On the practice of applying legislation on compensation for damage caused to the life and health of citizens during the liquidation of a legal entity as a result of bankruptcy

Normative Resolution of the Supreme Court of the Republic of Kazakhstan dated October 28, 2005 No. 4.

     The footnote. Throughout the text:

the words "bankruptcy trustee", "bankruptcy trustee", "bankruptcy trustee", "bankruptcy proceedings" were replaced by the words "bankruptcy trustee", "bankruptcy trustee", "bankruptcy trustee", "bankruptcy proceedings", the numbers "77" were replaced by the numbers "102" in accordance with the regulatory decree of the Supreme Court of the Republic of Kazakhstan dated 03/31/2017 No. 2 (effective from the date of the first official publication).

      In order to ensure uniform application by courts of legislation on compensation for damage caused to the life and health of citizens in the event of liquidation of a legal entity as a result of bankruptcy, the plenary session of the Supreme Court of the Republic of Kazakhstan DECIDES:

To draw the attention of the courts to the fact that the amount and procedure of payments in case of liquidation due to bankruptcy of a legal entity recognized in accordance with the established procedure as responsible for harm caused to the life and health of citizens are determined by the Civil Code of the Republic of Kazakhstan (hereinafter referred to as the Civil Code) and the Law of the Republic of Kazakhstan dated March 7, 2014 No. 176-V "On Rehabilitation and bankruptcy" (hereinafter referred to as the Law).

     The footnote. Paragraph 1 as amended by the regulatory resolution of the Supreme Court of the Republic of Kazakhstan dated 31.03.2017 No. 2 (effective from the date of the first official publication).

      1-1. After the completion of the period of capitalization of payments to a citizen of the Republic of Kazakhstan, monthly payments are made in accordance with the procedure established by the Government of the Republic of Kazakhstan (paragraph 4 of Article 945 of the Civil Code).

      In accordance with the Rules approved by the Resolution of the Government of the Republic of Kazakhstan dated May 25, 2011 No. 571, persons entitled to receive monthly payments in the specified order must submit copies of the court's decision declaring the company bankrupt, assigning responsibility for the payment of capitalized payments in compensation to the state, the register of claims of creditors of the first priority, approved by the court. Certified copies of the listed documents, at the request of the above-mentioned persons, are provided by the court that reviewed the bankruptcy case. A new court decision on assigning responsibility for the payment of capitalized payments to the State after they reach the age of 70 is not required.

     The footnote. The regulatory resolution was supplemented by paragraph 1-1 in accordance with the regulatory resolution of the Supreme Court of the Republic of Kazakhstan dated 12/30/2011 No. 5 (effective from the date of its official publication).

In accordance with paragraph 3 of Article 944 of the Civil Code, citizens who have the right to compensation for damage caused to life and health have the right to demand from a bankrupt legal entity the termination or early fulfillment of an obligation to compensate for damage by capitalizing the corresponding time-based payments.

      In this case, the obligation of the legal entity responsible for causing harm to make monthly and other additional payments on the grounds and in accordance with the procedure established by Articles 937 to 944 of the Civil Code is replaced by a new obligation to pay the capitalized amount to the injured person in a lump sum. Such payment should be understood as compensation for the damage caused at the request of the victim.

     The footnote. Paragraph 2 as amended by the regulatory resolution of the Supreme Court of the Republic of Kazakhstan dated 31.03.2017 No. 2 (effective from the date of the first official publication).

According to article 102 of the Law, the amount of compensation to be paid in the framework of bankruptcy proceedings of a legal entity is determined by capitalizing the corresponding time-based payments on the day the debtor is declared bankrupt, payable to a citizen before reaching the age of 70, but not less than ten years in advance. If the age of a citizen exceeds seventy years, the capitalization period of the corresponding time-based payments is ten years.

      Time-based payments should be understood as compensation for the victim's lost earnings (income) or part of it, which he had or definitely could have had before the damage to his health and which was paid by the responsible person on a monthly basis.

      Other statutory damage compensation payments (expenses for medical treatment, additional meals, purchase of medicines, prosthetics, outside care, sanatorium treatment, purchase of special vehicles, and others) are not taken into account when capitalizing.

      The amount of capitalized payments (compensation) determined in accordance with the procedure provided for in Article 102 of the Law is not subject to indexation, as well as revision in the direction of increase or decrease due to a change in the disability group assigned to a citizen.

     The footnote. Paragraph 3 as amended by the regulatory resolution of the Supreme Court of the Republic of Kazakhstan dated 12/30/2011 No. 5 (effective from the date of its official publication).

The capitalization of the corresponding payments provided for in paragraph 2 of Article 945 of the Civil Code in the event of liquidation of a legal entity responsible for harm caused to life and health is mandatory.

      In this regard, the bankrupt manager, when forming registers of creditors' claims, is obliged to capitalize monthly payments to all persons to whom the liquidated legal entity was recognized in accordance with the established procedure as responsible for the damage caused and who made the corresponding payments at the time of its recognition as bankrupt.

      If, during the liquidation procedures, a court decision finds the liquidated legal entity responsible for harm caused to its employee (in particular, an occupational disease), then, at the request of a citizen, the amount of monthly payments to compensate for lost earnings (income) is determined before the liquidation procedure is completed, and their capitalization is carried out in accordance with the procedure established by Article 102 of the Law..

Capitalized payments are included by the bankruptcy trustee in the registers of creditors' claims of the first stage and are satisfied at the expense of the debtor's property as a matter of priority.

      The registers of claims of creditors of the first stage also include arrears in monthly payments of lost earnings (income) for previous periods, if they existed or were established by a court decision at the time the legal entity was declared bankrupt.

In the event that capitalized payments cannot be made by the bankrupt manager due to the absence or insufficiency of property of the liquidated legal entity, citizens have the right, in accordance with Article 945 of the Civil Code, to apply to the court with an application for the obligation to pay capitalized payments to the state.

      A one-time payment at the request of a citizen of the payments capitalized in the above manner entails the termination in full of the obligation of a legal entity for harm caused to life and health.

Courts must specify the amount of unpaid capitalization in their rulings on the completion of bankruptcy proceedings in order to ensure the payment of capitalized payments.

      If the list of creditors of the first stage is extensive, then the court ruling may indicate only the total amount of accrued and unpaid capitalization in the first stage with reference to the registers of creditors' claims. An extract from the registers of creditors' claims as of the date of completion of the liquidation of a legal entity, signed by the bankruptcy trustee, or a duly certified copy of the register, and a court ruling on the completion of bankruptcy proceedings are documents confirming a citizen's right to apply to the state for payment of capitalized payments.

Assigning the obligation to pay capitalized payments to the state due to the absence or insufficiency of property of a liquidated legal entity is one of the ways to ensure the rights of a citizen to social security guaranteed by Article 28 of the Constitution of the Republic of Kazakhstan in case of illness, disability, loss of breadwinner. By assuming such an obligation, the State is not the legal successor of the liquidated legal entity for all other obligations.

      However, if the capitalization of time-based payments was not made due to the fault of the bankrupt manager, and this error was not corrected by the court when ruling on the completion of the bankruptcy procedure, or when disability due to an occupational disease was detected after the liquidation of a legal entity due to bankruptcy, a citizen has the right to apply to the court with a claim to the state for damages in accordance with the procedure established by law.

When satisfying an application for the obligation to pay capitalized payments to the state, the court must indicate in the operative part of the decision to recover money from the republican budget, and assign the obligation to pay the awarded amounts to the appropriate administrator of the republican budget program.

      No State fee is charged in cases of recovery of capitalized payments.

When the victim's earnings (income) are capitalized and the obligation to pay a monthly payment is replaced with a lump sum compensation with his consent, the obligation is replaced, and the right inextricably linked to the citizen's personality is replaced by the right to receive compensation.

      In this regard, the amount of compensation accrued to a citizen and included in the registers of creditors' claims of the first priority, but not received by him in full or in part during liquidation, or from the state by court decision, is included in the inheritance. The claim for its payment may be filed by the heirs in the manner and within the time limits established by the legislation on inheritance.

The capitalized payments calculated as part of the bankruptcy procedure are compensation for the earnings (income) lost by a citizen, therefore they are subject to income tax in accordance with the procedure established by tax legislation.

According to  According to Article 4 of the Constitution of the Republic of Kazakhstan, this regulatory resolution is included in the current law, and is also generally binding and effective from the date of its official publication.

Chairman

The Supreme Court

Republic of Kazakhstan

Judge of the Supreme Court

Republic of Kazakhstan,

Secretary of the plenary session

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