Termination of Activities of a Bankrupt Legal Entity

📘 Article 57 of the Civil Code of the Republic of Kazakhstan: TERMINATION OF ACTIVITIES OF A BANKRUPT LEGAL ENTITY

🔹 1. GENERAL CHARACTERISTICS

Article 57 concludes the block of provisions of the Civil Code of the Republic of Kazakhstan devoted to bankruptcy and establishes the final stage of the procedure — liquidation of the bankrupt entity and termination of its legal personality. It regulates:

· the legal consequence of being declared bankrupt;

· the moment from which a legal entity is considered to have ceased to exist.

🔎 This provision plays a final role in the bankruptcy process and links it to the registry system for recording business entities.

🔹 2. ANALYSIS BY PARAGRAPHS

✅ Paragraph 1: Bankruptcy entails liquidation

“A court’s declaration of a legal entity as bankrupt entails its liquidation.”

📌 This rule means that bankruptcy is not an alternative to liquidation, but one of its forms initiated by the court.

The moment of being declared bankrupt is:

· the basis for termination of activities;

· the moment from which liquidation (bankruptcy) proceedings commence;

· the starting point for transferring property into the bankruptcy estate and completing settlements with creditors.

📘 This provision is closely related to:

· Article 52 of the Civil Code of the Republic of Kazakhstan — concept of bankruptcy;

· Article 49 of the Civil Code — grounds for liquidation;

· Article 55 of the Civil Code — consequences of initiating bankruptcy proceedings;

· the Law of the Republic of Kazakhstan “On Rehabilitation and Bankruptcy” — defines the stages of bankruptcy proceedings.

📌 Exceptions:

· If the court declares a person bankrupt but initiates a rehabilitation procedure (prior to liquidation), liquidation may be postponed.

✅ Paragraph 2: Moment of termination — exclusion from the BIN Register

“...from the moment of exclusion from the National Register of Business Identification Numbers (BIN)”

📌 The liquidation of a legal entity is legally considered completed only after the corresponding entry is made in the BIN Register, and not from the moment of the court decision declaring bankruptcy.

🔍 Why this matters:

📘 Applicable law:

· Law of the Republic of Kazakhstan “On State Registration of Legal Entities...”;

· Regulatory legal acts of the Ministry of Justice of the Republic of Kazakhstan governing registration and exclusion procedures.

📌 After exclusion:

· claims can no longer be filed against the legal entity;

· all permits, licenses, and contracts terminate;

· counterparties may recognize losses for tax purposes.

🔹 3. PRACTICE

📍 Example 1:“Altyn-Service” LLP was declared bankrupt by court decision in May 2023, but was actually excluded from the BIN Register only in February 2024. The court dismissed a claim filed against the LLP after its exclusion, referring to paragraph 2 of Article 57 of the Civil Code: the legal entity had ceased to exist.

📍 Example 2:After completion of bankruptcy proceedings, a creditor attempted to recover debt from the former director. The court clarified that claims may not be brought against the bankrupt entity itself, but only in cases where subsidiary liability is proven (under Articles 44 and 145 of the Civil Code and Article 11 of the Bankruptcy Law).

🔹 4. RELATED PROVISIONS AND LAWS

🔹 5. PRACTICAL RECOMMENDATIONS

For bankruptcy trustees:

· Timely submit notification of completion of bankruptcy proceedings to the registration authority;

· Ensure that all settlements with creditors are completed and the liquidation balance sheet is prepared.

For creditors:

· Claims must be submitted before completion of the procedure;

· After exclusion from the BIN Register, filing claims becomes futile, except in cases of subsidiary or criminal liability of officials.

For counterparties:

· If a partner entity is liquidated, carefully document losses for tax purposes;

· Check the counterparty’s status in the BIN Register (eGov, Ministry of Justice website).

📎 CONCLUSION

Article 57 of the Civil Code of the Republic of Kazakhstan establishes the completion of bankruptcy proceedings through liquidation of the legal entity and its exclusion from the BIN Register. Only from this date is the legal entity considered de jure terminated, and any actions performed on behalf of or against it become legally void.

This ensures transparency and legal certainty in relations between businesses, creditors, and the state.

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