On January 10, 2020, the amendments to the Law of the Republic of Kazakhstan “On Rehabilitation and Bankruptcy” entered into force. Here is a selection of the most significant.
1.The concept of sustainable insolvency is introduced, which is the basis for a debtor to file a petition with the court to declare it bankrupt. 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 debtor filed the application in the first quarter of the calendar year .
2.An accelerated rehabilitation procedure is excluded. The insolvency resolution procedure is replaced by the debt restructuring procedure.
3.The old edition provided that the debtor is obliged to apply to the bankruptcy court within 6 months from the moment of insolvency. Violation of this obligation was the basis for bringing to subsidiary liability. In the new edition, such a duty is excluded.
4.A new basis for subsidiary liability has been introduced: failure to transfer to the interim trustee within three business days from the date of the court decision on declaring the debtor bankrupt the constituent documents, seals (if any), stamps, within ten business days - accounting records, title documents for bankruptcy property, within twenty business days - material and other values belonging to the bankrupt.
5.The procedure for the distribution of money received in connection with bringing to subsidiary liability has been changed. According to the amendments, the money received as a result of bringing the person to subsidiary liability should be directed to creditors, and the covering of administrative (current) expenses from this amount is not allowed.
6.The position of the administrator in the rehabilitation and bankruptcy procedures has been reformed. If earlier the activities of an administrator could be performed only by a person who passed a qualification exam and met certain requirements, now a person with a certificate of a professional accountant can be included in the register of administrators.
7.Partially changed the working conditions of the administrator. Before applying for rehabilitation or bankruptcy, now the applicant must first conclude an agreement with the administrator. The exception is the tax authority, for which administrators work on the principle of not guaranteed payment. The function of the appointment of the interim manager and interim administrator was transferred from the court to the authorized body. The functionality of the interim administrator has been changed, which will be required to draw up an analytical report.
8.The principles for drawing up the conclusion of the interim manager and interim administrator have been substantially changed: the legislator introduces other characteristics to assess the financial situation of the debtor, and provides other conclusions that the administrator can come to as a result of the analysis.
9.The deadline for consideration in court of cases of rehabilitation and bankruptcy is set in 2 calendar months, regardless of the status of the applicant.
10.The mechanism for applying the rehabilitation procedure has been changed: during a court hearing on the application of the rehabilitation procedure, the interim administrator collects information on the financial condition of the debtor on the basis of accounting documents and financial statements in order to draw up a conclusion on financial stability, which is submitted to the court. During the court’s consideration of the civil case, the interim trustee should hold the first meeting of creditors, at which the creditors must decide on the consent / disagreement with the application of the rehabilitation procedure, as well as the decision on choosing a rehabilitation manager, or on leaving the debtor to manage the debtor. If the court decides to apply the rehabilitation procedure, the powers of the interim administrator are terminated and the debtor is transferred to the person selected by the first meeting of creditors.
11.The rehabilitation procedure will now be available to individual entrepreneurs. If the court decides to refuse to apply the rehabilitation procedure, or decides to terminate the rehabilitation procedure, the debtor will not be able to apply again for rehabilitation within the next 2 years.
12.A new ground for termination of the rehabilitation procedure has been introduced: if the total amount of the debtor's monetary obligations arising after applying the rehabilitation procedure has exceeded twenty percent of the total payables as of the date the court decides to apply the rehabilitation procedure.