Publication On Rehabilitation And Bankruptcy In Kazakhstan

On Rehabilitation And Bankruptcy In Kazakhstan

Kazakhstan entered 2017 as a full-fledged member of the World Trade Organization. However, in reality, low competitive ability coupled with the global crisis and changes in the oil market pricing entailed a prognosis of an impending economic crisis in Kazakhstan. Such a situation mainly affects enterprises, which endure the crisis and are not able to compete with foreign suppliers of goods, works, and services.

In 2016, Kazakhstan modernized in part its laws on bankruptcy and rehabilitation procedures. The current law of the Republic of Kazakhstan ('the RK') No. 176-V 'On Rehabilitation and Bankruptcy' dated 7 March 2014 (as amended on 13 November 20151) ('the Law') supersedes the former statutory bankruptcy regime in Kazakhstan. The Law replaces the previous law of the RK No. 67-I 'On Bankruptcy' dated 21 January 1997, which generally appeared to be too uncertain and unlikely to bring results. Hence, many rely on the current Law of the RK 'On Bankruptcy and Rehabilitation' as a lifeline for maintaining businesses and expectations of it are high.

We note clients' demand for bankruptcy and rehabilitation matters, as well as enterprises' active practical use of rehabilitation regulations. In this note, we provide an overview of the main features of the rehabilitation and bankruptcy regime in Kazakhstan.

1 The Law of the RK 'On Amending Certain Legislative Acts of the Republic of Kazakhstan on Bankruptcy and Rehabilitation' dated 17 November 2015.

What procedures are available?

Settling insolvency

(the debtor's decision to settle his insolvency prior to creditors' initiation of legal procedures)

The court decides on approval or rejection of procedure.

Within 2 months from the date when the court decision on application of procedure enters into legal force, the debtor enters into agreement with all creditors on settling insolvency.

Consequences:

Ø Cessation of accrual of forfeit (penalties, fines) and consideration (interest) under all types of the debtor's indebtedness;

Ø Lifting of all restrictions on the debtor's accounts without respective decision of public bodies, which imposed said restrictions;

Ø Cessation of enforcement of previous court decisions and arbitral awards1;

Ø Imposition of new seizures on the debtor and other restriction in disposal of his property are permitted solely based on claims on invalidation of transaction and recovery of property held in adverse possession, filed...

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