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of April 28, 2006 No. 5

About some questions connected with practice of application of the Law of the Kyrgyz Republic "About bankruptcy (insolvency)

Having discussed practice of consideration by courts of cases on bankruptcy (insolvency), for the purpose of ensuring uniform application of the Law of the Kyrgyz Republic "About bankruptcy (insolvency)" of October 15, 1997, and according to article 15 of the Law of the Kyrgyz Republic "About the Supreme Court of the Kyrgyz Republic and local courts",


2. Courts shall consider that after initiation of proceeedings about bankruptcy (insolvency) the court has no right to adopt the similar statement from other creditor for recognition by the bankrupt (insolvent) of the same debtor. In the specified situation the court should refuse to the creditor adoption of the statement based on Item 7 of article 27-12 of the Law of the Kyrgyz Republic "About bankruptcy (insolvency)" as proceeedings about bankruptcy (insolvency) of the corresponding debtor are already initiated. In determination about refusal in adoption of the statement its right to appeal to interdistrict court with the statement for participation in case in quality of the creditor shall be explained to the creditor.

3. By hearing of cases about bankruptcy (insolvency) courts shall proceed from requirements of Item 2 of article 1 of the Law of the Kyrgyz Republic "About bankruptcy (insolvency)", at the same time it is necessary to consider that the Law of the Kyrgyz Republic "About bankruptcy (insolvency)" is not applied to the state companies founded on the right of operational management.

4. According to Article 3 bankruptcy (insolvency) is understood as the insolvency of the debtor recognized as court or announced with the consent of the debtor by creditor meeting, that is inability of the debtor in full to meet requirements of the creditors for monetary commitments, including inability to provide obligatory payments in the budget and off-budget funds.

At the same time courts shall consider that for determination of availability of signs of bankruptcy of the debtor the corresponding amounts collected by court instead of the obligation fulfillment which was due to the creditor in nature shall be considered (cost not transferred to the creditor of the thing paid with it, cost of the works or services paid, but not performed by the debtor, etc.).

5. Courts shall consider that initiation of process of bankruptcy concerning the insolvent debtor requires availability of the minimum sizes of debt specified in article 9-1 of the Law of the Kyrgyz Republic "About bankruptcy (insolvency)".

At the same time, courts shall mean that according to the Law of the Kyrgyz Republic "About settlement indicator" No. 13 of January 27, 2006 the settlement indicator is normative cash indicator which affirms Jogorku Kenesh of the Kyrgyz Republic on representation of the Government of the Kyrgyz Republic and can change.

6. To exclude the mechanical procedure of initiation of proceedings about bankruptcy (insolvency) of the debtor, courts need to consider that according to article 11 of the Law of the Kyrgyz Republic "About bankruptcy (insolvency)" the size of monetary commitments according to requirements of creditors is considered established if it is confirmed with the judgment which took legal effect or the documents testimonial of recognition by the debtor of these requirements, and also in other cases provided by this Law.

Considering that at present the Law does not provide "other cases", it is necessary to proceed from the above-stated two conditions: this availability of the judgment about money recovery and written consent of the debtor.

As the size of debt is not established and cannot be established by the court considering case on bankruptcy, courts should mean that before filing of application in court about recognition someone the bankrupt, it is already necessary to have the judgment which took legal effect about debt collection in claim procedure, or to have the written instrument which the debtor recognizes the debt in certain size.

At the same time, courts need to mean that according to Article 11 of the Bankrupcy law the minimum size of debt which is the basis for initiation of process of bankruptcy, the stipulated in Article 9-1 Bankrupcy law can include only principal debt according to monetary commitment and the percent added under the agreement. From this it follows that the penalties and penalty fee attracting application of insolvency proceeding cannot join in the size of debt.

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