How to recover a debt when a company 'disappears' but keeps operating under a new name
Latvian commercial law provides that when a business's assets, staff and operations transfer to a new owner, its debts transfer along with it. Courts and tax authorities are increasingly applying this rule to stop debtors from dodging creditors by shutting down one company and reopening under a different name.
It is not uncommon for a company to become unreachable and file for insolvency, only for the same premises and staff to resurface weeks later under a new company name. Article 20 of the Commercial Law addresses exactly this through the doctrine of 'business transfer': when an operating economic unit — its assets, employees and clients — passes into another person's ownership or use, its liabilities pass with it, even without a formal contract and even if the new owner claims ignorance.
Three groups affected
The rule matters to several groups. For employees, Article 117 of the Labour Law guarantees automatic transfer to the new employer with unchanged salary, tenure and accrued leave — workers are not obliged to sign a new, worse contract. For creditors, the law allows demanding repayment directly from the new company rather than waiting out insolvency proceedings; for five years after the transfer, the old and new companies are jointly liable, so the creditor can choose which one to pursue. For the State Revenue Service (VID), special powers allow it to establish a business transfer independently and recover tax debt through administrative rather than civil proceedings, a position confirmed by the Supreme Court.
Case law has shifted
Formal arguments about being a 'different company' used to often succeed. But a 2025 Supreme Court ruling (case SKC-53/2025) held that even an internal reshuffle between companies owned by the same person carries the same legal consequences as a transaction between strangers — the case involved a claim exceeding two million euros. An earlier 2017 Senate ruling listed indicators to be assessed together: transfer of staff and assets, continuity of address, assumption of liabilities and management. The Court of Justice of the EU applies a similar holistic approach.
Practical steps for creditors
Suspected cases warrant checking the Enterprise Register for overlapping owners or addresses, documenting continued operations, monitoring staff movements, and consulting a lawyer early. Continued operation of the business often signals that funds do exist — just under a different legal entity.
/nginx/o/2026/07/30/17816654t1h2769.jpg)
