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LAW OF THE REPUBLIC OF UZBEKISTAN

of May 5, 1994 No. 1054-XII

About bankruptcy

(as amended on 03-12-2019)

Chapter I. General provisions

Article 1. Purpose of this Law

The purpose of this Law is regulation of the relations in the field of bankruptcy of the legal entities, individual entrepreneurs and physical persons who lost the status of the individual entrepreneur.

Article 2. Legislation on bankruptcy

The legislation on bankruptcy consists of this Law and other acts of the legislation.

Operation of this Law does not extend to the state companies and non-profit organizations, except for the legal entities acting in the form of consumer cooperative or public fund.

If the international treaty of the Republic of Uzbekistan establishes other rules, than those which are stipulated by the legislation the Republic of Uzbekistan about bankruptcy then are applied rules of the international treaty.

Article 3. Basic concepts

In this Law the following basic concepts are applied:

bankruptcy (economic insolvency) - the inability of the debtor recognized by economic court in full to meet requirements of creditors for monetary commitments and (or) to fulfill duties on obligatory payments;

the voluntary settlement - the agreement of the parties on the termination of lawsuit on the basis of reciprocal concessions;

creditors - legal entities or physical persons before which the debtor bears responsibility according to monetary commitments and (or) discharge of duty on obligatory payments, except for citizens before whom the debtor bears responsibility for damnification of life or to health, and also founders (participants) of the debtor of the legal entity according to the obligations following from such participation;

the representative of creditor meeting (creditor committee) - person authorized by creditor meeting or creditor committee to participate in the case of bankruptcy;

observation - the insolvency proceeding applied by economic court to the debtor - to the legal entity from the moment of adoption by court of the statement for recognition of the debtor by the bankrupt before the following procedure for the purpose of ensuring safety of property of the debtor, carrying out financial analysis of the debtor;

obligatory payments - taxes and other obligatory payments in the government budget and the state trust funds;

the moratorium - suspension of execution by the debtor - the legal entity of monetary commitments and (or) obligations on obligatory payments;

monetary commitment - obligation of the debtor to pay to the creditor certain sum of money under the civil agreement and on other bases, stipulated by the legislation;

the judicial managing director (the interim manager, the sanifying managing director, the external managing director, the liquidating managing director) - person designated by economic court for carrying out insolvency proceedings;

pre-judicial sanitation - the measures taken by founders (participants) or the owner of property of the debtor - the legal entity, creditors and other persons for the purpose of recovery of solvency and the prevention of bankruptcy of the debtor;

judicial sanitation - the insolvency proceeding applied by economic court to the debtor - to the legal entity for the purpose of recovery of its solvency and debt repayment before creditors, without delegation of power on administration of the debtor to the sanifying managing director;

external management - the insolvency proceeding applied by economic court to the debtor - to the legal entity for the purpose of recovery of its solvency, with delegation of power on administration of the debtor to the external managing director;

liquidating production - the insolvency proceeding applied by economic court to the debtor declared bankrupt for the purpose of adequate consideration of requirements of creditors and the announcement of the debtor free from obligations;

the city-forming and equated to it company - the legal entity whose workers taking into account members of their families constitute at least a half of the population of the respective settlement, or the numbering workers at least three thousand people, or ensuring maintenance of defense capability and safety of the state or being the subject of natural monopolies;

the debtor - the legal entity or the individual entrepreneur not capable to meet requirements of creditors for monetary commitments and (or) to fulfill duties on obligatory payments, or the physical person which lost the status of the individual entrepreneur not capable to meet requirements of creditors for monetary commitments and (or) to fulfill duties on obligatory payments if monetary commitments and obligations on obligatory payments follow from its previous business activity;

the representative of founders (participants) or the owner of property of the debtor - person authorized by founders (participants) or the owner of property of the debtor when carrying out insolvency proceedings;

the employee representative of the debtor - person authorized by workers of the debtor to represent their interests when carrying out insolvency proceedings;

agricultural enterprise - agricultural cooperative (shirkat), farm and Dehkan economy with formation of legal entity, and also other legal entities whose core activity is production of commodity agricultural products.

Article 4. Bankruptcy signs

Signs of bankruptcy of the debtor inability to meet requirements of creditors for monetary commitments and (or) to fulfill duties on obligatory payments is recognized if the corresponding obligations and (or) duties are not fulfilled by it within three months from the date of their approach.

Article 5. Hearing of cases about bankruptcy

Case on bankruptcy is considered by economic court.

Proceedings on bankruptcy can be initiated by economic court if requirements to the debtor - to the legal entity in total constitute at least five hundredfold size of minimum wage, and to the debtor - the individual entrepreneur or physical person which lost the status of the individual entrepreneur - the thirtyfold size of basic settlement size in the presence of the bankruptcy signs, except as specified, provided by this Law suffices.

Article 6. Right to the appeal to economic court

The debtor, the creditor and the prosecutor have rights to the appeal to economic court with the statement for recognition of the debtor by the bankrupt in connection with non-execution of monetary commitments.

The debtor, the prosecutor, bodies of the State Tax Service and other authorized bodies have rights to the appeal to economic court with the statement for recognition of the debtor by the bankrupt in connection with non-execution of obligation on obligatory payments.

Article 7. Bases of the appeal of the debtor to economic court

The debtor has the right to take economic legal action with the statement for recognition by his bankrupt in the presence of the circumstances testimonial of the fact that he will not be able to satisfy monetary commitments and (or) to fulfill duties on obligatory payments in time, the stipulated in Clause 4 presents of the Law.

The debtor - the legal entity takes economic legal action with the statement for recognition by his bankrupt based on the decision of founders (participants) or the owner of property of the debtor or the decision of the body authorized by the owner of property of the debtor if other is not provided by this Law.

Article 8. Obligation of the debtor, liquidation commission or the liquidator on filing of application in economic court

The debtor's head, the debtor - the individual entrepreneur or the physical person which lost the status of the individual entrepreneur shall file petition of the debtor in economic court in cases if:

the satisfaction of requirements of one or several creditors leads to impossibility of performance the debtor of monetary commitments and (or) obligations on obligatory payments in full before other creditors;

the body of the debtor - the legal entity, authorized according to constituent documents of the debtor for decision making about liquidation of the debtor, makes the decision on the appeal to economic court with the statement of the debtor;

the body authorized by the owner of property of the debtor of the unitary enterprise makes the decision on the appeal to economic court with the statement of the debtor;

in case of the address of claim to property of the debtor reasons to believe are had that such collection will make impossible economic activity of the debtor.

The liquidation commission (liquidator) shall take economic legal action with the statement of the debtor if when carrying out liquidation of the legal entity the impossibility of satisfaction of requirements of creditors in full is established.

The statement of the debtor, liquidation commission or the liquidator shall be sent to economic court no later than one month from the moment of emergence of the circumstances provided in parts one and the second this Article.

Article 9. Responsibility of the head of the debtor, members of liquidation commission or the liquidator for non-execution of obligation on filing of application of the debtor in economic court

The non-presentation attracts with the debtor's head, members of liquidation commission or the liquidator of the statement of the debtor in economic court subsidiary responsibility of the head of the debtor, members of liquidation commission or the liquidator according to the monetary commitments and (or) obligatory payments of the debtor before creditors which arose after the expiration provided by part three of article 8 of this Law.

Article 10. Creditor meeting

In case of application of insolvency proceedings the interests of all creditors are represented by the creditor meeting or creditor committee formed according to this Law. From the moment of acceptance to production by economic court of the statement for recognition of the debtor by the bankrupt creditors have no right to address the debtor for the purpose of satisfaction of the requirements in individual procedure.

All actions concerning the debtor on behalf of all creditors are performed by creditor meeting or creditor committee.

Participants of the meeting of creditors with voting power are creditors, and regarding requirements for obligatory payments - bodies of the State Tax Service and other authorized bodies. The employee representative of the debtor, the judicial managing director, the representative of founders (participants) or the owner of property of the debtor participate in creditor meeting with the right of advisory vote.

In cases when in the case of bankruptcy the single creditor participates, decision making, carried to exclusive competence of creditor meeting, this creditor performs.

Decision making is within the exclusive competence of creditor meeting:

about the conclusion of the voluntary settlement;

about election of members of the committee of creditors, determination of its quantitative structure and early termination of their powers;

about the appeal to economic court with the petition for introduction of judicial sanitation or external management and prolongation of their term;

about the appeal to economic court with the petition for recognition of the debtor by the bankrupt and opening of liquidating production;

about approval of the plan of judicial sanitation and approval of the debt repayment schedule;

about approval of the plan of external management.

The organization and carrying out creditor meeting are performed by the judicial managing director.

Creditor meeting is competent provided that at it there are creditors with voting power imposing requirements in the amount of at least two thirds of the total amount of monetary commitments and (or) obligatory payments of the debtor. Creditors can participate at meeting as well through the representatives. In case of lack of quorum in ten-day time repeated creditor meeting which is competent, irrespective of number of the creditors provided on it is convoked provided that about date, time and the venue of creditor meeting they were notified properly.

The creditor has the right to vote on creditor meeting if he is holder of acknowledged requirements to the debtor.

On creditor meeting the protocol is taken.

Shall be attached to the protocol of creditor meeting:

register of requirements of creditors of date of creditor meeting;

the documents confirming powers of representatives of creditors;

registration sheets of participants of the meeting of creditors;

the materials provided to participants of the meeting of creditors for acquaintance and (or) approval;

proofs of the proper notice of creditors and authorized bodies about date, time and the venue of creditor meeting;

voting bulletins;

other documents at the discretion of the judicial managing director or to the solution of creditor meeting.

The protocol of creditor meeting and documents attached to it are subject to transfer to economic court no later than two days from date of creditor meeting.

Article 11. Notification on carrying out creditor meeting

Under the proper notice the direction to the creditor, authorized body, and also the other person having according to article 10 of this Law the participation right in creditor meeting, messages on carrying out creditor meeting by mail service not later than two weeks before date of creditor meeting or the different way providing such message at least in five days prior to date of creditor meeting is recognized.

In case of impossibility to reveal the data necessary for the personal notification of the creditor or the other person having the participation right in creditor meeting or in the presence of other circumstances making impossible the personal notification of specified persons, the proper notice of such persons the publication of data is recognized the official publication according to the procedure determined by the Cabinet of Ministers of the Republic of Uzbekistan.

The message on carrying out creditor meeting shall contain the following data:

the name and the location of the debtor - the legal entity;

date, time and venue of creditor meeting;

agenda of creditor meeting;

procedure for acquaintance with the materials which are subject to consideration by creditor meeting;

order of registration of participants of the meeting of creditors;

surname, name, middle name and the debtor's residence - the individual entrepreneur or physical person which lost the status of the individual entrepreneur.

Article 12. Procedure for convocation of creditor meeting

Creditor meeting is convoked at the initiative of the judicial managing director, to the requirement of creditor committee, creditors whose requirements for monetary commitments and (or) obligatory payments constitute at least one third of the total amount of requirements for the monetary commitments and (or) obligatory payments entered in the register of requirements of creditors or at the initiative of one third of total number of creditors.

In the requirement about carrying out creditor meeting the questions which are subject to entering into the agenda of creditor meeting shall be formulated.

The judicial managing director has no right to make changes to the formulation of questions of the agenda of the creditor meeting convoked upon the demand of creditor committee or the creditors specified in part one of this Article.

Creditor meeting upon the demand of creditor committee or the creditors specified in part one of this Article is convoked by the judicial managing director in time no later than thirty days from the moment of the address with the corresponding statement to the judicial managing director.

Creditor meeting is held in the location (residence) of the debtor if other is not established by creditor meeting or creditor committee. In case of impossibility of carrying out the first creditor meeting the venue of the first creditor meeting is determined by the location (residence) of the debtor by the judicial managing director.

Article 13. Procedure for decision making by creditor meeting

Solutions of creditor meeting on the questions put to the vote are accepted by the majority from poll of the creditors who are present at meeting.

Each creditor has poll in proportion to its share in general accounts payable on date of creditor meeting. Creditor meeting accepts by a majority vote from poll of all creditors the following decisions:

about the conclusion of the voluntary settlement; about the appeal to economic court with the petition for introduction of judicial sanitation or external management and prolongation of their term;

about the appeal to economic court with the petition for recognition of the debtor by the bankrupt and opening of liquidating production;

about the appeal to economic court with the petition for appointment, replacement or release of the judicial managing director.

If on creditor meeting the necessary poll of the creditors for decision making provided by part three of this Article is not provided repeated creditor meeting which is competent to make such decisions by a majority vote from number of the creditors who are present at meeting provided that about date, time and the venue of creditor meeting creditors were notified properly is convoked.

Persons participating in the case of the bankruptcy having the right to appeal the solution of creditor meeting in economic court.

Article 14. Register of requirements of creditors

The register of requirements of creditors is kept by the judicial managing director.

Account of requirements of creditors in the register is kept in national currency of the Republic of Uzbekistan. The requirements of creditors expressed in foreign currency are considered in the register of requirements of creditors according to the procedure established by the legislation. In the register of requirements of creditors the information about each creditor, the established size of its requirements for monetary commitments and (or) obligatory payments, priorities of satisfaction of each of its requirements are specified.

In case of the statement of requirements the creditor shall specify the information about himself, including full trade name, the location (postal address), passport data (for physical person), and also bank details (in case of their availability).

Person whose requirements are entered in the register of requirements of creditors shall inform in week time the judicial managing director on change of the data, and also on change of the size and structure of the requirements to the debtor, including with concession of requirements to the third parties. In case of failure to provide such data or their untimely provision the judicial managing director and the debtor do not bear responsibility for caused with respect thereto losses.

Access to the register of requirements shall be provided to creditors. The judicial managing director shall upon the demand of the creditor or his representative within five working days from the date of receipt of such requirement to send to this creditor or his representative the statement from the register of requirements of creditors about the size, structure and priority of satisfaction of its requirements. Expenses on preparation and the direction of such statement are assigned to the creditor.

The disagreements arising in case of creation of the register of requirements of creditors are considered by economic court.

Article 15. Creditor committee

The creditor committee represents the interests of creditors and exercises control of actions of judicial managing directors.

Creditor committee representatives of creditors in the quantity determined by creditor meeting are included.

If the number of creditors less than twenty, can be provided by the solution of creditor meeting assignment of functions of creditor committee on creditor meeting.

For implementation of the functions assigned to it the creditor committee has the right:

demand from judicial managing provision of information on financial condition of the debtor and the course of insolvency proceeding;

appeal in economic court of action (failure to act) of the judicial managing director;

elect the representative for participation in the case of bankruptcy;

perform other actions provided by this Law and the plan of judicial sanitation or external management.

The creditor committee has the right to make decisions:

about creditor meeting convocation;

about the recommendation to creditor meeting to take with the petition economic legal action for appointment, replacement and release of the judicial managing director;

about approval or refusal in approval of large deals of the debtor and transactions of the debtor in which making there is interest.

In case of the solution of questions on committee meeting of creditors each member of the committee of creditors has one voice. Transfer of voting power by the member of the committee of creditors to the other person is not allowed.

Decisions of creditor committee are made by a majority vote from total number of members of the committee of creditors.

The employee representative of the debtor, the judicial managing director, the representative of founders (participants) or the owner of property of the debtor can participate in committee meetings of creditors with the right of advisory vote.

Article 16. Election of creditor committee

Members of the committee of creditors are elected by creditor meeting for implementation of judicial sanitation, external management and liquidating production. According to the solution of creditor meeting of power of all members of the committee of creditors can be stopped ahead of schedule. Such decision can be made only on all members of the committee of creditors at the same time.

The candidates who got the maximum number of votes are considered as the elected to structure of creditor committee.

Members of the committee of creditors can elect the chairman of creditor committee from the structure.

If in creditor committee more than five members, then the chairman of creditor committee are elected without fail.

Article 17. Interested persons

Interested persons concerning the debtor - the legal entity are recognized:

the legal entity who is head or dependent in relation to the debtor according to the legislation;

the head of the debtor, and also persons who are part of the supervisory board, collegiate executive body, the chief accountant (accountant) including in termination cases with them the employment contract within one year until initiation of proceedings about bankruptcy;

founders (participants) of the legal entity.

The interested person concerning the debtor - the individual entrepreneur or physical person which lost the status of the individual entrepreneur in this Law is understood as his spouse (spouse), relatives on the direct ascending and descending line, sisters, brothers and their relatives on the descending line, parents, sisters and brothers of the spouse (spouse).

Interested persons concerning judicial managing directors, creditors are determined according to parts one and the second this Article.

Article 18. Judicial managing directors

The nominated persons having the higher education, length of service at least two years, and also who were connected certification in state body to the case on bankruptcy can be judicial managing directors.

Judicial managing directors cannot be appointed:

interested persons concerning the debtor or creditors;

persons having the outstanding or not removed criminal record;

the individual entrepreneurs or physical persons which lost the status of the individual entrepreneur concerning whom insolvency proceeding is entered;

persons, earlier in course of execution of obligations of the judicial managing director the caused losses to the debtor, creditors and not paid specified damages;

persons concerning whom there are restrictions for implementation of activities for administration and (or) property of other persons (the disqualified persons).

The economic court has the right to refuse appointment of the offered candidate or to exempt the judicial managing director from execution of its obligations on the bases specified in part two of this Article in the presence of the evidence produced by persons participating in the case of bankruptcy.

The judicial managing director within ten days from the date of its appointment as economic court shall insure the responsibility on damnification case to persons participating in the case of the bankruptcy, according to the procedure, determined by the legislation.

The requirements specified in part four of this Article do not extend to the judicial managing directors performing the simplified insolvency proceeding.

Creditor meeting has the right to demand from the judicial managing director to sign the insurance contract of property of the debtor.

Article 19. Rights and obligations of the judicial managing director

The judicial managing director has the right:

convoke creditor meeting;

require convocation of creditor committee in the cases provided by this Law;

file claim and other petitions without advance payment of the state fee;

earn reward according to article 22 of this Law;

attract to ensuring implementation of the powers on contractual basis of other persons with payment of their activities at the expense of means of the debtor if other is not established by the agreement with creditors;

submit the application for early termination of execution of the obligations to economic court.

The judicial managing director can have and other rights according to the legislation.

The judicial managing director shall:

take measures for protection of property of the debtor;

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