Legislator’s dilemma: analysis of priority rules under EU Directive 2019/1023

Abstract

The author explores alternative creditor priority rules in Directive 2019/1023 with the aim of outlining the most appropriate solution for the Latvian legal system. The ultimate aim of the research papers being – should future Latvian insolvency law have the absolute priority rule of the relative priority rule. Analysis is substantiated by practical implications that both choices would have in Latvia. Before reaching the final conclusion, the author compares both rules in the light of a number of spheres of interest, namely, how both rules would affect SMEs, the judicial system and the society. Finally, the author concludes that the absolute priority rule would appear to be the best choice and serve better to achieve the aims of the insolvency law apart from performing better in practice. The research paper contains a number of practical consideration for Latvian legislators.