Liability of the Guarantor when the Principal Debtor’s Liabilities are Discharged through Insolvency Proceedings
FVP attorney at law Ilze Jankeviča has expressed her opinion on how the regulatory standards of guarantee institutions are to be interpreted when a principal debtor’s liabilities are discharged through insolvency proceedings. The article was published in the “Jurista Vārds” periodical.
You can read the article in Latvian here.
A quote from the article:
“(..) considering the urgency of this situation, the legislature has tried to solve the matter of guarantor liability by adopting amendments to the Insolvency law, stipulating that, in the legal situation specified in the law, all attending (secondary) liabilities would be terminated once the primary liabilities undertaken by an individual are discharged. However, subsequent revisions of the Insolvency Law removed the regulation, and it has not been applied in practice. Therefore, the matter of guarantors’ liability has been left up to the judiciary (..)”