State institutions, agencies, and companies run by the government have lost a total of EUR 434 million in insolvency processes over the past two years, as the State Audit Office says in its report on the insolvency policy in Latvia, cites LETA.

The amount was lost for the state from January 1, 2013 to September 30, 2014, Auditor General Elita Krumina said today. Of the total amount, EUR 402 million is what the State Revenue Service had to write off in unpaid debts, and EUR 15 million was spent by ministries and their institutions.

The total amount of claims in the ongoing insolvency processes was at least EUR 603 million as of October 1 last year, the Audit Office indicates.

"I believe this is very bad news for the national economy of Latvia," said Krumina. The Justice Ministry has not considered it necessary to draw up an insolvency policy development planning document, she added.

According to the Audit Office's conclusions, the actual priority of insolvency processes in Latvia is for them to be completed as soon as possible, while preserving and recovering the value of an insolvent company is not the main objective. This is also proved by the low amount of debt recovered by creditors – the average portion is just 14 percent of total amounts claimed by creditors.

Krumina also said that the current laws and regulations made it possible for insolvency administrators to be associated with one another, and that administrators had too much freedom in deciding how a legal protection process unfolds.