Insolvency Law at Uzbekistan
Uzbekistan's insolvency framework is governed by the Law on Insolvency (No. ZRU-763), enacted on April 12, 2022, and effective from January 1, 2023. This legislation modernizes the country's approach to insolvency, introducing procedures for both legal entities and individuals, including self-employed persons. (Amendments in the insolvency legislation – Azizov & Partners)
⚖️ Key Features of Uzbekistan's Insolvency Law
1. Types of Insolvency
Temporary Insolvency: Occurs when a debtor is unable to meet obligations for 3–6 months.
Permanent Insolvency: Arises when liabilities exceed assets, indicating an inability to pay debts. (Uzbekistan adopts law on bankruptcy of individuals, Review of the Law on Insolvency - Unique Law Firm)
2. Insolvency of Legal Entities
Initiation: Proceedings can be initiated by the debtor, creditors, or the court.
Court Process: The court must consider the insolvency case within two months of application receipt, extendable by one month.
Liquidation: Upon declaring insolvency, a liquidation process is initiated, typically lasting up to 12 months.
Management: A judicial trustee is appointed to oversee the proceedings.
Tax Obligations: During rehabilitation or external management, tax payments may be suspended, with arrears payable in equal installments within six months post-proceedings. (Bankruptcy in Uzbekistan, Review of the Law on Insolvency - Unique Law Firm, Amendments in the insolvency legislation – Azizov & Partners)
3. Insolvency of Individuals
Eligibility: Individuals unable to meet monetary obligations or tax duties may be declared insolvent.
Debt Threshold: Insolvency proceedings can commence if debts are at least 200 times the base estimated value (approximately 54 million UZS or USD 4,800).
Procedures:
Debt Restructuring: A court-approved plan to reorganize debts over up to three years.
Asset Sale: Selling assets to settle debts.
Bankruptcy: Liquidation of assets when restructuring is unfeasible.
Moratorium: Imposed on creditor claims during proceedings.
Court Timeline: Cases must be considered within two months, extendable by one month.
Advance Payment: Applicants must deposit an amount equal to seven times the minimum wage to cover judicial trustee fees. (Review of the Law on Insolvency - Unique Law Firm, Law: Individuals can also be declared bankrupt, Uzbekistan adopts law on bankruptcy of individuals)
4. Judicial Trustees
Role: Licensed lawyers act as judicial trustees, managing insolvency cases.
Powers: Access to debtor information, suspension of enforcement actions, and authority to propose debt restructuring plans.
Compensation: Fees are covered by the debtor's estate, with potential additional rewards based on creditor satisfaction. (Review of the Law on Insolvency - Unique Law Firm)
5. Criminal Liability
Offenses: The law criminalizes false and deliberate insolvency.
Penalties: Strengthened provisions in the Criminal Code address these offenses. (Uzbekistan is strengthening the basis of criminal liability for false insolvency and deliberate insolvency)
🏛️ Court and Procedure Overview
Jurisdiction: Insolvency cases are handled by courts at the debtor's registered location or place of residence.
Court Timeline: Decisions must be made within two months of application receipt, extendable by one month.
Pre-Trial Rehabilitation: For legal entities, a 12–24 month pre-trial rehabilitation period may be granted, subject to effectiveness. (President signs Insolvency Bill into Law - Tashkent Times)
📈 Recent Amendments
Amendment Law (ZRU-911): Enacted on February 22, 2024, this law introduced changes to 25 existing laws, including the Civil and Tax Codes, to align with the new Insolvency Law.
Tax Relief: Suspension of current tax payments during rehabilitation, with arrears payable in installments.
Court Fees: Judicial trustees are exempt from state fees, reimbursed from the debtor's estate. (Amendments in the insolvency legislation – Azizov & Partners)
RELATED Blog
0 comments