Comment to Article 21. Bankruptcy of an individual entrepreneur of the Civil Code of the Republic of Kazakhstan
Bankruptcy of an individual entrepreneur, regardless of the type of individual entrepreneurship, is regulated by the commented article, as well as Articles 52-56 of the Civil Code, Chapter 7 of the Law on Individual Entrepreneurship and some other regulatory legal acts. The provisions of the Bankruptcy Law can be applied to the bankruptcy of individual entrepreneurs only in cases explicitly specified in the legislation, since the Bankruptcy Law itself (paragraph 2 of Article 2) states that this law does not apply to the bankruptcy of individual entrepreneurs. Therefore, the Law on Individual Entrepreneurship has special reservations regarding the application of bankruptcy rules established for legal entities to individual entrepreneurs. Thus, according to Articles 40 and 41 of the Law on Individual Entrepreneurship, the initiation and consideration of bankruptcy cases, as well as rehabilitation procedures for bankruptcy cases of individual entrepreneurs, with the specifics provided for by this law, is carried out according to the rules established for legal entities. And such rules are established not only by the Civil Code, but also by the Bankruptcy Law.
According to paragraph 1 of the commented article, the basis for declaring an individual entrepreneur bankrupt is his insolvency. Article 52 of the Civil Code defines insolvency as the debtor's inability to satisfy creditors' claims for monetary obligations, to settle wages with persons working under an employment contract, and to ensure mandatory payments to the budget and off-budget funds at the expense of his property.
52 of the Civil Code calls bankruptcy the insolvency of a debtor recognized by a court decision or officially declared out of court on the basis of an agreement with creditors, which is the basis for its liquidation.
According to paragraph 2 of the commented article, there are two procedures for recognizing the bankruptcy of an individual entrepreneur: voluntary and compulsory. These procedures are provided for in Article 53 (see Article 53 of the Civil Code and its commentary).
From the moment an individual entrepreneur is declared bankrupt, his registration as an individual entrepreneur becomes invalid, and therefore his right to engage in individual entrepreneurial activity. A citizen may start doing business anew in accordance with the general procedure provided for in art. 19 of the Civil Code.
Unlike the obligations of a legal entity engaged in entrepreneurship, which are always considered related to it, the obligations of a citizen - an individual entrepreneur may or may not be related to his entrepreneurial activity. The obligations of a citizen that arose before the start of his entrepreneurial activity are always unrelated to this activity. But the obligations of a citizen who is an individual entrepreneur may not be related to entrepreneurial activity, even if they arise during the period when the citizen is engaged in entrepreneurship, for example, alimony obligations, debts incurred in connection with marriage or divorce, etc.
According to the norm of paragraph 3 of the commented article, in the process of declaring an individual entrepreneur bankrupt, his creditors for obligations not related to his entrepreneurial activity have the right, but are not obliged to submit their claims in accordance with the procedure established for the creditors of the entrepreneur, if the deadline for fulfilling such obligations has come. Paragraph 3 of the commented article establishes that claims by creditors of an entrepreneur that are not related to his business activities, but are filed in accordance with the procedure established for creditors of an entrepreneur, as well as claims that have not been satisfied in the exact amount from the bankruptcy estate, remain valid and may be levied after bankruptcy proceedings are applied to an individual entrepreneur. However, the amount of these claims is reduced by the amount of satisfaction received during the debtor's bankruptcy.
Satisfaction of creditors' claims, if these claims are related to the debtor's business activities, from the moment of initiation of liquidation proceedings may be brought against the debtor only within the framework of this proceeding (art. 55 of the Civil Code). After completing settlements with creditors, an individual entrepreneur declared bankrupt is released from fulfilling the remaining obligations related to entrepreneurial activity, except for the claims of citizens to whom the person declared bankrupt is responsible for causing harm to life or health, as well as other personal claims provided for by legislative acts (paragraph 5 of the commented article). 6. Paragraph 4 of the commented article establishes the order of satisfaction of requirements for an individual entrepreneur. This priority used to differ from the priority provided for in Article 51 of the Civil Code for satisfying creditors' claims against legal entities, in particular with respect to claims secured by collateral. With regard to these claims, creditors of bankrupt individual entrepreneurs were placed in worse conditions than creditors of legal entities. In the first case, creditors' claims secured by collateral were satisfied in the fourth row, and in the second case - in the second row. By the Law of March 2, 1998. This provision has been corrected, and the same order has been established for the bankruptcy of individual entrepreneurs as for the bankruptcy of legal entities.
Paragraph 4 of the commented article establishes the priority of requirements for an individual entrepreneur related to declaring him bankrupt. Claims for such debts are satisfied before the claims of other creditors, the order of which is provided for in the commented article.
The procedure for declaring individual entrepreneurs bankrupt is regulated in detail by the Law on Individual Entrepreneurship.
Constitution Law Code Standard Decree Order Decision Resolution Lawyer Almaty Lawyer Legal service Legal advice Civil Criminal Administrative cases Disputes Defense Arbitration Law Company Kazakhstan Law Firm Court Cases
The commentary was prepared within the framework of the scientific and practical research program of the Scientific Research Center of Private Law of the Kazakh State Law University.
Head of the working group on the preparation of the draft Civil Code of the Republic of Kazakhstan, Corresponding Member of the Academy of Sciences of the Republic of Kazakhstan, Professor Suleimenov M.K.
Deputy head Professor Basin Yu.G.
