               
assets of the enterprise in liquidation.                                        
                                                                                
     A decision  to liquidate  a  bankrupt  enterprise  shall  be               
adopted if:                                                                     
                                                                                
     1) the settlement is not concluded or is declared invalid;                 
                                                                                
     2)  the  enterprise  is  not  reorganised  pursuant  to  the               
decision of  the creditors'  meeting or the reorganisation of the               
enterprise is terminated on the decision of the court; and                      
                                                                                
     3) the  rehabilitation  procedure  is  not  applied  to  the               
enterprise.                                                                     
                                                                                
     A decision  concerning  the  compulsory  liquidation  of  an               
enterprise may  be adopted  no earlier  than 3  months  from  the               
institution  of the enterprise bankruptcy proceedings.                          
                                                                                
     The  decision   of  the   court  concerning  the  compulsory               
liquidation of an enterprise may be appealed against according to               
the procedure established by the Code of Civil Procedure.                       
                                                                                
     Upon the  liquidation of a bankrupt enterprise, all terms of               
debts payable  by and  to  the  enterprise  shall  be  considered               
expired.                                                                        
                                                                                
     Article 28. Announcement of Decisions Concerning the                       
               Liquidation of Bankrupt Enterprises                              
                                                                                
     Upon adopting  a decision to liquidate a bankrupt enterprise,              
the court must:                                                                 
                                                                                
     1) make a public announcement thereof; and                                 
                                                                                
     2)  notify   the  creditors,  the  owners  of  the  bankrupt               
enterprise, the  founders of  the bankrupt  state  enterprise  or               
state joint stock enterprise, and the institutions of finance and               
banking servicing the enterprise of the adopted decision.                       
                                                                                
     Article 29. Sequence of and Procedure for Fulfilling                       
               Creditors' Claims                                                
                                                                                
     Priority in  fulfilling creditors'  claims shall be given to               
claims secured  by mortgage,  to employees' claims connected with               
labour relations,  and to  claims of  compensation for maiming or               
other physical injuries, as well as for the deprivation of life.                
                                                                                
     Second in sequence for the satisfaction of claims shall be:                
                                                                                
     1)  court   and  administrative   expenses  connected   with               
investigations of bankruptcy cases; and                                         
                                                                                
     2)   unpaid claims for goods supplied during the period from               
the institution  of the  bankruptcy  proceedings  or  the  public               
announcement of  its bankruptcy  to the  day that the decision is               
adopted by  the court  or the creditors' meeting to liquidate the               
enterprise, as  well  as  other  claims  arising  from  decisions               
adopted by the liquidator during the investigation of the case.                 
     Third in  sequence for  the satisfaction  of claims shall be               
taxes and  other payments  to the  budget, as  well as compulsory               
state social insurance.                                                         
                                                                                
     Fourth in  sequence for  the satisfaction of claims shall be               
creditors' claims  which are  not secured  by mortgage, and other               
claims of creditors.                                                            
     The claims  of  creditors  (claimants)  of  each  successive               
sequence shall  be fulfilled  upon fully satisfying the claims of               
the creditors  (claimants) of  the preceding  sequence. If assets               
are insufficient  to fulfill all of the claims of one sequence in               
full, said  claims shall be satisfied in proportion to the amount               
of claims due to each creditor (claimant).                                      
                                                                                
     Article 30. The Procedure for Liquidating Bankrupt                         
               Enterprises                                                      
                                                                                
     Bankrupt enterprises  shall be liquidated in accordance with               
the laws  regulating the  activities of  corresponding  types  of               
enterprises, with  the exception  of cases  provided for  in this               
Law.                                                                            
                                                                                
                                                                                
                                                                                
Vytautas Landsbergis                                                            
                                                                                
President                                                                       
Supreme Council                                                                 
Republic of Lithuania                                                           
                                                                                
Vilnius                                                                         
15 September 1992                                                               
No. I-2880