Legal prism — 2026-10-20

Point 15 of Article 40 of the Law requires justification that the benefit to dissenting creditors from implementing the process is at least as great as in the event of insolvency — it is against this criterion that the bondholders' objections are most likely to be directed.

Article 15(5) protects DIP financing: the administrator is not entitled to bring an action for its recognition as invalid merely because the transaction harms the interests of the body of creditors, except in cases of bad faith or related-party transactions.

Core issue

airBaltic appears to be in a US "Chapter 11" process, and the US Bankruptcy Court has approved the first tranche of DIP financing — EUR 175 million out of a total planned EUR 350 million. This means the company maintains operational continuity while simultaneously securing very expensive financing at a rate of SOFR +8% (approximately 12% per annum) plus fees of up to approximately EUR 52.5 million. The legal essence is that a DIP loan is new financing during a restructuring process, and its approval, terms, and subsequent tranches are court-controlled decisions rather than a freely negotiated contractual process. Under Latvian law, such a situation would be governed by the provisions of the Insolvency Law concerning the legal protection process. Article 44 of the Law provides that the legal protection process is implemented only if the action plan has been agreed with the creditors and approved by the court. Article 38 permits measures — deferral of payments, disposal of assets, reorganisation (Article 46) — while the wording of Article 40 shows that the plan must also specify new financing, the reasons for its necessity, and the justification for why the prospects of avoiding insolvency are reasonable (points 15.4 and 15.5). DIP financing is precisely such new financing contemplated in the plan.

Legal assessment

In the airBaltic case, the DIP financing structure corresponds to what point 15.4 of Article 40 of the Insolvency Law requires: the plan must include information on new financing necessary for implementing the action plan, indicating the reasons why the financing is needed. The court here acts as the decision-maker on each tranche of financing — EUR 175 million has been approved, but the next tranches of EUR 125 million and EUR 50 million will be available only after additional court decisions and satisfaction of conditions ("milestones"). The minimum liquidity requirements — at least EUR 10 million after the first tranche and EUR 20 million after the second — are typical DIP agreement terms that give lenders financial control over the process. The objections of the bondholders' "Ad Hoc Group" regarding the DIP terms and their impact on security constitute a significant disputed issue that the court has not yet resolved. Several provisions of the Latvian Law would regulate such a structure:

• In the context of Article 73, the claims of secured creditors and their restriction during the process require the plan to provide for compensation to the secured creditor for the restriction of rights (point 14).
• The plan must be approved by the creditor majority under the third part of Article 42; if the plan is not supported by the creditor majority, the court terminates the process (Article 51(1)).
• Article 51(2) provides that the court terminates the process and declares insolvency if proceedings have been initiated against the debtor for the second time within a year without implementation.
• Article 15(5) protects DIP financing: the administrator is not entitled to bring an action for recognition of a temporary or new financing transaction as invalid merely because it harms the interests of the body of creditors, except in cases of bad faith or related-party transactions.
• Article 167 provides that the costs of the process are covered from the debtor's monetary funds, and their amount is set out in the action plan. The bondholders' objections would correspond to the mechanism of Article 37.2: if objections indicate a plan's non-compliance, an independent assessment of the economic activity may be requested, and if non-compliance is found, the debtor compensates the creditor's expenses. Likewise, point 15 of Article 40 requires justification that the benefit to dissenting creditors is at least as great as in the event of insolvency — this is precisely the criterion against which the bondholders are most likely to direct their objections concerning the diminution in the value of the security. These "milestones" are not merely commercial obligations but court-imposed procedural conditions — failure to satisfy them could result in the blocking of further financing.

Consequences

Realistic scenarios:

• If the "milestones" are satisfied and the court approves the subsequent tranches, airBaltic receives the remaining EUR 175 million and the process moves towards approval of the reorganisation plan, planned for mid-2027.
• If the bondholders' objections are upheld, the DIP terms may be revised — this would affect both the costs and the security structure.
• If the conditions are not satisfied, the subsequent tranches of financing are not granted, and the process may lead to a declaration of insolvency — in the Latvian context, this would correspond to the outcome under Article 51(2).
• Article 106 of the Latvian Law permits a transition from insolvency to the legal protection process only in limited cases; therefore, a declaration of insolvency would be a practically irreversible step. In practical terms, this matters to: passengers (flights and tickets remain valid), creditors (satisfaction of the bondholders' claims depends on the reorganisation plan), the Latvian state as the holder of 88.37% of the shares, and Lufthansa as a 10% shareholder. Further monitoring: a US court decision on the bondholders' objections to the DIP terms is expected, as well as, in early December and by 23 December — a report on the conclusion of an NDA with investors and an agreement with lessors; the next court hearing on the granting of the EUR 125 million and EUR 50 million tranches will depend on satisfaction of these conditions.

Where an undertaking employs 300 or more employees, a collective dismissal exists already where 30 employees are to be dismissed within 30 days (Section 105(1), point 4 of the Labour Law).

A collective dismissal may be commenced no earlier than 30 days after the notification has been submitted to the State Employment Agency, and the SEA may in exceptional cases extend the period to 60 days (Section 107).

Core issue

In the event of a collective dismissal, airBaltic employees face a strictly regulated procedure involving consultation, information and notification deadlines, the omission of which renders each individual dismissal legally contestable. The factual news is straightforward: the chair of the board confirms that a collective dismissal is forthcoming without specifying the number, while in parallel the company has initiated Chapter 11 restructuring in the US with EUR 350 million in investor financing. The direct legal question is whether the planned dismissal qualifies as a collective dismissal within the meaning of Section 105 of the Labour Law and what duties flow from it under Sections 106, 107 and 108. The criterion is numerically defined: where an undertaking ordinarily employs 300 or more employees, a collective dismissal exists already where 30 employees are to be dismissed within 30 days (Section 105(1), point 4). airBaltic, with more than a thousand employees, exceeds this threshold with any realistic scale of dismissal, so the full procedure is mandatory.

Legal assessment

The employer's duties arise sequentially and must be performed regardless of whether the decision is taken by airBaltic or by the controlling undertaking — Section 106(3) expressly provides for this:

• to commence consultations with employee representatives in good time on the number of dismissals, the course of the process and social guarantees, examining all possibilities of avoiding or reducing the dismissals (Section 106);
• to inform employee representatives in writing of the reasons, the number of employees to be dismissed by profession and qualification, the number ordinarily employed, the time period and the procedure for calculating the severance pay if it differs from Section 112 (Section 106(2));
• to notify the State Employment Agency and the municipality in writing no later than 30 days in advance, also indicating information about the consultations; a copy of the notification must be sent to employee representatives (Section 108, Section 106(4));
• to commence the collective dismissal no earlier than 30 days after the notification has been submitted to the SEA, and the SEA may in exceptional cases extend the period to 60 days (Section 107). The aspect mentioned in the news concerning voluntary resignations and applications for 85% workload is legally significant: Section 105(2) provides that, in calculating the number of dismissals, account must also be taken of cases where the employment relationship has been terminated on other grounds not related to the employee's conduct or abilities and which have been encouraged by the employer. Each individual dismissal must be based on Section 104(1) — a reduction in the number of employees due to urgent economic or organisational measures — and a written explanation must be requested before notice of termination (Section 101(2)). The burden of proof rests on the employer: it must prove that the notice of termination is legally justified and complies with the procedure (Section 125), failing which the court will reinstate the employee. At the international level, the relevant duties are mirrored by Article 13 of ILO Convention C158 of 1982 and Article 29 of the Revised European Social Charter. The Chapter 11 procedure before a US court does not displace these Latvian Labour Law duties: employment relationships with employees employed in Latvia remain within Latvian jurisdiction, and the need for restructuring is merely an economic reason, not a procedural facilitation.

Consequences

Practical implications for employees and the company:

• if the employer omits the consultations or the 30-day notification to the SEA, each dismissal is contestable, and the court may reinstate the employee, with the Section 125 burden of proof resting on the employer;
• employees must receive written information on the severance pay; if the procedure differs from Section 112, this must be indicated in advance;
• transfer to an 85% workload is permissible only with the employee's consent, as it alters the terms of the employment contract; refusal is in no way a ground for dismissal;
• the company must take into account that the SEA may extend the deadline for commencing the dismissals to 60 days, which limits the pace of the restructuring.

Section 17(3) of the State Border Guard Law imposes on the border guard a duty to warn of the intention to use a weapon before doing so, and only Section 17(4) permits the use of a weapon without warning where an attack or resistance is sudden, or a dangerous object or vehicle is used.

Section 17(5) establishes a prohibition on the use of a weapon against a woman, a person with a visible disability and a child, except where such persons endanger the life or health of the border guard or another person or offer armed resistance.

Core issue

If the amendments proposed in the Saeima Defence, Interior and Corruption Prevention Committee are adopted, border guards and officials involved in the reinforced border surveillance regime would acquire the right to use firearms without warning, and the principal legal shift is the exclusion of liability — an official would bear no civil, criminal, administrative or disciplinary liability for harm resulting from the exercise of these powers. Section 17 of the currently effective State Border Guard Law permits the use of a weapon without warning only in narrow situations — where an attack or resistance is sudden, a dangerous object or vehicle is used, or where a warning is impossible in the given circumstances. The amendments would shift this balance: a warning would no longer be a precondition in cases where actions are detected that endanger the security of the state border or border infrastructure facilities. The legal question to be resolved is twofold — procedural (when the use of a weapon is lawful without warning) and substantive (whether an official who has used a weapon in such circumstances can be held liable at all). The solution will rest on Sections 16, 16.1, 17 and 17.1 of the State Border Guard Law and on the Law on the State Border of the Republic of Latvia, which governs the operation of the reinforced border surveillance system.

Legal assessment

The current regulation establishes a two-tier system. Section 17(3) of the State Border Guard Law imposes on the border guard a duty to warn of the intention to use a weapon before doing so, and only Section 17(4) permits the use of a weapon without warning where an attack or resistance is sudden, or a dangerous object, vehicle or device intended for navigation is used. The duty of proportionality remains unchanged: Section 17(6) and the relevant provisions of Section 16 require that the harm inflicted be limited to the maximum extent possible and that first aid be provided immediately. Under the amendments, the new framework provides for:

• the right to use, without warning, not only firearms but also explosives, physical force, special combat techniques, special means and a service dog;
• a justifying circumstance consisting not only of defence against an attack, but also of detected actions endangering border security or infrastructure facilities;
• a complete exclusion of liability in four forms — civil, criminal, administrative and disciplinary;
• the sole safeguard for the victim — the Border Guard's duty to notify the prosecutor's office immediately, but no later than within 24 hours, in writing, where a person has been injured or has died.

This construction also corresponds to the existing Section 17.1 on explosives, which already permits their use without warning (Section 17.1(3)), requires proportionality (Section 17.1(4)) and the provision of first aid (Section 17.1(5)). Extraterritorial frameworks also exist in parallel: Sections 17(7) and 17(8) provide that, when supporting other institutions or performing duties outside Latvia, a weapon is used in accordance with the Law on Police or norms of international law, while a border guard incorporated within the National Armed Forces (NBS) acts in accordance with the Military Service Law. By comparison, other officials are subject to a narrower standard: Section 10 of the Tax and Customs Police Law and Section 65 of the Weapons Circulation Law permit the use of firearms only as a last resort, while Section 22 of the Security Work Law permits it as a last resort subject to a proportionality constraint. The most significant analytical insight: in excluding liability "for harm or losses resulting from the exercise of the rights", the legislator must clarify whether the duties of proportionality and first aid remain in force as the boundary between the "exercise" of the right and its excess — otherwise, the 24-hour notification to the prosecutor's office becomes the sole effective control mechanism.

Consequences

If the amendments are adopted, the practical consequences will manifest themselves at three levels. First, the border guard's on-the-spot decision-making logic would change: a warning shot would no longer be a mandatory step upon detecting actions against border infrastructure — for example, the attacks on electricity distribution cabinets registered in early October. Second, aggressive migrant escorts who are armed and threaten soldiers, as documented in NBS attestations, would fall within the new justifying circumstance, and an official would not be held liable in any of the four forms of liability for the use of a weapon against them. Third, for victims or their families, the avenue of a civil claim against the state would be practically closed, except in cases where it can be proven that the rights were exercised outside the conditions prescribed by law. Going forward, attention should be paid to the outcome of today's sitting of the Saeima Defence, Interior and Corruption Prevention Committee and to whether the amendments to the State Border Guard Law and the Law on the State Border of the Republic of Latvia will be submitted for a final vote in the Saeima.

Correction. First, the article's generalisation that the law entitles the client to receive a refund "immediately" is not precise — Section 84(1.1) of the Latvian law sets the limit "immediately, but no later than by the end of the next business day", and the right exists only subject to the exception where the provider has notified the Bank of Latvia of reasonable suspicion of the client's unlawful conduct. Second, the assertion that the payer is liable for "all" losses if acting with intent or gross negligence incompletely reflects the logic of Article 69 of the Directive: the ground of liability stated in the statutory text is unlawful conduct, and a claim for reimbursement of expenses after the immediate refund is subject to the provider's burden of proof, not to an automatic shifting of the entire loss onto the client. It would be more accurate to state that gross negligence is not a ground for refusing immediate refund, but only a possible ground for a recourse claim after the refund, which the provider must prove.

The bank must immediately, but no later than by the end of the next business day, refund the amount of the unauthorised payment or restore the account balance (Article 86(1¹) of the Law).

If the bank wishes to impose the losses on the customer, the burden of proof lies with the bank — Article 87(3) of the Law: it must prove intent or gross negligence.

Core issue

A phishing victim who lost approximately EUR 700 from their account faces a two-stage legal regime: first, the bank is obliged to refund the unauthorised amount immediately, and only then can the battle begin over who ultimately bears the losses. The CJEU judgment of 15 October 2026 in Case No. C-70/25 clarifies that mere suspicion of the customer's gross negligence does not, in itself, burden the customer and does not release the bank from immediate refund. The specific question of law concerns the scope of the exception under Article 73(1) of the Payment Services Directive and how it correlates with Articles 86 and 87 of the Payment Services and Electronic Money Law, applicable in Latvia. Article 73 of the Directive and Article 86 of the Law provide only one exception to immediate refund: substantiated suspicions of fraud, notified in writing to the competent authority (in Latvia — Latvijas Banka). Gross negligence does not fall within this list of exceptions, and therefore a refusal to refund on the grounds of the customer's fault is unlawful. The allocation of liability after the refund is governed by a different provision — Article 72(2) and Article 74 of the Directive, and in Latvia, Article 87 of the Law.

Legal assessment

The bank's obligations and the customer's position are structured as follows:

• The exception applies only where the bank has substantiated suspicions of fraud and has notified them in writing to Latvijas Banka; the customer's gross negligence is not a ground here.
• If the bank nevertheless wishes to impose the losses on the customer, the burden of proof lies with the bank — Article 87(3) of the Law and Article 72(2) of the Directive: it must prove intent or gross negligence by which the customer breached the obligations set out in Article 82.
• The mere recording of the use of the payment instrument is not sufficient evidence of the customer's authorisation or fault (Article 87(2) of the Law).
• Unauthorisation is determined by the absence of consent in accordance with Article 64 of the Directive and Article 80 of the Law. The CJEU judgment in Case C-70/25 directly concerns a Polish customer's phishing case: the Court held that a refusal of immediate refund based on possible gross negligence does not comply with Article 73(1), as it would render the refund obligation ineffective and impose a disproportionate burden of defending one's rights on the consumer. The ruling is equally binding on Latvian courts in similar disputes. At the same time, the CJEU distinguished the second stage: after the refund, the bank may bring a claim against the customer for reimbursement of expenses if it proves fault in accordance with Article 74. In the Latvian context, the customer additionally has institutional avenues: the Consumer Rights Protection Centre and Latvijas Banka may order a payment service provider to cease non-compliance with the provisions of Chapters VII–XIV, and Latvijas Banka also has the power to impose a fine of up to EUR 142,300 for breaches of EU legal act requirements in the field of payment services.

Consequences

Three practical scenarios are possible:

• The bank refunds the amount immediately, and the dispute ends — the most common outcome following the signal from C-70/25.
• The bank, after the refund, brings a counterclaim against the customer, and the court determines whether the phishing victim acted with gross negligence; the burden rests on the bank.
• The bank continues to refuse the refund — in that case, the customer has access to the complaint (dispute) management mechanism at the provider itself, recourse to the Consumer Rights Protection Centre or Latvijas Banka, as well as a civil claim; the provider additionally faces supervisory measures by Latvijas Banka, including a fine of up to EUR 142,300. For banks, this judgment means that internal justifications for refusal referring to "gross negligence" without a written notification of fraud suspicions to Latvijas Banka are legally indefensible. For consumers, it is essential to document the notification to the bank of the unauthorised payment, as this triggers the refund deadline.

Does the prosecutor's office have a legal basis for identifying the accused by profession in a press release, where that profession is neither a qualifying element nor a mitigating or aggravating circumstance in the specific criminal offence?

Legal basis: No specific statutory provision is available here, so the analysis rests on general principles of law, which the article itself derives from the structure of the Criminal Law. Article 177 of the Criminal Law (fraud) does not provide for the status of an advocate as a specially qualifying element, nor do the provisions on mitigating and aggravating circumstances of liability mention profession. It follows that professional affiliation is not a legally significant element in this case — it does not affect either the qualification of the offence or the quantum of punishment. Under the fundamental principles of the Criminal Procedure Law, the purpose of criminal proceedings is the just resolution of criminal-law relations without unjustified interference in a person's life, and public communication that highlights a characteristic of no legal significance is difficult to reconcile with that purpose. The boundaries of prosecutorial communication in Latvia are not precisely fixed in a direct norm, so the assessment rests on the principles of proportionality and the purpose of the proceedings, rather than on a prohibitive norm.

Practical significance: In practice, this means that the drafter of a prosecutor's press release must test each element of identification with the question: does this characteristic help in understanding the offence — for example, where professional powers or a client's trust have been abused. If there is no such connection, the profession in the headline becomes a means of attracting attention and creates a reputational risk that the accused could also invoke as an argument in the context of procedural protection or moral harm. Whether an advocate's private conduct complies with the requirements of the profession is assessed by the Council of Sworn Advocates of Latvia, not by prosecutorial communication — these two roles must be kept distinct. In the specific case, the point to watch is the further course in court of the criminal case that has reached Dobele, and whether the accused will raise the prosecutorial communication as a separate issue to be assessed, including a possible complaint about the prosecutor's conduct.