The Law of the Republic of Kazakhstan dated 27.12.2019 No. 290-VI "On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on improving rehabilitation and bankruptcy procedures, budget, tax legislation and legislation on railway transport" amended and supplemented a number of legislative acts, including the SAM "On Rehabilitation and Bankruptcy" (hereinafter-the Law), which entered into force on January 10, 2020.
Initiation of rehabilitation and bankruptcy procedures
Rehabilitation
The debtor and the creditor (with the exception of the creditor for taxes and customs payments) have the right to apply to the court for the application of the rehabilitation procedure in case of temporary insolvency.
The insolvency is temporary if there are one or more circumstances at the date of filing the application:
1) obligations to creditors of a social nature (compensation for damage caused to life and health, recovery of alimony, wages and other related payments) are not fulfilled within three months from the date of the date of their execution;
2) the obligations to other creditors are not fulfilled within four months from the date of the date of their fulfillment.
Bankruptcy
The debtor has the right to apply to the court for recognition of its bankruptcy in case of stable insolvency.
The insolvency is stable if the debtor's obligations exceed the value of his property at the date of filing the application with the court and at the beginning of the year in which the application was filed, as well as at the beginning of the year preceding the year of filing the application, if the application was filed by the debtor in the first quarter of the calendar year.
The creditor (with the exception of the creditor for taxes and customs payments) has the right to apply to the court for declaring the debtor bankrupt if there is an unfulfilled monetary obligation of the debtor to the creditor on the basis of a court act or enforcement document that has entered into legal force to recover money from the debtor, or if the debtor has recognized the debt.
The creditor for taxes and customs payments has the right to apply to the court with an application for declaring the debtor bankrupt if the debtor fails to pay the amount of tax arrears, as well as debts for customs payments, special, anti-dumping, countervailing duties, and interest after taking all measures of compulsory recovery in accordance with the procedure established by the tax and customs legislation of the Republic of Kazakhstan.
Appointment of a temporary administrator and temporary manager
A temporary administrator is involved in the court's consideration of a rehabilitation case to compile a register of creditors ' claims and an opinion on the financial stability of the debtor.
The candidate of the temporary administrator is selected independently by the initiator of the application for the application of the rehabilitation procedure (debtor or creditor) from among the persons whose notifications are included in the register of notifications of persons entitled to perform the activities of the administrator.
The initiator, before submitting an application to the court, enters into an agreement with the selected candidate on the exercise of the powers of the temporary administrator, which comes into force from the date of initiation of the rehabilitation case in the court.
If the applicant is a creditor for taxes and customs payments or a state body or a legal entity with the participation of the state, an agreement on the exercise of the powers of the temporary manager is not concluded
The procedure for selecting a temporary manager, if the applicant is a creditor for taxes and customs payments, a state body or a legal entity with the participation of the state, is determined by the Rules approved by Order No. 426 of the Minister of Finance of the Republic of Kazakhstan dated April 29, 2020
Application of rehabilitation and bankruptcy procedures
The application of the rehabilitation procedure or the recognition of the debtor as bankrupt is carried out by a court decision, taking into account the conclusion on the financial stability of the debtor, which is drawn up:
temporary administrator - when considering a rehabilitation case;
temporary manager-when considering a bankruptcy case.
Financial stability is divided into classes:
Class I-financially stable;
Class II – associated with the risk of bankruptcy, but with the possibility of restoring financial stability;
Class III-financially unstable.
A debtor classified as Class III may be declared bankrupt.
Rehabilitation can be applied to a debtor assigned to class II, as well as to class III, but subject to the consent of the creditors ' meeting.
The definition of class boundaries will be carried out in accordance with the" Rules for calculating coefficients and determining the boundaries of financial Stability classes " approved by Order of the Minister of Finance No. 372 of April 9, 2020.
Statement of claims by creditors
The procedure for forming the register of creditors ' claims in the bankruptcy procedure has been clarified.
In particular, the creditor's claim may not be included in the register of creditors ' claims in the part that would not be subject to recovery in accordance with the procedure provided for by the civil legislation of the Republic of Kazakhstan, due to the expiration of the statute of limitations.
Meeting and Creditors ' Committee
Creditors ' Meeting
As a general rule, the organization of the meeting of the creditors ' meeting is entrusted to the administrator.
However, if the creditors 'meeting considers the issue of removing the rehabilitation or bankruptcy manager, the creditors' committee shall organize the meeting of the creditors ' meeting. In particular, the notification to creditors, their registration, and vote counting are carried out by the chairman of the creditors ' committee.
The agenda of the creditors 'meeting should contain the issues proposed for consideration that are directly within the competence of the creditors' meeting. When forming the agenda, it is not allowed to use the wording of an extended interpretation: for example," Other.", "Other issues." and so on.
If the number of votes of creditors present at the meeting is sufficient to make a decision on the issues included in the agenda, then the postponement of consideration of issues included in the agenda of the meeting of creditors is not allowed.
The number of votes of creditors for the decision of the creditors ' meeting decreases as they are satisfied during the rehabilitation or bankruptcy procedure. However, this rule does not apply when considering the approval of the final report.
In this case, each creditor votes depending on the size of the claims originally included in the register of claims (provided that the creditor is not deprived of the right to vote).
The decision of the creditors ' meeting may be appealed by the participants of the proceedings within one month from the date of its adoption.
Creditors ' Committee
The law establishes the main requirement for the creation of a creditors ' committee - the minimum number of its members must be at least three people.
The creditors ' committee consists of one creditor from each group of homogeneous creditors. At the same time, a creditor that does not form a group of homogeneous creditors due to the absence of other creditors with identical claims against the debtor may be included in the creditors ' committee.
A member of the creditors 'committee must not be an affiliated person or a person deprived of the right to vote in the creditors' meeting.
If the requirements for the quantitative composition cannot be met, the powers of the creditors 'committee are exercised by the creditors' meeting.
In this case, the creditors 'meeting is convened and decisions are made by it in accordance with the procedure provided for by the creditors' committee.
The meeting of the creditors ' committee is authorized with the participation of at least two-thirds of the total number of members of the committee.
The decision of the creditors ' committee may be appealed by the participants of the proceedings within one month from the date of its adoption.
Delegation of the meeting's powers to the committee
The following powers have been transferred from the competence of the creditors 'meeting to the creditors' committee:
approval of the plan for the sale of the bankrupt's property;
making a decision on the electronic auction of property at book value;
approval of the amount of receivables that cannot be collected;
making a decision on the write-off of movable property that is listed on the balance sheet, but is absent from the inventory report.
Debtor management in the rehabilitation procedure
The right to manage the debtor in the rehabilitation procedure is granted by the creditors ' meeting to the rehabilitation manager from among the persons whose notifications are included in the register of notifications of persons entitled to carry out the activities of the administrator, or to the body or person authorized by the owner of the property, the founder (participant).
During the rehabilitation procedure, the assembly may only change the decision once. In other words, if initially the right of management is granted to the rehabilitation manager, then during the rehabilitation procedure the assembly has the right to decide to remove the rehabilitation manager with the transfer of the right of management to the body or person authorized by the owner of the property, the founder (participant). However, the management right can no longer be transferred back to the rehabilitation manager.
If the rehabilitation procedure was terminated due to the fact that the current accounts payable exceeded 20% of the amount of creditors ' claims at the time of the rehabilitation procedure, the person exercising the powers of the rehabilitation manager, within two years from the date of termination of the rehabilitation procedure, cannot exercise the powers of the rehabilitation manager for other debtors (disqualification).
At the same time, such a person can act as a temporary administrator, temporary or bankrupt manager.
Removal of restrictions and encumbrances in the rehabilitation procedure