On October 1, the Ministry of Justice and the Court Administration in Latvia are set to take over the functions of the Bankruptcy Control Service (MKD). According to the Justice Ministry, they have developed documents for the reform of the MKD, but the draft regulatory acts still require approval from the Cabinet of Ministers. The reform aims to optimize the oversight of administrators' activities, including the handling of complaints, while the Latvian Association of Bankruptcy Process Administrators will manage examinations and address disciplinary cases to strengthen self-regulation within the sector.

The reform will also divvy up responsibilities between the two agencies, as the Court Administration will handle employee claims guarantee fund management, deposit payments, and maintain the Electronic Bankruptcy Records System. The Justice Ministry highlighted the contributions of MKD employees, acknowledging that their expertise will be crucial for the successful implementation of the reform. However, it is noted that approximately one-third of MKD employees will not continue their employment, but they will receive legally stipulated social guarantees.

The primary objective of this reform is to establish a balance between government oversight in the bankruptcy process and the operational independence of the administrators involved. This transition is expected to streamline processes and enhance accountability, ultimately benefiting stakeholders in the bankruptcy sector and contributing to a more effective legal framework regarding bankruptcy in Latvia.