Lithuania's Supreme Court to Rule on Protecting Startups From 'Technical' Insolvency
The Supreme Court of Lithuania has agreed to hear a case that, for the first time in the country's case law, will decide whether a startup's insolvency should be assessed differently from that of an ordinary company. On June 11, 2026, the court's panel of judges accepted the cassation appeal of entrepreneur and startup founder Mindaugas Voldemaras (cassation appeal No. DOK-2020/2026, judicial process No. 2-55-3-00931-2023-5). A ruling is expected in the autumn of 2026.
The question matters far beyond one company. Under the interpretation applied by the lower courts, any company whose liabilities exceed its assets — even by a single euro — is considered insolvent that same day and must immediately initiate bankruptcy. By that standard, the overwhelming majority of early-stage startups are technically insolvent for most of their lives, because they run at a planned loss while building a product and scaling on investor capital.
"If you found a company on Wednesday with €2,500 in starting capital, borrow €3,000 from your mom on Thursday and spend it on advertising, then on Friday you would already be legally required to file for bankruptcy — even as the orders pour in," said Voldemaras. "Almost every startup is formally insolvent at some point. So whether a founder gets sued for damages depends only on the goodwill of creditors."
How the case arose
Voldemaras founded a modular outdoor-kitchen hardware startup in 2019. Its revenue grew from €14,455 in 2019 to €102,075 in 2020 and €807,767 in 2021; by April 2022 the company had 122 dealers across 23 countries and 18 employees. In July 2021 it secured a €1,000,000 investment from Estonia-registered Peranto OÜ, followed by a further €800,000 that September. On February 28, 2022, the parties signed a letter of intent for an additional €2,200,000 — but in March 2022, right before the peak barbecue season, the investor announced it would not invest further.
The company subsequently entered bankruptcy out of court in June 2022, at a creditors' meeting chaired by Peranto OÜ as the dominant creditor. According to Voldemaras, the investor's own lawyer — who had drafted the loan agreements — was appointed as the company's first bankruptcy administrator; that administrator was later replaced. The company's insolvency administrator subsequently sued Voldemaras personally, seeking damages for business decisions he made as director — a claim Voldemaras attributes to the former investor as the dominant creditor. In December 2025 the Vilnius Regional Court ordered him to pay €222,187.62 in damages plus €44,955.48 in litigation costs, and the Court of Appeal upheld that ruling in April 2026.
According to Voldemaras, shortly before the bankruptcy the investor set up a new company, Outing, UAB, which he says was granted exclusive rights to sell the startup's products and continues to do so.
The courts deemed the company insolvent as of July 31, 2021 — the date its liabilities (€1,093,280) first exceeded its assets (€963,513), just three weeks after the investment arrived. Voldemaras argues this ignored the evidence: the company had no overdue debts, paid salaries and taxes on time, was growing revenue exponentially, and was actively expanding its European distribution network.
The legal questions before the Supreme Court
The appeal asks the Supreme Court to address two issues with broad consequences for Lithuania's startup ecosystem:
Startup insolvency. Whether the insolvency definition in the Law on Insolvency of Legal Entities (JANĮ, Art. 2(7)) should apply identically to startups — innovation-driven, fast-growing companies that investors fund precisely because they expect future returns despite present losses — as it does to conventional businesses.
Standing to sue (locus standi). Whether a bankruptcy administrator has the legal standing to bring a damages claim against a former director in the circumstances of this case.
A clarifying ruling would directly affect the legal position of founders and directors across Lithuania, where startups are a state-promoted form of enterprise, as well as the insolvency administrators who bring such claims.
The investor behind the bankruptcy
Peranto OÜ, the Estonian company that provided the startup's loans, is owned by Lithuanian businessman Tadas Augustauskas, according to Estonian and Lithuanian business-registry data.
Augustauskas and another of his companies have a documented history with Lithuania's tax authority. As reported by the Lithuanian business daily Verslo žinios, his oil-products trading company Sunergus UAB — of which he was director and sole shareholder — was ranked the second-largest tax debtor in Lithuania in early 2024, owing some €3.37 million. In October 2024, the Supreme Administrative Court of Lithuania finalized Sunergus's liability, ordering the company to pay €2,394,995 in unpaid VAT plus €258,356.31 in interest, with the penalty reduced from €718,498.50 to €119,750. The tax inspectorate's audit found that Sunergus had wrongly declared transactions involving roughly €11.77 million of invoices from German suppliers as VAT-exempt "triangular trade." Sunergus is now in bankruptcy.
The tax authority has separately filed a court claim seeking to recover the €2.39 million personally from Augustauskas, subsidiarily with Sunergus (Vilnius Regional Court, case No. e2-2526-640/2025). That claim is pending and has not been adjudicated; Augustauskas has said publicly that he is contesting it.
Earlier in his career, Augustauskas was a senior executive at the former Mažeikių Nafta oil refinery (now Orlen Lietuva). According to Lithuanian news outlet Delfi, Augustauskas was in 2008 found guilty of abuse of office for approving, in 2000, invoices worth about 641,600 litas (roughly USD 160,000) for work prosecutors determined had not been performed.
About the issuer
This release is issued by TOC Sales and Marketing, UAB, on behalf of Mindaugas Voldemaras, a party to the proceedings. Supporting documentation — including the founder's account of the case and the court rulings — is available at https://theroadrunner.substack.com/s/kamado-reideriai.