OREANDA-NEWS. May 15, 2012. The Bankruptcy Administrator and his team have now processed all set off requests relating to loans and creditor claims, reported the press-centre of Bankas SNORAS.   

When the Bankruptcy Administrator was appointed over BAB Bankas SNORAS on 7 December 2011, set off was prohibited under the Lithuanian Banking Law. This meant that if a client had deposits totalling LTL 50,000 and a loan of LTL 100,000 for example, the client was still obliged to pay the full amount of the LTL 100,000 loan but the LTL 50,000 was not available to offset against the loan, something you would typically expect in other European Union states.

In response to this unfair treatment and following discussions with the Bankruptcy Administrator and his team, the Lithuanian Government moved to introduce a new provision to address the issue. As a result, new Banking Laws were introduced in Lithuania to allow partial set off from 1 January 2012. This partial set off was limited to the LTL 345,280 or €100,000 insured under the Deposit Insurance Scheme.

The allowing of partial set off has had a significant impact on two areas of the Bankruptcy, the loan book and the creditor claims process.

Loan Book

The 49,908 customers with loans and deposit accounts at the Bank and eligible for set off have received set off credits totalling LTL 48 million, of which LTL 40 million has already been utilised against matured loan servicing obligations (due and payable interest and amortisation).

Creditor Claims

Approximately 1,300 out of the 18,984 creditor claims received have had the set off provision applied. The value of this provision exceeds LTL 20.4 million.

In making the LTL 20.4 million available for set off, total creditor claims have decreased by this amount, therefore reducing the total value of claims against the Bankruptcy estate. After applying the set off provision, some creditors no longer have any claim against the Bankruptcy estate at all depending on the value of their deposits and loans.

Commenting on the implications of partial set off on the Bankruptcy process, Neil Cooper, Bankruptcy Administrator said:

“Given that it has been impossible to apply the same set-off procedure to all clients, we have had to deal with over 1,300 clients individually. Processing these set off requests has been a complicated task and has involved both the Bank’s employees and the claims team. I am pleased to announce that we have now processed all set off requests.”