To apply the rehabilitation procedure, two signs must be present simultaneously:1) the debtor's insolvency or the threat of his insolvency; 2) the real possibility of restoring his solvency

LLP "A" (hereinafter referred to as the Partnership) applied to the court for a rehabilitation procedure, pointing to its insolvency and the possibility of its restoration. The application was granted by the decision of the specialized inter-district Economic Court of Astana city dated November 22, 2016. A rehabilitation procedure has been applied to the Partnership. By the resolution of the Judicial Board for Civil Cases of the Astana City Court dated February 22, 2017, the decision of the court of first instance was canceled with the referral of the case to the same court for a new hearing in a different composition. Upon a new review, the decision of the specialized interdistrict Economic Court of Astana dated April 19, 2017 denied the application. By the resolution of the Judicial Board for Civil Cases of the Astana City Court dated June 14, 2017, the decision of the court of first instance was overturned with the issuance of a new decision on the satisfaction of the application. A rehabilitation procedure has been applied to the Partnership. The Judicial Board for Civil Cases of the Supreme Court overturned the decision of the appellate instance, upholding the decision of the court of first instance. The petitions of the State Institution "Astana City Construction Department" and "J" LLP were satisfied on the following grounds. Paragraph 3 of Article 5 of the Law of the Republic of Kazakhstan "On Rehabilitation and Bankruptcy" (hereinafter referred to as the Law) establishes that the basis for the debtor's application to the court for the application of a rehabilitation procedure is his insolvency or the threat of insolvency, when the debtor will be unable to fulfill monetary obligations upon their due date in the next twelve months, if the possibility of restoring solvency. Therefore, for the application of the rehabilitation procedure, two signs must be present simultaneously.:1) the debtor's insolvency or the threat of his insolvency; 2) the real possibility of restoring his solvency. The Court of first instance, refusing to satisfy the application, proceeded from the fact that the insolvency of the Partnership had been confirmed in court, however, there was no acceptable and reliable evidence to confirm the existence of a real possibility of restoring its solvency.

To apply the rehabilitation procedure, two signs must be present simultaneously:1) the debtor's insolvency or the threat of his insolvency; 2) the real possibility of restoring his solvency

The Court of appeal recognized the conclusions of the court of first instance on the debtor's insolvency as correct. However, he did not agree with the conclusions about the lack of a real possibility of restoring his solvency. At the same time, he pointed out that the court of first instance unreasonably questioned the documents on transactions between the Partnership and the Construction Department, between the Partnership and Yesil Stroy Invest LLP. The court of appeal also pointed out the validity of the arguments of the complaints about the prematurity of the court's conclusions on tax assessment according to the tax audit act dated February 25, 2016 No. 1743. As of the day of the appeal hearing, the tax authority has not issued a notification. The Judicial Board finds the conclusions of the courts on the insolvency of the Partnership, based on the criteria established by paragraph 1 of Article 5 of the Law, justified. Thus, the courts established and the case materials confirmed that as of April 4, 2017, the Partnership's accounts payable to 50 counterparties amounted to 1,125 015 000 tenge. This debt is formed for obligations that, with the exception of the debt owed to I-Travel LLP, expired in the period from March 2015 to July 2016. The debt to I-Travel LLP in the amount of KZT 260,939,000 was incurred on December 31, 2011. It also follows from the financial statements that there are arrears of taxes and other mandatory payments to the budget in the amount of 4,735,000 tenge, wages for a total of 119,511,000 tenge, and bank obligations in the amount of 19,615,000 tenge. The arguments of some creditors about the doubtfulness of the Partnership's debt to affiliated companies, about the lack of proof of its insolvency, similar to the arguments of the petition of J LLP, were the subject of careful research and proper legal assessment by both judicial instances. The fact of the debtor's insolvency has been established and fully confirmed by the case file.

In this regard, these arguments of the petition are unfounded, contradict the factual circumstances. At the same time, the arguments of the petitions about the absence of the second, mandatory feature of the rehabilitation procedure – the real possibility of restoring the solvency of the Partnership, are legitimate. The application of the rehabilitation procedure is to restore the debtor's solvency. In paragraph 3 of Article 5 of the Law, the legislator pointed out the need for the possibility of its restoration. According to paragraph 14 of the regulatory resolution of the Supreme Court of the Republic of Kazakhstan dated October 2, 2015 No. 5 "On the practice of applying legislation on rehabilitation and bankruptcy", rehabilitation procedures can be applied by the court only if there is a real possibility of restoring the debtor's solvency. The possibility of restoring the debtor's solvency should be understood as the existence of a set of interrelated real measures aimed at improving the debtor's financial activities and carried out on the basis of mutual agreement between the debtor and creditors, a group of homogeneous creditors. The Court of first instance, having examined the documents submitted by the Partnership and the interim manager's conclusion on the financial situation of the Partnership dated April 5, 2017, came to the correct conclusion about the insolvency of the arguments of the applicant and the interim manager that the total income from assets in the future will amount to 2,330,235,000 tenge, thereby there is a valid opportunity to get out of temporary financial difficulties.. In addition to the amount of accounts receivable in the amount of 586,024,000 tenge, the rest of the doubtful asset and the estimated future income from problematic contracts are not a guarantee of a real possibility of restoring solvency. In support of its arguments about the receipt of financial resources on a regular basis, the Partnership referred to the public procurement contracts concluded between it and the Construction Department: 1) No. 9/36 dated December 2, 2009 for a total amount of KZT 1,517,244,807, of which KZT 506,715,000 is provided for financing in 2016 and KZT 284,554,098 for fiscal year 2017, profitability is KZT 84,587,000; 2) No. 13/44 dated October 2, 2013 in the amount of KZT 3,166,800,000, of which KZT 809,800,000 is provided for financing 2016 and KZT 1,214,031,085 for fiscal year 2017. The profitability is 157,956,775 tenge. In addition, the Partnership indicated the conclusion on October 9, 2016 of an agreement with LLP "E" for a total amount of 1,000,000,000 tenge with a completion date of March 31, 2018. The profitability is 100,000,000 tenge. Meanwhile, the Partnership's obligations under both public procurement contracts have not been fulfilled since the summer of 2016, so no payment is made by the customer. The Construction Department indicated in the petition that the cost of completed and paid works under these contracts is as follows: – for the facility "Construction of a vocational school for 800 places.

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