On the practice of applying legislation on rehabilitation and Bankruptcy

The legislation of the Republic of Kazakhstan on rehabilitation and bankruptcy procedures is based on the Constitution of the Republic of Kazakhstan and consists of the Civil Code of the Republic of Kazakhstan (hereinafter referred to as the Civil Procedure Code of the Republic of Kazakhstan (hereinafter referred to as the APC), the entrepreneurial code of the Republic of Kazakhstan (hereinafter referred to as the entrepreneurial code), the law of the Republic of Kazakhstan dated March 7, 2014 No. 176 – V "on rehabilitation and Bankruptcy" (hereinafter referred to as – Law" on rehabilitation and Bankruptcy"), other laws and regulations establishing the specifics of the application of rehabilitation and bankruptcy procedures in relation to individual economic entities.

According to Paragraph 2 of Article 2 of the law" on rehabilitation and bankruptcy", if an international treaty ratified by the Republic of Kazakhstan establishes rules other than those provided for by law, the rules of the international treaty shall apply. Paragraph 1 as amended by the normative resolution of the Supreme Court of the Republic of Kazakhstan dated 31.03.2017 No. 2 (effective from the date of its official publication). 2. Cases on bankruptcy rehabilitation, accelerated rehabilitation and insolvency settlement, as well as cases on bringing officials (debtor) to subsidiary liability are considered according to the general rules of civil proceedings, with the specifics established by the law "on rehabilitation and Bankruptcy". Cases of this category are considered by specialized Inter-District economic courts of Regions, Cities of Almaty and Astana and are not subject to consideration in absentia. Paragraph 2 as amended by the Supreme Court of the Republic of Kazakhstan dated 31.03.2017  Regulatory Resolution No. 2 (effective from the date of its official publication). 3.in accordance with Article 3 of the law" on rehabilitation and Bankruptcy", the specifics of applying bankruptcy procedures in relation to individual economic entities may be determined by the legislation of the Republic of Kazakhstan, depending on their legal status and direction of activity.

On the practice of applying legislation on rehabilitation and Bankruptcy

The specifics of the forced reorganization and liquidation of banks and insurance (reinsurance) organizations are determined by banking legislation and legislation on insurance and insurance (reinsurance) activities. The grounds for the compulsory liquidation of grain receiving enterprises and cotton processing enterprises, the specifics of the sale of property mass and the sequence of satisfaction of creditors ' claims are provided for by the laws of the Republic of Kazakhstan "on grain" dated January 19, 2001 No. 143-II and "on the development of the cotton industry" dated July 21, 2007 No. 298-III. Certain features of rehabilitation and bankruptcy procedures are also established by legislative acts in relation to accumulative pension funds, agricultural producers. The application of bankruptcy procedures taking into account the legal status of the subject of economic activity - individual entrepreneurs and peasant (farm) Farms is regulated by Article 21 of the civil code and Article 39 of the entrepreneurial code. The procedure for rehabilitation (accelerated rehabilitation) does not apply to individual entrepreneurs and peasant (farm) farms. Organizations and enterprises, individual entrepreneurs, including blocks of shares (participation shares), which are subjects of natural monopoly or market entities that dominate or have a monopoly position in the relevant commodity market or have an important strategic significance for the economy of the Republic, which can affect the life, health of Citizens, national security or the environment, are classified as strategic objects in accordance with the legislation of the Republic of Kazakhstan, also, in the event of bankruptcy of organizations recognized as bankrupt on the initiative of the state, the Government of the Republic of Kazakhstan in order to protect the interests of citizens and the state, to establish special conditions and procedures for the sale of property mass and additional requirements for buyers of property mass objects, also, organizations whose blocks of shares (participation shares) are classified as strategic objects in accordance with the legislation of the Republic of Kazakhstan or organizations of significant strategic importance for the economy of the Republic have the right to make a decision on the acquisition of property mass by the national managing holding in case of bankruptcy. In case of bankruptcy of legal entities engaged in environmentally dangerous types of economic and other activities, a mandatory environmental audit is carried out in accordance with the Environmental Code of the Republic of Kazakhstan dated January 9, 2007 No. 212-III of the Bulletin of the Supreme Court of the Republic of Kazakhstan No. 32/5/2017. Paragraph 3 as amended by the normative resolution of the Supreme Court of the Republic of Kazakhstan dated 31.03.2017 No. 2 (effective from the date of its official publication). 4. An application for declaring a debtor bankrupt may be submitted by the prosecutor or any creditor of the debtor, regardless of the amount of the monetary obligation and the period of its execution. If the amount of accounts payable for monetary obligations is less than that established by law, the court, on the basis of Paragraph 1 of Article 43 and Paragraph 4 of Article 44 of the law "on rehabilitation and Bankruptcy", returns the application without consideration. 5. When accepting applications of the debtor or creditor for consideration on declaring the debtor bankrupt or applying a rehabilitation procedure, it is advisable to check by the court whether the application was signed by the relevant person (body) on the basis of the applicant's constituent documents. If, when accepting the application of the debtor or creditor to declare the debtor bankrupt for consideration or applying the rehabilitation procedure, the court finds that the application was signed by a person without authority, or documents confirming the authority of this person and the documents provided for in Articles 41 and 42 of the law "on rehabilitation and Bankruptcy" were not attached, then the court returns such an application without consideration in accordance with paragraph 1 of Article 43 of the law "on rehabilitation and Bankruptcy". In cases where the debtor's appeal to the court is mandatory on the grounds provided for in Paragraph 2 of Article 43 of the law "on rehabilitation and Bankruptcy", the court is obliged to accept the application for its proceedings, and has the right to request the necessary documents from the applicant in the order of preparing the case for trial. The creditor's application can also be signed by his representative. In this case, in accordance with articles 60 and 61 of the APC, the creditor's power of attorney confirming the representative's authority to apply to the court is attached to the application. Paragraph 5 as amended by the Supreme Court of the Republic of Kazakhstan dated 31.03.2017  Regulatory Resolution No. 2 (effective from the date of its official publication).

According to Article 46 of the rehabilitation and Bankruptcy Act, the creditor has the right to specify several requirements for the debtor in one application, or the requirements of several creditors can be combined into one application. If the creditor's application for declaring the debtor bankrupt is submitted to the court on the basis of the application of another creditor after the initiation of the case against the debtor, but before the decision on the case is made, the court issues a ruling on the launch initiated for the simultaneous consideration of the application.

When an application is received after the entry into force of a court decision to declare the debtor bankrupt and initiate bankruptcy proceedings, the court refuses to accept the application, referring to Article 151 of the APC. Paragraph 6 as amended by the normative resolution of the Supreme Court of the Republic of Kazakhstan dated 31.03.2017 No. 2 (effective from the date of its official publication). 6-1. In accordance with article 28-1 of the law" on rehabilitation and bankruptcy", within three working days from the date of acceptance of the debtor's application for insolvency settlement, the court makes one of the following decisions: on the application of the insolvency settlement procedure; on the refusal to apply the insolvency settlement procedure. Based on the results of consideration of the debtor's application for the application of the insolvency settlement procedure, the court has the right to refuse to apply this procedure only if the debtor does not provide evidence of the presence of signs of insolvency in the debtor, established by Article 5 of the law "on rehabilitation and Bankruptcy". It is necessary for the court to establish the presence of insolvency of the debtor, and not his insolvency. In this regard, the courts do not necessarily need to request financial statements from the debtor for the last 3 years. The court considers cases of this category in the presence of the debtor at a hearing. Based on the results of consideration of cases of this category, a judicial act is issued in the form of a decision. When the debtor's application is satisfied, the resolution part of the decision must reflect the consequences of making such a decision, which are mandatory for execution, provided for in Article 28-2 of the law "on rehabilitation and Bankruptcy". Item 6-1 is supplemented by the normative resolution of the Supreme Court of the Republic of Kazakhstan dated 31.03.2017 No. 2 (effective from the date of its official publication). 7. It should be noted by the courts that bankruptcy applications of legal entities and individual entrepreneurs are considered in a special procedural order, therefore, the presence or absence of grounds for declaring the debtor insolvent is determined at the time of applying to the court. The court's refusal to recognize the debtor as bankrupt (apply the rehabilitation or accelerated rehabilitation procedure) or the reduction of the bankruptcy proceedings (rehabilitation or accelerated rehabilitation procedure) on the grounds specified in the law (except for the reduction of the proceedings in the case related to the liquidation of the debtor) is not grounds for refusing to accept the subsequent applications for the recognition of the debtor as bankrupt or the application of the rehabilitation or accelerated rehabilitation procedure. Any creditor, including a creditor whose application for declaring the debtor bankrupt (applying a rehabilitation or accelerated rehabilitation procedure) was not satisfied, has the right to re-submit to the court an application for declaring the debtor bankrupt or applying a rehabilitation or accelerated rehabilitation procedure in connection with a change in circumstances (a significant increase in the volume of the debtor's indisputable obligations, a significant change in his financial and economic situation, etc.).

 

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